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Articles
Invisible Profits?
July 1, 2007
Originally published in the Service That Sells! Newsletter
We all know suggestive selling builds sales. If you run your business properly, it follows that increased sales lead to higher profits, correct? Yes, there is food, beverage or packaging/paper costs associated with what is sold, but there is a positive impact on profits. Most companies call that incremental profit ‘flow-through' - what amount ‘flows through' to the bottom line.
Think beyond the traditional profit model. ‘Invisible Profits', those hidden on the P&L will now become very evident. Servers and bartenders also impact profits in other ways. First, the more money they make (coupled with the increasing skills you constantly provide them), the happier they will be. Improved retention will save you tens of thousands of dollars on your labor line each year.
Next, happy employees are less likely to steal. Hundreds of dollars will now reappear in the areas of less breakage, food waste and sales not rung up. Happy employees who all of a sudden now care about the business will also self-police other employees to ensure they are not stealing, mis-portioning or ripping off the business. While it is hard to scrimp your way to prosperity, these are a few intangible benefits of teaching your servers and bartenders life skills to help them succeed not only in your restaurant but in life as well.
Finally, don't forget the sales line. While common sense says bad service impacts sales (and profits), it is not commonly practiced in too many of your competitors' restaurants. Your restaurant fixed costs do not change whether the dining room is full or empty so keep attracting more clients and watch the profits ‘flow-through' to the bottom line - you'll be smiling as much as your employees!