6 Ways to Increase Restaurant Sales with Examples
It’s a difficult year to say the least, for the restaurant industry. Just eight short months ago no one could have predicted the devastation the COVID-19 pandemic would have on the sector. The National Restaurant Association estimates that within six short months following mandated restaurant shutdowns 100,000 restaurants have closed in the United States. That’s close to one in six restaurants. Overall the restaurant industry will lose an estimated $240 billion in 2020 alone.
Despite these challenges restauranteurs are innovating in ways they haven’t before. From ghost kitchens to virtual cooking classes there is no shortage of ideas for new ways to grow. If you are in the restaurant industry and are looking for new avenues for growth here are six ideas you should consider.
1. Set up a ghost kitchen to fulfill in-demand delivery orders
Have you ever ordered wings using DoorDash’s app? If you have without realizing it your wings may have been prepared by Chili’s. Brinker International Inc. which is the parent company of Chili’s and Maggiano created a new business this summer called Just Wings that only fulfills delivery orders. The selling concept Brinker is using is called a ghost kitchen. The concept of ghost kitchens, which have become popular in recent years, involves setting up online stores on delivery apps like Uber Eats or DoorDash. Then a commercial kitchen designed for this purpose or the kitchen within an existing restaurant fulfills customer orders. There is no full service restaurant where customers can dine in. Just Wings began generating $3 million per week soon after launch. Chili’s and Maggiano’s are servicing Just Wings orders from 1,050 Chili’s and Maggiano’s locations across the United States.
The key to making a concept like this take off is to find items that are often ordered for takeout or delivery like pizza or wings. One of the reasons these types of businesses can take off without a store front or a lot of branding has to do with how people make purchasing decisions when using delivery apps. Often consumers will search for menu items like burgers or fried chicken or Chinese dumplings and then they make purchasing decisions based on average customer reviews. This is how many businesses take off on Amazon. Consumers make the decision to buy a particular product not because they are aware of the brand but because of favourable reviews.
2. Rethink how you package and sell your goods
Three Michelin star rated restaurant Eleven Madison Park, which has also carried the title of the top ranked restaurant in the world has been closed since March when the pandemic hit. For many months Eleven Madison Park resisted pivoting but that changed last month when it announced the launch of Eleven Madison Park to Go. This new service allows customers to have an elevated dining experience at home. The service is essentially a luxury meal kit which includes a 3.5lb chicken stuffed with brioche, foie gras & truffle (not yet cooked); butternut squash baked with seaweed & brown butter, salad; potato gratin; an apple tart and the restaurant’s famous granola. Instructions are provided so that you are not left at home fumbling around trying to figure out how to prepare everything. If you want the taste of luxury at home the meal will set you back $275.00 and it serves up to four people. Wines and cocktails to pair with the dinner are also available. The kits are available by pick up only in the New York area.
Eleven Madison Park’s Thanksgiving meal kit was so popular it sold out. Eleven Madison Park is also planning to offer holiday meal kits. The plan is to offer these meal kits until the restaurant re-opens. There is also a philanthropic element with 10 meals given to those in need for every meal kit sold.
Guerrilla Tacos in Los Ángeles is another restaurants selling meal kits. For $85 it offers a mini emergency taco kit. It comes with two pounds of roasted chicken, tortillas, beans, rice and salsas. The meat is already cooked and makes up to 30 tacos. Earlier this year Guerilla Tacos said its pivot to selling taco kits has helped to keep 12 people working.
3. Create new businesses from popular menu items
Many people have heard of Milk Bar which sells delicious cookies, pies and cakes with locations in the United States and Canada. But what you may not know is that Milk Bar grew to fame out of the Momufuku restaurant chain.
After attending culinary school and working at a number of restaurants, in 2005 Milk Bar, founder Christina Tosi, was introduced to renowned chef David Chang, Founder of Momofuku restaurants. Tosi ended up creating Momofuku’s dessert menu which became a hit. Sensing there was a larger opportunity Chang gave Tosi the seed money to open the first Milk Bar store in 2008.
Milk Bar started with humble beginnings as a small store in the East Village in New York. From those small beginnings Milk Bar now sells three million cookies annually and has 18 stores in the United States and Canada. The success of Milk Bar shows that the big idea you are looking for might be right under your nose. “After the cereal-milk soft serve broke out [at Momofuku], I knew she had to do something. We had an option on a space, and she’d spoken about opening a bakery” said Chang.
Not only did those popular sweet menu items spawn a new retail chain they also led to the creation of cookbooks. Since opening that tiny first Milk Bar store, Tosi has written several cook books including: Momofuku Milk Bar: A Cookbook, All About Cake: A Milk Bar Cookbook and Milk Bar Life: Recipes & Stories: A Cookbook.
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4. Expand into consumer packaged goods
Does the idea of bottling up your famous hot sauce and selling it at Costco make you excited or does the thought make you feel like you are selling out? Several restaurants are going done this path to create new streams of revenue. One of those restaurants is Momofuku.
Since the pandemic hit Momofuko has closed three restaurants. Momofuku realizes it won’t be successful by only serving customers inside of its restaurants. Instead it has a goal to have 50% of its revenue come from outside of its core restaurant business. To get there Momufuku has launched a direct-to-consumer business. On its website Momofuku now sells seasoned salts, tamaris and cooking oils. “The [ethnic] grocery aisle still has these vestiges of a previous era,” says Momofuku chief executive officer Marguerite Mariscal. “But in other places in the world, there’s as much variety in soy sauce as there is in olive oil or in coffee.” That presents an opportunity for Momofuku to fill a gap in an area where consumers are craving more choice. “We didn’t want this to be the typical packaged goods play for a restaurant where you have a jarred sauce or a can of soup that is a departure from what you’re serving,” says Mariscal. “We wanted to make sure that everything we’re putting out is as at home in our kitchen as it is in the user’s home.”
Momufuku also sells merch including Momufuku branded aprons and hats. “We’re doing anything and everything to fight another day but I see light at the end of the tunnel in terms of where Momofuku could be and it’s not necessarily just doing restaurants," says Chang. Echoing these thoughts, Mariscal says: “whatever worked before, doesn’t work now.” “Hopefully this is a moment where restaurants can expand their definition of what they do, whether that’s making products for people to take home, meal kits, classes, or catering. These are all new potential business streams that everyone will need to survive.” “I hope that isn’t just for now, but becomes the new normal.”
Do you love Chick-fil-A’s famous sauce? If you do by early 2021 you will be able to find Chick-fil-A sauces all bottled up at many retailers across the United States including Publix, Winn-Dixie Stores, Kroger and Walmart. Royalties from the sales will be donated to the Chick-fil-A Remarkable Futures Scholarship Initiative. Bottles of these sauces are also available for purchase at Chick-fil-A stores.
5. Conduct virtual cooking classes
Since the pandemic started many restaurants are offering virtual cooking classes. Popular restaurant group TAO is now offering virtual chef experiences. During these experiences customers can watch along as a chef prepares a meal during a live stream event. If you are adventurous a TAO chef will curate a box of ingredients so you can cook along during the live stream. If that is not enough excitement TAO will integrate a trivia game into the experience. “One family asked for a virtual cooking class to learn how to make a full Chinese meal, with a Q&A from the chef,” says Paul Goldstein who runs the virtual program at TAO. That meal set back the family $5,500.
Since TAO’s nightclubs are closed it is also offering a virtual New Year’s Eve party complete with a cookie decorating demonstration, charcuterie plate design instruction, cocktail making sessions, a comedian and of course a DJ. Digital programs “won’t keep the lights on” indefinitely, says Noah Tepperburg Tao Group co-founder. But “it will keep between five to 10 people at each restaurant employed.”
6. Sell groceries
Groceries are another sales avenue many restaurants are pursing during the pandemic. It makes sense after all they often purchase grocery staples on a frequent basis to make food for customers.
Another benefit of selling groceries is that they are frequently purchased items that can keep customers coming back on a regular basis and while a customer makes an order for groceries they may choose to order takeout as well. Selling groceries is how Walmart grew in prominence. Customers got used to buying their groceries from Walmart and then would shop for other items helping Walmart to grow in the process. It is estimated that due to the disruption caused by the pandemic with less people eating out grocery sales could increase by as much as 10% in 2020. But that growth will likely slow to 2% to 5% next year.