Livening up your restaurant with a, well thought out, remodel can be just the thing to boost your sales. While you always start with design, budget and contractors, a few customer-related questions arise that are crucial to planning.
Will the new look be appealing to regular customers; will they keep coming? Will new customers be attracted by the remodel? Of equal importance, are higher menu prices going to be accepted by the customers once the restaurant has been freshened up?
With a good understanding of your customers and good planning, fine-tuning your restaurant with a remodel can be profitable. You can offset the cost, over time, with some careful adjustment of the menu pricing while not slowing customer traffic.
The extent of your remodel largely determines how much you can raise your prices. Refreshing the interior design or fresh cut a painting outside may not be enough for a significant rise in the pricing structure. On the other hand, fully rebuilding the restaurant does support those changes. Other elements if efficiency, such as adding another cash register or another drive-through lane can boost volume and revenue.
Here are some considerations to ensure the restaurant remodel is profitable in the long run:
Return on investment
Before reopening your restaurant, review your expectations for return on investment and take another look at menu pricing. As remodeling a restaurant is a big investment, you need a good sense of how long the project will take and a good plan for recouping your expenses.
As you assess the return of investment, consider any leases or rent, and how long you may be out of operation. Also, look for any partner funds and resources that might be available for the project.
Decay Rate
Customers are generally less sensitive to prices when they are enjoying the refreshed environment of a newly remodeled restaurant. The decay rate is the listening opportunity to raise menu prices caused by changing customer perception over time. Depending on brand, location and scope of remodel, the decay rate varies, but generally speaking, the opportunity to increase menu prices declines every day after reopening.
Demographic and Transitional Data
Understanding your customer is crucial to adjusting your menu prices without mistakes that may be costly.
Firstly, you need to understand customer demographics and income levels in your market area. As you research this, also note what competition you have and how close they are.
Understanding what your customers are willing to pay for each item, is equally important. Reviewing transitional data will tell you the sensitivity of your menu items to price change, as well as if your revenue is coming more from high-end items or maybe quick and convenient.
Remodeling creates a special opportunity
Fine-tuning your restaurant brings the possibility of attracting customers who may have not considered your restaurant before. Also, it may bring back one-time visitors who weren’t satisfied before but are pleased with your changes.
When visiting a restaurant, the value of the visit is determined by the entire experience, the aesthetics, the technology, and the service, not to mention the food. By increasing the overall value of the visit, you’re encouraging more customers to return and they are willing to pay more.
Remodel when the restaurant is doing well
When your restaurant is doing well is typically the best time for a remodel. Fix, update, and fine-tune things while you have the revenue, don’t wait until you’re having troubles.
A well-done remodel has the potential to positively impact sales, maybe more than anything else, as it brings new customers and retains regulars. Providing you have the right location and carefully plan using the appropriate data, a remodel can bring a significant return of investment.
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