With rising costs, labor challenges, and the need for exceptional guest experiences, it’s essential for culinary professionals to balance creativity with strategic business decisions.
In this blog, we’ll explore key insights and practical tips from 4 industry experts on how to increase profitability across multi-location businesses, restaurant groups, and smaller operators.
From managing food costs to measuring team growth and raising margins, these strategies will help you achieve long-term success while fostering a culture of innovation and sustainability.
Advice for Multi-Location Businesses…
From Basu Ratnam, Founder of Indian fast-casual restaurant chain INDAY
Create Magic Moments
A key strategy in profit-driven culinary management is allowing employees the freedom to create “magic moments.” These moments—like a manager personally buying flowers for the restaurant or a team member going the extra mile for a guest—aren’t dictated by rigid SOPs but stem from a culture that values initiative and attention to detail.
By empowering staff to make decisions that enhance the guest experience, restaurants cultivate loyalty, increase repeat business, and ultimately drive profitability. Customers remember the little details—whether it’s a beautifully presented space, a warm greeting, or a personalized act of service—and these moments turn into positive word-of-mouth marketing.
How INDAY Strikes the Balance:
- Empowering Employees to Create Memorable Experiences – Staff are encouraged to find small ways to make guests feel special, fostering loyalty and positive word-of-mouth marketing.
- Maintaining the ‘Wow’ Factor – While stores must always look impressive, Ratnam avoids strict mandates. Instead, managers are given guidelines on cleanliness, brightness, and energy, allowing flexibility in execution.
- Blending Structure with Individuality – Clear operational standards ensure consistency, while creative freedom helps employees take ownership of their roles, leading to higher morale and better guest interactions.
“Our stores always have to look, ‘wow.’ We don't always define what that is. There's nothing that says you have to light incense. There has to be flowers on the table. But it has to be clean. It has to be bright. The music has to be energetic. We want people to remember that there is good karma. And so we let our managers figure that out.”
Focus on Strategic Consolidation
Mergers or acquisitions should focus on maximizing efficiencies while maintaining brand integrity and operational continuity. INDAY’s acquisition of Beatnic (formerly By Chloe) is the perfect example of the power of strategic consolidation.
The deal was pitched as a merger opportunity, leveraging economies of scale to reduce overhead costs and strengthen financial positioning.
They were successful by:
- Retaining Talent for Stability – INDAY kept 80% of Beatnic’s employees, including most general managers and corporate staff, ensuring continuity and preserving institutional knowledge.
- Sharing Systems and Operations – Both brands used the same point-of-sale system, backend delivery providers, and software like meez and Restaurant365, making integration smoother.
- Setting Realistic Expectations – Ratnam emphasizes that integration takes time, requiring patience as new locations, systems, and teams adjust.
“I loved, loved, loved the corporate infrastructure that Beatnic had built—the people. We didn’t let go of a single person at the corporate level.”
Understand the Reality of Theoretical Food Costs
One of the biggest surprises for Basu was the difficulty in achieving the theoretical food cost targets he had projected. Despite thorough planning, the gap between ideal food costs and real-world execution will probably be wider than expected.
Food cost inefficiencies often stem from human error, over-portioning, waste, and the learning curve that comes with integrating a new team and operations. Initially, INDAY expected a 200-basis-point spread, but they started at 700 and had to work their way down.
How to prepare :
- Expect inefficiencies at scale – Achieving theoretical food cost targets takes longer than expected due to human error and operational adjustments.
- Build in financial flexibility – Raise additional capital to support integration and efficiency improvements.
- Plan for a gradual ramp-up – Operational efficiencies don’t happen overnight, so set realistic expectations.
- Optimize theoretical costs – Since actual food costs will always fluctuate, focus on lowering theoretical costs as a more controllable path to profitability.
“We set a theoretical food cost in meez. Achieving those has been much, much harder. It’s not because we’re mismanaging the business—it’s just harder to go from five to ten locations and be as precise as you think, even if you see the numbers on paper.”
Advice for Restaurant Groups
From Ellen Yin, Founder and Co-Owner of High Street Hospitality Group
Blend Creativity and Business
Just as a writer may need to work with advertisers to make a publication viable, a chef or restaurateur must work with operational staff to create a dining experience that is profitable, innovative, and sustainable.
Here’s what to do:
- Unified Vision: Prioritize a mission that supports the local economy, champions sustainability, and fosters community. Ensure both front- and back-of-house staff are aligned with these values.
- Support Hospitality: Have flexibility for guests with dietary restrictions, ensure timely service, and be responsive to any concerns.
- Embrace Servant Leadership: Feedback should be welcomed. Maintain a positive attitude, even when feedback is tough, and ensure that everyone in the organization feels heard and valued.
- Adapt New Leadership Styles - Instead of being in survival mode, your leadership style should focus more on collaboration, empowering others, and using technology.
“You can be a creative person and be a business person. You can be a creative person and be a chef. But it all has to make the overall mission of the organization work... We are committed to sustainability, to our team members, and to the community, being a learning organization.”
Measure Team Growth and Happiness
One of the most valuable indicators of a well-run, profitable restaurant is the growth and happiness of its team. A strong, engaged team not only improves service quality but also reduces turnover.
To foster a supportive, team-oriented culture, you must:
- Track Employee Growth: Seeing employees develop over time is a rewarding part of leadership. If former team members return, this reflects a strong foundation of growth and opportunity.
- Foster Team Cohesion: Strong camaraderie and mutual respect lead to a more engaged staff and improved guest experiences.
- Balance Incentives with Work-Life: Competitive pay is as important as a supportive environment with reasonable schedules, benefits, and respect for personal time.
- Know When to Let Go: It's crucial to make tough staffing decisions when necessary. Protecting team morale by letting go of those who aren't a fit helps maintain a cohesive, high-performing workplace.
“At each restaurant, there are groups or cohorts of people who are very strong together, and they stay friends for years and years. It really is about how much respect that they have for their teammates.”
Consider Using Service Charges
Sometimes the answer to profitability lies in reimagining traditional business models, particularly when it comes to pricing structures. One solution could be introducing a service charge of around 15-20%. This can replace traditional tipping, and provide your team with a flat hourly wage, supplemented by credit card tips.
Why service charges work:
- Bridges the gap between customer expectations and the cost of running a restaurant.
- Offers a more sustainable and transparent way to manage rising costs.
- Ensures fair compensation for all staff, including both front- and back-of-house teams.
For restaurants operating in high-cost environments, service charges offer a sustainable way to maintain profitability while providing customers with a clear understanding of what their payment supports.
Educating customers on the true cost of dining out—beyond just the ingredients—can help shift perceptions and make price increases more acceptable. Diners aren't just paying for food; they’re paying for service, ambiance, and the expertise that goes into creating a great restaurant experience.
“The business model we all said needed to be reinvented during COVID—so much of the industry has just fallen back into old habits. But a city like Philadelphia gives us the flexibility to try new things like service charges.”
Advice for Smaller-Operators
From Tracy Malecheck-Ezekiel and Arjav Ezekiel, Co-Founders of Birdie’s
Take a Multifaceted Approach to Raising Margins
As restaurant margins continue to shrink and benefits rise, the pressure on operators to maintain profitability has never been more intense. This is particularly challenging for smaller operators—those managing restaurants with annual revenues between $1M to $4M. For these businesses, increasing margins is no longer a luxury; it’s a necessity.
Larger, hyper-capitalized restaurant groups may have the resources to absorb losses from underperforming locations, but smaller operators don’t have that cushion. For them, every dollar counts. To stay competitive, smaller restaurant operators need to shift this perception.
Here’s how:
- Innovative Menu Design: A well-designed menu encourages repeat visits from regulars who enjoy seeing new offerings and the energy of testing out dishes.
- Managing Food Waste: Be willing to 86 a dish when it’s not right or when an ingredient runs out. Avoid holding onto perishable ingredients, like fish, that won’t be fresh for the next service.
- Exceptional Hospitality: Many guests hesitate to tip before experiencing service, viewing it as a "stick and carrot" system. Rather than pushing back, double down on hospitality and show why your experience is worth it rather than just telling them.
“I try to explain to people sometimes that like if we were a full-service restaurant that same dish would be 48. Like, I don't think people can wrap their heads around that. I think that's like another benefit of counter service— we can move the needle on our margin if we need to by just moving things up or down a dollar, depending on what the month looks like.”
Separate Self-Worth from Reviews
While it’s easy to fixate on a handful of negative Yelp or Google reviews, you should be focusing on the customers who do get it—the ones who return regularly and appreciate the value of the experience.
Not every guest will be your target audience, and letting every random opinion dictate decisions is a distraction. Not all criticism is helpful. If a guest provides constructive feedback—like a dish being overcooked—it’s worth considering. But if the complaint is about something subjective or out of the restaurant’s control, it’s best to move on.
Tips for overcoming skepticism:
- Don’t let a handful of negative reviews define your restaurant’s worth.
- Instead of defending yourself, prove your value through great service.
- Take in constructive criticism, but don’t let every opinion sway your vision.
- If you know what you stand for, you won’t feel the need to please everyone.
“For the first two years, I felt like we had to defend what we were doing. Now, instead of just telling people why they’re wrong, we just show them. We double down on hospitality, and eventually, they get it.”
Be Strategic About Menu Changes
Whether menu changes happen daily, weekly, or seasonally, embracing this constant evolution requires a balance of flexibility and structure to maintain quality and consistency.
A successful approach is to let fresh ingredients inspire the menu, adapting dishes based on what’s available. While the menu evolves, some foundational recipes should remain, providing a structured base that allows for adjustments. Equally important is empowering the team to trust their instincts, ensuring collaboration and consistency through shared tastings and adjustments.
Here’s how to make it work:
- Let ingredients guide the menu – Work with what’s fresh and available, and be open to inspiration.
- Encourage team collaboration – Tasting and refining dishes together creates consistency.
- Have flexible structures – Some base recipes help, but leave room for adjustment.
- Train for intuition – Empower your team to cook from experience and taste, not just from measurements.
“A few weeks ago, one of the cooks pointed out that we had a lot of soft strawberries. They asked, ‘Do you want me to make jam or something?’ And I said, ‘Yeah, make it. Make a jam. Make it delicious.’ Then we tasted it together, adjusted the acid and salt, and ended up serving it with a flourless chocolate cake for this total 90s vibe—crème fraîche, go.”
Advice for Any Restaurateur
Be Transparent About Price Changes
There's an old adage that you can only pick two: fast, cheap, or good. Yet, in today's instant-gratification culture, diners often expect all three. Many have become conditioned to expect low prices without considering the full cost of a meal—sourcing, preparation, labor, ambiance, and even cleanup.
While some pressures have eased post-pandemic, menu prices have remained higher as a necessary correction. For many restaurants, these price hikes aren't about profit but ensuring fair wages, benefits, and long-term viability.
To address pricing concerns and build trust with diners, restaurants must focus on transparency.
- Educate customers on the true cost of a meal, including fair wages, ethically sourced ingredients, and operational expenses.
- Communicate the value of dining out beyond just the food—highlighting service, atmosphere, and convenience.
- Use storytelling to share behind-the-scenes details, such as sourcing practices or the craftsmanship behind each dish.
“You can't suddenly increase prices 30 percent or 50 percent and expect people not to notice. Get the buy-in and the trust in the storytelling and gradually increase prices where you need to get to. People will pay higher prices if they feel like the value is there.”
Conclusion
Profitability in the restaurant industry is not just about cutting costs; it’s about finding the right balance between operational efficiency, team happiness, and guest satisfaction.
Whether you’re managing multiple locations or a single restaurant, applying these proven strategies will help you increase margins, build loyalty, and create an environment where both your business and your team can thrive.
By embracing transparency, fostering creativity, and continuously evolving your practices, you can drive long-term profitability and ensure your restaurant stands out in a crowded marketplace.
