Choosing Restaurant Business Hours

Choosing Restaurant Business Hours

When opening a restaurant or taking over management one of the questions you have to answer is what your hours will be.

Like most of the decisions you make about service, your hours should conform to the lifestyle and needs of your target guests.

Hours of business should also be profitable. Labor is expensive and it doesn’t do any good to have people standing around burning up cash. This guide to choosing restaurant business hours will provide ways you can look at your business to determine the best hours of operation.

  • Market Research
  • Service and Concept
  • Profitability / ROI

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Use Market Research to Determine Hours

Perform some basic market research to determine what your restaurant hours of operation will be. Market research helps you anticipate demand ahead of time.

Stakeout — Part of your location research before signing a lease is to do an old-fashioned stakeout. Watch the street all day and use a tally counter to help you track how many people pass by.

Perform a stakeout on different days to get a sense of the flow. Set restaurant hours of operation to match the flow of foot traffic in the area.

Get Customer feedback — If the restaurant is already open, you should always be talking to your guests. Ask them if the hours you’re open are convenient.

Maybe people are always tugging on the front door an hour or two before service? Do your guests say “I wish you guys were open past nine so I could get a late dinner” or “It would be great if you served lunch too”?

Set your hours to what is most convenient for your guests to enjoy more regular business.

Seasonality — Don’t be afraid to adjust your hours through the year. If business consistently drops off in winter, the extra utilities and labor cost of staying open may not be worth it.

Likewise, if people flock to the area during the summer, take advantage of it with extended hours. See if other restaurants are adjusting hours through the year and take a cue.

Additional Research — Don’t forget to look online. Read customer comments for your restaurant and others in the area. Use their feedback as an indication of what hours work best.

Do you see anyone complaining about not enough quality places open during certain hours?

Read More: Choosing a Restaurant Business Structure

Restaurant Concept Determines Hours

Your restaurant concept is based on the type of food you serve and your target customers. This will lead you to certain hours of operation.

Type of service — Is it counter service, drive through or a sit down restaurant? The type of service determines how many guests you can serve during operating hours. You need to be open long enough to make money.

Menu — What type of food is on your menu? When do people eat this type of food? Adding lunch items to your cafe menu would warrant adding brunch / lunch hours. But not a lot of people are going to eat lasagna for breakfast.

Location — When are people in the area? What is the flow of foot traffic? For example, if there is an office nearby it would be great to capture them for quick breakfasts, fast lunches and takeaway dinners.

Target Customer — Really, that’s what it’s all about. Serving the needs of your target customer largely determines everything about your restaurant concept, especially the hours of operation.

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Let the Numbers Determine Hours

Establish Your Operational Costs

If you’re considering expanded hours you need to determine what your costs are so you can project profitability.

  • Cash Flow - The saying goes, “it takes money to make money”. And it’s true, so know your cash availability. Opening for longer hours and serving more guests means you need more cash for food and labor to make it work.
  • Establish Your Fixed Costs - Fixed costs are not dependent on sales. Whether you sell one slice of pie or 25, your fixed costs will be the same.

    Fixed costs are those that remain stable from day to day, month to month. To figure out what your fixed costs per day are, add all your monthly fixed costs and divide by the number of days in the month.

    Since you have to pay this amount even if you’re closed all day, it’s an important number to know. Fixed cost per day doesn’t change based on your hours or sales.

    Examples of fixed costs:

    • Rent
    • Utilities
    • Monthly payments for services and loans
  • Calculate Your Variable Costs - Variable costs on the other hand are dependent on how much business the restaurant is doing. In other words, the more you sell, the higher these costs are. Add up all the variable costs and divide them by the number of days in the month. Divide this number by your hours of operation. This gives you an estimate of how much you can expect to spend for any additional hours.

    • Example of Variable Costs:

      • Cost of food
      • Labor
      • Gas to run the stoves
      • Electricity to keep the lights on
      • Bills that go up or down depending on how much you use
  • ROI / Break Even Point - Add together your fixed costs and your variable costs to determine what your daily operational costs are. It’s important to understand the tipping point between when the restaurant is paying for costs and begins to turn a profit.

    • Break Even — When sales cover your daily operational costs for the restaurant. You haven’t made a profit, but you’re not losing money either.
    • ROI — After you have covered operational costs, you earn a return on your investment. This is the restaurant’s profit.
    • Sales Projections — To estimate daily profits you have to be able to project sales. You’ll have to try your new hours and review daily sales reports to find a pattern. Find the sales-by-hour report in your POS.
  • Using ROI To Set Hours - When you can project daily ROI you can determine if being open for additional hours is worth it. How much additional profit will you make after paying operating costs?

Read More: Choosing a Restaurant Business Structure

Conclusion

When it comes to choosing your restaurant hours, you want to make an informed decision. Establishing your hours is an important part of your restaurant business plan.

To determine your hours, perform market research to get an idea of the demand at different hours of the day. Understand your target guests and how your food is perceived in the market. Is your cuisine highly associated with a certain meal time?

To determine if your restaurant’s hours are profitable perform an analysis of your daily operational costs. Will staying open additional hours increase your daily profits? Will closing early hurt your bottom line? Use your POS hourly sales report to help you decide.

This free guide to choosing restaurant business hours is part of the free resource library provided by Rezku. Rezku is a leading hospitality management systems developer. Founded in 2012 by veteran restaurant owner Paul Katsch with the goal of providing the most reliable, powerful and affordable technology to restaurant entrepreneurs like you. Learn more about Rezku on our homepage. To schedule a free one-to-one consultation with one of our restaurant management experts contact us today.

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