Many independent restaurants are opening earlier and staying open later in hopes of driving additional business. Some experts say this is an excellent way to boost revenue without increasing fixed costs, especially in college towns where late night diners and drinkers can bring in a major boost to your business.. On the other hand, others claim that earlier and later hours simply increase variable costs like utilities for the additional hours and additional pay for employees who work those extra hours. Also, if your restaurant is open on a Sunday or a Monday, traditionally you don’t see that much early or late business anyway. So who is right? How do you know what is best for your business?
Let’s look at some factors that may have a strong influence on your traffic during peak hours to help you decide if extending hours is right for your business.
Demographic Appeal: Who Are Your Most Frequent Customers?
Do you typically have a midday rush with light evenings and no late night? Or are your slow most of the day and then frantically busy from dinnertime til closing as crowds ebb and flow through your doors? Your traffic pattern will largely depend on your demographic, so you need to get a solid idea of what kind of customer is coming in during peak business hours in order to determine whether opening earlier or later is a good idea. If you tend to see boosts in traffic from noon until dinner or later, you are more than likely catering to a younger demographic of young professional and college-age customers.
Many of these diners skip breakfast and eat lunch or dinner out, and of course often extend dinner longer to include drinks with friends. This is the crowd that weekdays and weekends routinely stays our until 3 AM sometimes as their class or work schedule allows, so staying open later is definitely your best option if you want to maximize your business with that crowd. However, if your customers tend to be older, stop in for breakfast regularly and never miss a Sunday brunch, you are more than likely getting most of your business from the older professional and retiree crowd, and earlier mornings are definitely in order. Once you’ve established where most of your revenue comes from, you can adjust hours accordingly.
Profitability: Is The Extra Business Worth The Variable Cost?
Owners will need to sit down and look over their books and bills to make this assessment. Staying open later may drive up traffic and sales, but it has to bring in cash after the bills and payroll are done, or else this strategy is costing you additional money instead of earning. If it balances out in your favor to open earlier or later because traffic is up during that time, then you absolutely need to take advantage of those opportunities, but keep in mind that major franchises and fast food chains offer extended hours because they can absorb the hit on the back end. Make sure you don’t have any hits to absorb by making certain that you determine what your variable costs are going to be after the change before you actually swap out the hours on your sign.
Tracking: Do You Have Systems In Place To Track Your Business Progress?
Before making major changes to your operation like extended hours, you need to make sure you have a system in place to verify that you are seeing an increase or decrease in business. Most point-of-sale systems have revenue tracking, but make sure you are doing daily reports and comparing them to track trends. There is no way to verify if your change is having the desired effect without cutting into profits unless you have a way to empirically verify that data on paper.
Ultimately, extending your hours is a controlled risk: you may see a drastic uptick in business from your primary demographic customer base, or you may see a decline in profits due to increased variable expenses. The important thing to remember is to carefully keep track of trends, both increases and decreases, on a daily and weekly basis. If extended hours end up being more hurtful than helpful to your business, then you need to make a course correction as soon as possible in order to minimize your losses. Be sure to give your customers time to adjust to the extended hours as well before making a decision about fishing or cutting bait on extended hours. Word gets around, but sometimes it can take a little while for your regulars to come around. Also, if providing service during different hours ends up hurting your business, then by all means call it quits, even if you feel that being open later or earlier is helping you boost sales.
This operational decision should always be based on your numbers instead of gambling on instinct and feelings, and you will make the right call so long as you focus on that guiding principle. In the independent restaurant business, facts trump feelings every time.
Can Extending Your Hours Increase Business? was last modified: December 14th, 2016 by Rafi Cohen
Rafi Cohen, a graduate of Baruch College & Brooklyn native is the Co-Founder @ Orders2me, an online ordering platform that gives restaurant owners all the features they need to grow their business in the digital age.
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