What do we mean when we say “revenue generators”?
In its simplest form, revenue is money brought into a company by its business activities. For anyone running a business, that’s pretty obvious. However, oftentimes when businesses look to improve their profit margins, they are stuck with trying to cut back on expenses. But why not get back to the core of what’s bringing in money? With new technologies sweeping the industry, adding new forms of revenue generation are becoming easier to implement and manage, creating a fixed revenue that will continue to give. Plus, finding new opportunities to add in extra revenue doesn’t necessarily require a hefty investment nor more staff, maybe just some creative thinking around your brand.
Here are some ways F&B brands are creating new revenue streams, because sometimes you can’t keep cutting — you need to add.
Lifestyle to merchandise
Technology has made food and beverage brands more than just a service and even more than just an experience – they’ve become lifestyles. Social media channels are giving brands a personality and voice that guests want to associate with. We’ve noted in our Livit Insights Food For Thought, that the lines between F&B and retail are blurring, creating an opportunity to add merchandise as a revenue generator. Reusables such as coffee cups, water bottles, or takeaway containers have been popular items for Gen Z who tend to be more focused on sustainability and recycling. Some other options can be partnering with local vendors, or setting up a pop-up shop that can bring your digital brand personality to tangible revenue generating merchandise. How does your brand fit into the lifestyle of your guests? Costa Vida, Fresh Mexican Grill hosts the Costa Vida Surf Shop which plays well to its brand image and coastal lifestyle positioning. Bavet Spaghetti Restaurant, another great example, promises to “create a complete ‘Bavet experience’” and uses its brand extension to build a lifestyle and foster community.
Upselling & Add-ons
“Would you like to add chicken to your caesar salad?” One of the simplest ways to generate more revenue to your business is by just ensuring that your staff is regularly upselling and highlighting your existing menu items. Upselling to your guests is a quick win because nothing needs to change other than your staff’s commitment to offering the right pairings to your guests. A study by restaurant management software consultancy Software Advice shows “a majority of customers are being upsold on no more than half their restaurant visits” and yet over 50% of customers are likely or very likely to take the server’s modification. If you already have a digital POS functioning in your restaurant, setting up automated prompts for servers and guests and orders are placed can help make sure the add-ons aren’t an afterthought. Likewise, you can make an upselling strategy embedded in your menu, 68% of adults say they would likely order such multi-course meal bundles if they were offered.
Partnering with External Delivery
If you haven’t jumped on the delivery scooter, you might be missing out on this major revenue generator. Long gone is the excuse that adding a delivery service will require more staff and more complexity to BOH kitchen operations. With the latest technology and experienced delivery services, you can integrate your menu seamlessly to external apps and deliver your offering without adding more pressure to your staff. Sounds great right? Nonetheless, although it may be easy to implement, let’s focus on that key word of partner. Not all delivery services are equal, and as this will be an extension of your brand you need to make sure you’re partnering with the right services. The need to offer at-home options to your guests is a lasting trend and a great additional revenue stream, but you’ll also need to do some pre-planning to ensure a good balance between offline and online orders.
Already have delivery and looking to level up the experience? Consider delivery of at-home meal kits or integrated loyalty programs that add a layer of personalization and another brand touchpoint while off-premise. With 53% of adults saying they would be more likely to purchase a meal kit if it was offered by their favorite restaurant, why not explore this add-on?
Consider adding Dynamic Pricing to your menus. It’s a new sale strategy for restaurants where prices change constantly depending on different variables like the forecasted demand, contribution margin or even the speed at which each dish is served. There are various benefits of dynamic menus including realtime menu changes based on inventory and customer demand. Another added value is its ability to bring in customers during low demand days and increase profits during your restaurant’s high demand days. Curious of how it looks in action? We’ll be following the partnership between Dynameat and Lalala Group who have already tested out the technology in one of their trendiest restaurants La Bientirada de Santa Engracia in Madrid. Soon to be rolled out in more of the restaurant group’s locations, this is a revenue generator worth checking out.
Making use of downtime
If you’re willing to put in a bit more effort, opening up your restaurant during off times can bring in additional revenue by monetizing the “remote working” wave that has swept the workforce. Many digital nomads are looking for reliable locations to park themselves for the day with access to fast running internet, power outlets, and some light snacks. With a little prep-work, your space can turn into a coworking haven, where service is minimal and the cover charge is by seat or by hour. Services like DropDesk connect spaces with these roaming customers. Although this will require some number crunching to know if it makes sense to use your space, locations in busy areas are especially situated for success of this off-hours revenue generator.
If you hadn’t noticed, there’s a recurring theme to each of these add-ons – digital technology. Going digital is generating more and more opportunities for F&B brands to gain extra percentages on profit margins. The key is to make sure that whatever the choice, it makes sense for your brand and is integrated with your overall strategy. Check out our services page on how Livit navigates this for our clients and how we can do the same for you.
2/3 2022 State of the Industry Report by National Restaurant Association