Eight effective strategies to enhance your restaurant's profit margins through digital solutions and smart cost management.
Want to boost your restaurant's profits? Start by going digital. Restaurants in Malaysia and Singapore face rising costs, labour shortages, and stiff competition. But smart online strategies can help you thrive. Here’s a quick summary of 8 key tactics:
- Set Up an Online Ordering System: Save on third-party commissions, increase order sizes, and reduce errors.
- Manage Delivery Costs: Negotiate lower fees, choose the right delivery model, and optimise pricing.
- Use Dynamic Pricing: Adjust menu prices based on demand. Maximise revenue during peak hours and attract customers during slow periods.
- Create a High-Converting Digital Menu: Use clear descriptions, professional photos, and mobile-friendly designs to increase online orders.
- Add QR Code Ordering: Reduce labour costs and improve efficiency with self-service ordering.
- Improve Online Marketing: Use social media, email campaigns, and customer reviews to attract and retain diners.
- Start a Digital Rewards Programme: Encourage loyalty with points, discounts, and personalised rewards.
- Use Data for Better Decisions: Analyse sales, customer behaviour, and operational costs to optimise strategies.
Key takeaway: Digital tools and strategies can help restaurants in Singapore improve profit margins, even with rising costs and competition. Start with an online ordering system and QR code ordering for quick wins, and build from there.
1. Set Up an Efficient Online Ordering System
In Malaysia and Singapore's competitive F&B market, online orders now account for 25–30% of total orders. So if you want to improve your business performance? Tap into this growing trend by setting up an efficient online ordering system.
Why It Matters
An online ordering system can benefit your business in several ways:
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Keep More of Your Profits
Research shows that 70% of customers prefer ordering direct from restaurants rather than using third-party platforms. By using your own system, you avoid high commissions and maintain full control over pricing. -
Higher Order Values
Uno Pizzeria & Grill reported that digital orders were 10% larger on average compared to dine-in orders after implementing an online ordering system. -
Lower Operational Costs
Automating order processing has several benefits. It reduces manual errors and streamlines kitchen operations, saving time and money.
Key Features to Maximise Results
| Feature | How It Helps Your Business |
|---|---|
| Mobile Optimisation | Captures over 60% of digital transactions by 2025 |
| Multiple Payment Options | Boosts conversion rates with local payment methods |
| Real‑time Menu Management | Allows dynamic pricing and better inventory control |
| POS Integration | Minimises errors and reduces operational costs |
| Order Tracking | Enhances customer experience and lowers support costs |
Incorporating these features can make your system more effective and user-friendly.
Costs to Consider
For restaurants in Malaysia and Singapore, a comprehensive online ordering system costs between MYR 300 (S$90) and MYR 650 (S$200) per month. This price includes essentials like website hosting, payment gateway integration, POS system integration, and order management tools.
Tips for Smarter Implementation
- Add one-click reordering to make repeat purchases easier.
- Integrate a loyalty programme to encourage customer retention.
- Use automated inventory management to keep stock in check.
- Analyse peak ordering times to optimise staffing and promotions.
- Offer tailored promotions based on customer ordering habits.
2. Manage Food Delivery Costs
Managing delivery costs is a key focus for restaurants in Malaysia and Singapore, as delivery orders contribute to 30–40% of total sales. However, third-party platforms charge commissions ranging from 15–30%, leading to an average 19% hike in delivery menu prices compared to dine-in since 2020.
Negotiating Better Terms
To reduce commission costs, consider these strategies:
- Use consistent order volume as leverage: Negotiate for lower commission rates with third-party platforms.
- Push for flexible contracts: Ensure your agreement includes termination rights if critical terms are breached.
Choosing the Right Delivery Model
Pick a delivery system that aligns with your business needs:
- First-Party Delivery: Use your own drivers for full control.
- Hybrid Model: Combine in-house drivers with flat-fee, on-demand services.
- Third-Party Platforms: Fully outsource deliveries for convenience.
"As marketplace orders have grown - reaching 30 or 40 percent of sales for some concepts - restaurants have come to see third-party orders (and therefore third-party fees) as part of the business, not incremental to it." – Nation's Restaurant News
Practical Cost Management Tips
Here are some actionable ways to keep delivery costs in check:
- Know your cost per serving: Calculate it accurately and adjust menu prices accordingly.
- Account for all overheads: Factor these into your delivery pricing [4].
- Use dynamic pricing: Charge more during peak hours.
- Set delivery zone pricing tiers: Adjust rates based on distance.
- Track performance: Regularly monitor delivery efficiency and costs.
3. Adjust Prices Based on Demand
Dynamic pricing can help increase online revenue by aligning prices with demand. Research indicates that 61% of people support this approach, particularly younger diners.
Smart Surge Pricing
During busy hours, consider adding a 10–20% markup to popular menu items. This approach takes advantage of higher demand to maximise revenue.
Dynamic Discounting
For quieter times, offering a 10–20% discount can help attract more customers. For instance, Puesto implemented this strategy and saw a 12% increase in revenue, translating to an additional USD $64,000 annually. Discounting during slower periods can be just as effective as raising prices during peak times.
Time-Based Promotions
Time-specific deals can also help balance customer flow. Here are a few examples:
- Early Bird Specials: Offer reduced prices for early dinner reservations.
- Extended Happy Hours: Provide special pricing during typically quiet times.
- Off-Peak Incentives: Create unique promotions for slower weekdays.
Cali BBQ successfully used dynamic pricing, increasing delivery revenue by USD $1,200 per month by adjusting the price of their pulled-pork sandwiches during peak hours.
"If somebody is willing to come in at a time where we're not busy, why would I not want to incentivize them to come in earlier? It makes perfect sense."
– Shawn Walchef, Cali BBQ owner
Implementation Tips
To make these strategies work effectively, follow these steps:
- Analyse hourly sales data to identify peak and slow periods.
- Define clear pricing tiers for different times of the day.
- Communicate any pricing changes transparently to customers.
- Track revenue and customer behaviour to assess impact.
- Adjust your strategy based on performance data.
4. Create a High-Converting Digital Menu
An engaging digital menu can significantly boost online sales. Research shows that clear food descriptions can influence buying decisions by 45%, while high-quality images can increase conversions by 25%.
Engaging Menu Descriptions
Make your menu items stand out with vivid, clear descriptions. Here's an example:
- Basic: "Pulled chicken burger roasted chicken, coleslaw, bbq sauce, bun"
- Improved: "Succulent Pulled Chicken Burger: Slow-cooked, hand-pulled chicken piled high in a fresh brioche bun, topped with zesty coleslaw and a dollop of Jenny's special BBQ sauce"
High-Quality Food Photography
Since 82% of people are more likely to buy a dish based on how it looks in a photo, investing in professional food photography is a must. Here are some tips:
- Use natural light to highlight the food's colours.
- Maintain consistent branding across all images.
- Showcase high-profit dishes with realistic portions.
- Consider hiring a professional food stylist.
Thoughtful Menu Layout Design
The layout of your digital menu plays a big role in influencing what customers order. Use these strategies:
| Element | How to Implement | Benefit |
|---|---|---|
| Visual Hierarchy | Highlight best-sellers prominently | Draws attention to key items |
| Logical Grouping | Organise similar items together | Simplifies the ordering process |
| Readability | Use sans-serif fonts with good contrast | Improves accessibility for all |
| Dietary Icons | Add clear symbols for dietary preferences | Speeds up decision-making |
A well-structured menu ensures a smooth and enjoyable browsing experience.
Mobile-Friendly Design
With many customers ordering via mobile devices, it's essential to optimise your menu for smaller screens. Focus on:
- Responsive design that adjusts to different screen sizes.
- Readable font sizes for easy navigation.
- Quick-loading images to avoid delays.
- Smooth scrolling between categories.
Keep It Updated
Regularly refresh your menu to reflect seasonal items, updated prices, new dishes, or discontinued offerings. Studies show that 85% of online users are more likely to try new dishes when they see appealing images in the menu.
Simplify Your F&B Business OperationsCreate your own online ordering platform with Maynuu. Manage menus, orders, payments, and deliveries seamlessly while keeping your profit margins. |
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5. Add QR Code Ordering
Adding QR code ordering can help reduce costs and improve service efficiency, ultimately increasing profit margins.
Simplify Operations with Digital Ordering
QR code ordering allows customers to place orders directly from their mobile phones, bypassing traditional methods. Here’s how it helps:
| Benefit | Impact | Results |
|---|---|---|
| Labour Savings | Fewer front-of-house staff | Up to 150% reduction in labour costs |
| Time Savings | Less time spent at POS terminals | 2,800 to 6,000 hours saved annually |
| Fewer Errors | Orders entered by customers | 57% fewer void orders |
| Better Table Coverage | Servers can handle more tables | Improved service efficiency |
While these advantages are clear, executing this system effectively is essential.
Tips for Successful Implementation
Set Up the System
Use QR menu software that works seamlessly with your POS system and kitchen printers. Key features to look for include:
- Secure payment options
- Real-time menu updates
- Order tracking tools
- Detailed analytics
Train Your Staff
Proper training ensures a smooth transition. Staff should know how to:
- Assist customers with QR code ordering
- Solve scanning issues
- Manage special requests
- Oversee kitchen orders effectively
Focus on Customer Experience
Make the ordering process simple and user-friendly by:
- Displaying QR codes prominently
- Providing clear scanning instructions
- Ensuring good lighting around codes
- Keeping QR displays clean and easy to access
Preparing for the Future
As discussed earlier, digital ordering systems are becoming essential in the restaurant industry. With QR code ordering and payments projected to grow by 240% by 2025, adopting this technology now ensures your business remains efficient and competitive.
6. Improve Online Marketing Results
Refining your online marketing efforts can help you reach more customers and increase profits. Targeted strategies can attract new diners and encourage repeat orders.
Use Social Media Effectively
With 80% of customers expecting restaurants to have an online presence, focus on visual platforms that highlight your food:
- Instagram: Post food photos, Reels, and behind-the-scenes kitchen videos.
- TikTok: Share short, engaging videos that showcase your kitchen's flair.
- Facebook: Keep menus updated and promote local events to connect with your community.
Email Marketing to Keep Customers Coming Back
Email marketing offers an impressive 4,400% ROI. Use it to encourage repeat orders by segmenting your audience based on factors like order frequency, spending habits, and favourite dishes. For example, Jumbo Seafood's Lunar New Year campaign combined personalised emails with social media promotions to boost festive bookings.
Strengthen Your Local Search Presence
Nearly 89% of diners check out restaurants on their phones before visiting. Make sure you're easy to find by updating your Google Business Profile, using location-specific keywords, and responding to reviews promptly.
Build Trust Through Customer Reviews
Online reviews play a big role in dining choices, with 72% of customers trusting them as much as personal recommendations. Responding to reviews can increase customer satisfaction by 15%. This also sets the stage for engaging with influential voices in your area.
Collaborate with Local Influencers
Partnering with local food influencers can help you reach a broader audience. For instance, P.S. Cafe successfully engaged followers with a creative Instagram takeover.
7. Start a Digital Rewards Programme
A digital rewards programme can help increase profits by encouraging repeat orders and higher spending. Research shows that boosting customer retention by just 5% can raise profits by 25% to 95%. Here's how to structure, customise, and make the most of your rewards programme.
Create a Simple and Attractive Structure
Keep your rewards system straightforward and appealing. Consider these approaches:
- Points-based: Award points for every dollar spent.
- Visit-based: Offer perks after a set number of visits.
- Spending tiers: Provide benefits at different spending levels.
To kick things off, give new members a welcome discount on their next purchase. This encourages them to participate right away.
Use Mobile Technology
Make your programme mobile-friendly by incorporating features like:
- Digital "stamps" for takeaway orders.
- QR code scanning for in-store visits.
- Push notifications to highlight special offers.
- Easy access for checking and redeeming points.
Customise Rewards for Customers
Studies reveal that 87% of customers are willing to share personal data in exchange for personalised rewards. Use this to your advantage by offering:
- Birthday rewards and perks for special occasions.
- Deals based on their ordering history.
- Exclusive promotions for members.
- Tailored email and SMS communications.
"Restaurant owners should use loyalty programs as a tool to ensure that they are continuing to offer promotions and products that attract, and resonate with, their target customer base and keep them coming back." - Mo Chaar, Chief Commercial Officer, Givex
Measure and Improve Programme Performance
Track these key metrics to ensure your rewards programme is working effectively:
| Metric | What to Monitor |
|---|---|
| Customer Retention | Percentage of repeat customers |
| Average Order Value | Changes in spending per visit |
| Redemption Rate | Frequency of rewards being used |
| Programme Engagement | Active participation by members |
Encourage Direct Orders
A well-structured rewards programme not only retains customers but also motivates them to order directly, helping you bypass high delivery fees. Strengthen these ties by:
- Sending monthly e-newsletters.
- Posting updates on social media.
- Adding promotional codes to takeaway packaging.
- Using push notifications for loyalty members.
8. Use Data to Make Better Decisions
Analysing data is a key step in boosting your restaurant's online profits. With 80% of restaurants now relying on tech solutions for their operations, leveraging data insights can directly impact your bottom line.
Monitor Key Metrics
Focus on tracking these essential data points:
| Metric Category | What to Track |
|---|---|
| Sales Performance | Top-selling dishes, profit margins, peak hours |
| Customer Behaviour | Order frequency, average spending, preferences |
| Marketing Impact | Campaign results, conversion rates, ROI |
| Operational Costs | Labour expenses, delivery times, stock turnover |
Combine Data Sources
Bringing together data from multiple platforms provides a clearer picture of your business. Useful sources include:
- POS system reports
- Online ordering analytics
- Customer feedback
- Loyalty programme data
- Delivery performance metrics
When combined, these data streams help uncover actionable insights.
Fine-Tune Operations with Data
Labour costs often account for 25% to 40% of a restaurant's gross revenue. Use data to:
- Schedule staff around peak hours and adjust stock based on demand trends.
- Optimise delivery routes for faster and more efficient service.
- Highlight and promote menu items with the highest profit margins.
Tailor the Customer Experience
Data can help you personalise interactions with customers:
- Offer targeted promotions based on past orders.
- Recommend menu items tailored to individual preferences.
- Keep track of dietary needs and restrictions.
- Design customised loyalty rewards to increase engagement.
Improve Menu Choices
Your menu is a critical driver of revenue. Use data to:
- Promote dishes that generate the most profit.
- Remove items that consistently underperform.
- Adjust pricing to reflect demand trends.
- Create upselling opportunities by pairing popular items.
Conclusion
These eight strategies can help improve your restaurant's online profit margins in Malaysia and Singapore's competitive F&B market. With typical profit margins ranging from 3% to 6%, every effort counts.
If you want to see results quickly, focus on initiatives that deliver immediate impact:
- Digital Infrastructure Setup: Build a reliable online ordering system and implement QR code ordering. These tools not only streamline operations but also improve customer experience. In 2024, 60% of restaurants invested in digitisation.
- Cost Management: Use portion control and inventory tracking to reduce waste. Effective cost management can help restaurants go beyond the standard 3–6% margins and aim for 10% or more.
"The restaurant industry is notoriously competitive with razor-thin margins... Understanding this dynamic and pursuing strategies to enhance profit margins is crucial to avoid merely surviving and instead help your restaurant thrive."
– Doug Gross, Partner, CPA, CGMA, MBE CPAs
Next Steps
- Take action with these practical steps:
- Evaluate your digital presence and fix gaps in your online ordering system.
- Monitor key performance indicators (KPIs).
- Train your team to use digital tools effectively and enhance service standards.
- Adjust menu pricing based on profitability analysis.
- Introduce a customer loyalty programme.
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We use the term 'restaurant' throughout the article for consistency. However this guide can be generally applied to any type of food shop, including but not limited to: bakeries, bars, bistrots, boulangeries, butcheries, cafés, cantinas, caterers, coffeeshops, delis, diners, eateries, food trucks, grocers, patisseries, pubs, and more.
