Sales vs Profitable Sales

Posted by fshsfhsfh on Sunday, March 20, 2011

The reason why the food business looks very attractive to most people is the illusion of profitability and success when you visit a restaurant as a customer. Clearly a lot of the restaurants are very profitable and successful.

I believe that the difference between successful restaurants and the others is their ability to generate profitable sales rather than just sales. Whenever most people start a restaurant the focus is so much on getting customers and generating sales that they do not price their product at a level that is required for the business to sustain itself and generate profits. The trouble is that after the inital round of sales, when you change your price, the customers disappear. In this business the price of the product is as important as the product itself. This is especially critical if your business is a low cost/budget offering - as the market segment is exceptionally price sensitive there. With a high priced concept restaurant, you can still get away with increasing prices, if the concept is received well by customers.

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