How to Choose a Restaurant Design to Maximize Profitability
Choosing a restaurant design has severe implications on restaurant profitability. Here’s what matters most when selecting between restaurant models.
Types of Restaurants
There are several different types of restaurants. From a food truck to formal dining, they all come with perks, but which ones are most profitable? Let’s start with bars. You focus on alcohol sales, which does well profit-wise — it’s estimated a bar can earn about $300,000 a year. You can add a bar to almost any restaurant model.
Obviously, one of the most popular types of restaurants is fast food. These restaurants are convenient, easy, and cheaper for consumers. For owners, cost-effective factors include paying for a limited set of ingredients, advance food prep, and lower labor costs.
Then there are casual and fine dining. These restaurant types hit consumers with higher prices, allowing owners to make bigger profits. In addition, casual and fine dining restaurants are more of a destination, so people tend to order more drinks and desserts, which helps drive profits up.
Lastly, in between fast food and casual dining is fast casual. These restaurants tend to have healthier and higher-quality menu items. The menu price point is higher than fast food, but the food is still served up within 5-15 minutes, according to Fast Casual magazine. As a result, fast casual is one of the fastest-growing sectors in the restaurant industry. QSR magazine reports that fast casual was valued at $125.6 billion in 2019 and expects the value to reach $209.1 billion by 2026, with a compound annual growth rate (CAGR) of 10.6% from 2021 to 2027.
Current Dining Trends
New research shows diners are looking for options. A study from Morning Consult done in June found that 66% of people dine at a restaurant at least once a month. Meanwhile, 73% of people order takeout at least once a month. Offering both takeout and dine-in means you can cater to both crowds.
At Teriyaki Madness, we know the times are changing, and we are ready to evolve. If that means adding drive-thrus to our restaurant, then so be it. We adapted when COVID-19 hit, amping up our technology through our app and delivery services. We constantly on the lookout for ways to meet our customers’ needs.
Different Restaurant Designs
You’ve already have experience with fast casuals from your portfolio of brands, so what type of restaurant design do you want to choose? Do you want to serve everyone inside your four walls? Sit-downs can be pricier restaurant models because they take more real estate. But, after the pandemic, more people are looking for that experience in a restaurant.
How about carry-out? Customers are looking for the convenience of ordering and paying on an app. Carry-out allows this without adding extra staff.
But don’t pigeonhole yourself; include a drive-thru! Not all drive-thru franchises are fast food. Restaurants with drive-thrus do about 70% of business at the window. Having a drive-thru allows you to catch the crowd of passersbys looking for a quick bite to eat AND the group looking to come in and enjoy their lunch or dinner. It is becoming more critical for drive-thrus to offer at least one lane for mobile pickup orders, allowing you to cater to those looking to order and pay on the restaurant’s app. Research finds that drive-thru and mobile orders can generate 10% to 15% higher sales volumes.
Consider Franchising with TMAD
Teriyaki Madness is blazing its way through the fast casual restaurant industry. We’ve grown so much since 2020 that Restaurant Business named us the fastest-growing big restaurant chain in the U.S. Our system-wide sales spiked 50% year-over-year from 2020 to 2021. In 2020, we had a handful of locations that featured drive-thru or pickup windows that weren’t in use. So, we converted those into drive-thru franchises. Although it took some time to teach customers about the new way of picking up our awesome Seattle-style teriyaki bowls, these models began capturing about 20% to 25% of business through the drive-thrus.
With TMAD, you don’t have to fret over choosing a restaurant model. Instead, technology drives us through our takeout, online ordering, curbside pickup, and integrated third-party delivery. With only 20% of orders consumed in shops, franchisees can keep their build-out costs lower and locations smaller. See your earnings potential with TMAD by downloading our franchise report.