Converting Storage Area into Retail Space: A Profitable Move for Restaurants
Converting Storage into Retail Space, as the restaurant industry becomes increasingly competitive, restaurant owners must find innovative ways to maximise profits and reduce overhead costs. According to Nisbets – see link https://www.nisbets.co.uk/how-much-space-need-open-restaurant the rule of thumb that 60% of a restaurant is for covers and 40% for kitchen and storage. What about aiming for 80/20?.
One such solution is to convert the storage area into retail space, allowing for more frequent deliveries from a staging warehouse thus reducing restaurant storage requirements such as walk-in fridge / freezer / dry store. In this article, we explore the benefits of this move and why it makes financial sense for restaurants.
More Frequent Deliveries = Lower Storage area
When restaurants rely on traditional supply chain models, they are often forced to order large quantities of goods to ensure they have enough inventory to last them until the next delivery. Furthermore Minimum order quantities (MOQ) set by suppliers can lead to stock loss due to lack of demand. This can lead to a significant amount of excess inventory that may go to waste or become obsolete, resulting in increased storage costs and a loss of profits.
By converting the storage area into retail space to increase covers, restaurants can opt for more frequent deliveries, reducing the need for excess storage. This allows restaurant owners to better manage their inventory levels and reduce their on site storage, resulting in increased profits.
Converting Storage Area into Retail Space will Increase Revenue
In addition to reducing storage needs, converting the storage area into retail space also presents an opportunity for restaurants to generate additional revenue through retail sales. By selling other related products, restaurants can tap into a new revenue stream.
Utilising and increasing portfolio diversity in your restaurant with expensive high street rents, utilities and rates increasing the division of the overheads is important to not only profit but survival..
This move also allows restaurants to diversify their income streams, reducing their dependence on traditional revenue sources such as dine-in customers or delivery orders. Moreover, it provides an opportunity to attract a new set of customers who may be interested in purchasing retail products but may not have considered the restaurant for their dining needs. Turn the dead storage area from a cost base to a profit base is a key strategy to ensure sucess
Converting Storage Area into Retail Space Improves Operational Efficiency
Another benefit of converting the storage area into retail space is improved operational efficiency. With more frequent deliveries, restaurants can better manage their inventory levels and reduce the likelihood of stockouts. This ensures that customers always have access to the items they want, leading to improved customer satisfaction.
Additionally, the shift towards more frequent deliveries also reduces the amount of manual labour required for restocking and inventory management. By automating these processes, restaurants can improve their operational efficiency. An outcome is to reduce labour costs, and free up time for their staff to focus on profitable tasks. The increased retail space will only attract a marginal cost and profit from the ‘extra’ space would be high.
Converting Storage Area into Retail Space Improves Cash Flow
Finally, converting the storage area into retail space can also improve cash flow for restaurants. With reduced storage costs, increased revenue from retail sales increases portfolio diversity. Furthermore improved operational efficiency, restaurants can better manage their cash flow and reinvest profits back into the business.
This can be particularly beneficial for restaurants that are looking to expand or upgrade their facilities. It provides them with the financial resources to do so. Moreover, improved cash flow can also help restaurants weather unexpected expenses or economic downturns, ensuring their long-term viability.
Converting the storage into retail space can be a profitable move for restaurants. It allows for more frequent deliveries, reduced storage costs, increased revenue at marginal cost from retail sales. Furthermore, improved operational efficiency, and improved cash flow. While this move may require some initial investment, the long-term benefits make it a worthwhile consideration for restaurant owners. If you are looking to boost profits and remain competitive in an increasingly challenging industry. The important cog in the operation is a reliable and professional temperature controlled logistics provider.
Reduced on site intake costs for raw materials into a restaurant by having one bulk delivery. Reducing several or many deliveries per day