Friday, August 23, 2013

How much should I sell?

One of the big things that most first time and even some experienced restaurateurs don't know how to do is figure out what their targets really mean. It's quite simple to say, we need to do revenues of Rs. 500,000 but what that really translates to in terms of number of people per month, business growth, costs are things that are usually not thought about.

If you take into account an average inflation of 8% in India, your business needs to grow more than 8% a year in order to be considered a growing and healthy business. Taking conservative growth of 12% or 1% a month. Sales of Rs. 500,000 today should grow to Rs. 525,500 in 6 months and Rs. 557,900 in one year.

How does this translate to the number of people you need to come and eat at your restaurant?
If your restaurant's planned average spend per person is Rs. 150 you need to attract 3,333 people each month or 111 people each day. If the APC is Rs. 400 this changes to 1,250 people / month and 42 people each day. Here's a table that takes you over a few different scenarios.

Hopefully this helps you plan just a little better and not be surprised on how many people you need to have coming through your doors!

Month Monthly Revenue 150 400 500 550
1 500000 3333 111 1250 42 1000 33 909 30
6 525505 3503 117 1314 44 1051 35 955 32
12 557834 3719 124 1395 46 1116 37 1014 34