Profitable Restaurants Run on Strategy and Process
How Smart Systems Drive Margin, Culture, and Growth
With margins tighter than ever and operators being pulled in countless directions—labor shortages, supplier price increases, rising rent, and ever-growing tech stacks, how can restaurateurs stay profitable without burning out?
In a recent webinar, Doug Radkey from KRG Hospitality and James Passafaro from opsi shared real-world tips to help restaurants stay profitable—breaking down what it really takes to run a smooth, successful operation in 2025: clear strategy, solid systems, and daily discipline.
Here’s what every operator should know.
Profitability Benchmarks: Know Your Numbers
Doug Radkey emphasized the importance of setting the right financial benchmarks. According to him, top-performing restaurants aim for:
- 15–20% Profit Margins (well above the industry average of 4–7%)
- 6–8% of revenue allocated to rent (many operators are exceeding 12–15%)
- 25–30% labor costs
- 25–30% food cost or COGS
- Prime Costs (Labor + Food) should stay under 60%
If you're exceeding these targets, you're likely under pressure. But with clear systems and tools, it’s possible to realign operations to hit these marks consistently.
From 2% to 12%: Real-World Proof
James Passafaro shared a powerful success story. As a first-time executive chef, he took over a restaurant operating at just 2% profit. Within a year, by tracking only two metrics daily—how much was spent and how much was earned—he pushed that margin up to almost 12%.
How? Daily visibility. James ran the business off three basic spreadsheets and made purchasing and scheduling decisions in real time. He emphasized:
“A plan is only as good as your ability to execute it daily.”
This type of operational control is much easier today with tools like opsi’s restaurant management software, which automates food costing, inventory, and invoice processing—all while saving managers hours every week.
Food Costing: Control, Don’t Just Cut
A key takeaway: it’s not just about cutting food costs—it’s about controlling them.
Operators need to:
- Track ingredient pricing over time
- Avoid bulk orders that tie up cash
- Use menu engineering to evaluate profit contribution—not just food cost %
For example, a dish with a 35% food cost might generate more actual profit dollars than a 28% item if it drives higher sales volume. Using a smart restaurant POS system with food costing analytics helps identify these patterns quickly.
Culture & Retention: The Hidden Profit Driver
High turnover is one of the most underestimated cost drivers in restaurants. Doug and James both stressed that culture is a strategic advantage. Every lost team member means lost morale, lost training investment, and a reset in productivity.
Doug suggested starting with a monthly team audit:
“Ask what’s frustrating your team right now. Fix one thing. Then fix another next month. Watch it compound.”
The result? Better morale, lower turnover, and a stronger culture that supports consistency and profitability.
When your team isn’t buried in busywork, you’re not just saving time—you’re creating space to think bigger. And for many operators, that extra bandwidth sparks the next big question: how do we grow from here? That’s where smart scaling comes in.
Technology That Gives Time Back
Technology should amplify your team, not replace it.
Doug’s philosophy was simple: don’t chase every new gadget or platform. Instead, invest in restaurant management software and restaurant POS systems that save time and drive smarter decisions.
James agreed, adding:
“With opsi, if you get 10–15 hours back per week, what does that unlock? More time to train staff, manage guest experience, or work on opening a second location.”
That’s the power of systems that focus on efficiency and clarity—they give operators space to lead instead of react.
Scaling Smarter: Systems Before Expansion
If you’re planning to grow, start with these three pillars:
- Systems – Documented standard operating procedures (SOPs), benchmarks, and tools that create consistency
- Culture – Retention-first environments that keep teams aligned
- Profitability – At least 12–15% before scaling to the next location
Doug warned:
“You can’t replicate the location if you can’t replicate the experience or results.”
Invest in a flexible POS system and restaurant management software that can scale with you. The right tools today can future-proof tomorrow’s growth.
Strategy Is the New Competitive Advantage
In 2025, the restaurants that win will be those that lead with strategy and a daily focus on execution, not gut feeling. That means:
- Daily tracking of food and labor costs
- Systems that drive communication and accountability
- Tools that give back time—not take it away
As Doug summed it up:
“Guessing is expensive. Strategic thinking is your new competitive advantage.”
Ready to grow smarter?
Explore how GoTab’s restaurant POS system and opsi’s restaurant management software can help you streamline operations, manage costs, and increase profitability—every single day.
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