Edit

Can lunch-only service be successful?

business lunch restaurant

Question:

Are there any successful restaurants that are only open for lunch service?

– Frank Marilao, Military Club, Southern California

Answer:

You are in one of the few environments where being open for one meal service is potentially feasible. In general, since restaurants pay rent for 24-hours a day, it is best to maximize your operating hours as long as the costs of staying open are less than the revenue earned.

To really answer this question, we need to distinguish between fixed and variable expenses. Fixed expenses like rent, insurance, salaries and POS contracts are paid regardless of volume or operating hours—the rent bill stays the same whether you are open 15 hours per week or 100. Variable expenses like food and labor increase with volume. That is, if you sell more food you need more ingredients and more staff, so costs (and revenue) increase. For commercial restaurants, since fixed expenses are paid for the entire day, it is smart business to spread those costs out over longer operating hours, provided you have enough business to justify the variable costs associated with staying open.

As a military club, you are in one of the few environments where fewer hours may be feasible. Because you may not be paying rent, insurance or even utilities directly from your operating budget, it may in fact be feasible to open less. Other operations like country clubs may fall into this scenario as well. The best way to know is to treat each daypart as its own venture on a P&L. That is, divide your expenses across the day, and see if the anticipated revenue from additional dayparts will pay off.

More on adding dayparts here.
 

Want to ask Advice Guy a question?

Trending