Smart Growth for Mid-Market Restaurants: Expanding Without Sacrificing Your Margins

As a mid-market restaurateur, you’re constantly seeking that sweet spot: growth that expands your reach and revenue without eating into your hard-earned margins. The good news is, according to a recent KPMG poll of senior restaurant executives, strategic growth is possible, even with ongoing concerns about inflation and rising costs.

The industry is eyeing growth driven by new products and locations, but challenges like increasing food and labor costs are top of mind, especially for franchisees. So, how can you expand while keeping a close watch on your profitability? Let’s dive into some key areas.

How Mid-Market Restaurants Can Unlock Their Next Stage of Growth

1. Strategic Investments for Sustainable Growth

When it comes to financial investments, new location and restaurant development is a top priority for 50% of executives polled. This highlights a clear path for expansion. However, to ensure this growth doesn’t erode your margins, consider what else you’re investing in. Improving kitchen equipment and technology, and enhancing customer experience/ambiance also rank highly as priority financial investments. These investments can drive efficiency and customer loyalty, directly supporting margin health.

2. Driving Revenue Without Compromising Margins: The Tactics

So, how are successful restaurants achieving revenue growth without impacting margins? The survey reveals some compelling tactics:

• Pricing and Promotions (70%): This remains the most popular tactic. Smart pricing strategies and targeted promotions can attract customers and boost sales without necessarily slashing your overall profitability.
• Taking Cost Out of the Business (48%): This is a crucial area for margin protection. It could involve optimizing your supply chain, reducing waste, or renegotiating vendor contracts.
• Leveraging Technology to Address Labor Shortages (41%): Technology can be a game-changer for efficiency. Examples might include kitchen automation, streamlined ordering or booking systems, or AI-powered inventory management.
• Acquisitions/Divestitures within the Industry (20%): For some, strategic mergers or sales can optimize their portfolio and enhance overall profitability.
• Collaboration with Business Partners (15%): Partnerships can open new revenue streams or provide cost-saving opportunities.

3. Navigating Headwinds: Inflation and Labor remain Key Concerns

The threat of inflationary fears is a significant concern. In fact, 67% of respondents see the strength of the consumer/inflationary fears as a continued headwind to company growth. Additionally, talent, labor supply, and wage pressures are also major concerns.

Rising food and labor costs are the biggest financial challenges for franchisees, specifically. This underscores the importance of the tactics mentioned above, especially removing costs from the business and leveraging technology to address labor issues.

4. Embracing Efficiency through Finance Transformation and AI

Restaurants are actively transforming their businesses, focusing on operational efficiency. Accounting and Financial Planning and analysis are the top back-office areas undergoing transformation.

While AI adoption is still developing for most companies, it presents a significant opportunity. Only 17% of companies are piloting use cases and implementing AI, but 43% are considering it. Finance and accounting departments are eyeing AI for knowledge assistance, documentation assistance, and data analysis.

5. The Digital Imperative: Expanding Capabilities with Tripleseat

Digital enablement is a key area of focus for restaurant executives. Expanding digital capabilities can lead to increased customer conversion and stickiness. Tactics include:

• Expanding digital order options (52%)
• Investing in POS technology (50%)
• Increasing third-party delivery services (39%)
• Expanding loyalty and membership capabilities (67%)
• Integrating new digital interface tools (54%)

This is where Tripleseat shines! Our event management software and direct booking and payment tools can help you streamline operations, manage direct bookings, and process payments efficiently, directly supporting your digital enablement goals.

By strategically investing in new locations, implementing smart pricing and cost-saving measures, embracing digital expansion with tools like Tripleseat, and exploring the efficiencies offered by finance transformation and AI, mid-market restaurateurs can achieve meaningful growth without compromising their vital margins in 2025.

Grow Your Mid-Market Restaurant with Events and Private Dining

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Book a demo and see how Tripleseat can power your private events.