How and Why to Add Private Dining to Your RestaurantFor many restaurants, private dining is the cash cow that keeps the main business afloat.
In the restaurant business, turning a profit isn’t as simple as turning tables. To make enough money, you must continually look for ways to control costs and maximize revenue. One potentially lucrative revenue source you may not have considered: private dining.
In your main restaurant, you never know what or how much guests will order, and this variability affects profitability. “In private dining, though, everything is controlled,” said Stephen Zagor, dean of business and management programs at Institute of Culinary Education. “You know what your cost of product is and exactly how many people you’re serving in advance. So you’re able to build in a level of profitability without the variability that you have in the main restaurant.”
In fact, private dining is often the cash cow that keeps the main restaurant afloat, Zagor noted.
If you’re hungry to roll out a private dining program at your restaurant, here’s how to get started.
Look at your space
First, determine if your space can accommodate a separate dining area. Whether it’s a private dining room, an event space on your rooftop or just part of a room that can be sectioned off, the key is privacy, said Zagor.
“Private dining implies a private area,” he said. “It’s not a group of eight sitting at a table. That’s a party in a restaurant. Private dining works best if you have an area that can be isolated off as a private dining room.”
Hire an events lead
A successful private dining program requires a lot of time and planning — time many restaurant owners don’t have to spare. Zagor suggested hiring someone, or identifying someone on your staff, who will build your program and run it on a day-to-day basis.
A dedicated events lead will not only be responsible for helping you build your program — including pricing menus, creating processes and policies and producing collateral materials — but will also serve as the main point of contact for private parties and help coordinate the details of each event.
Develop a business plan
Your private dining program is essentially “a business within a business,” said Zagor, so it’s critical to create a separate business plan for it.
“For a private dining business, you need to have an understanding of what resources it’s going to take,” he said. Determine how many your dining room will seat, estimate sales numbers and costs, and think about what kind of marketing you’ll need to make your private dining successful. “Do a profit and loss statement to evaluate the overhead and see how you can make money,” he said.
Create standardized options with minimal customization
If you’re customizing every menu for every guest, it’s challenging to make a profit. In private dining, standardization is key, said Zagor. “You can’t reinvent the wheel for every client that comes in.” Instead, come up with a set list of menu options that can be tweaked to create a feeling of customization.
Talk the client through the possibilities, offering two or three options for entrees, appetizers and preparation styles that are all relatively the same cost. “It’s a little bit like ‘the hand is quicker than the eye,’ but it’s standardized to you,” Zagor said.
He likened selling the menu to selling a car. “You can change the tires. You can change a little bit of the upholstery, but you’re still selling the car. So everything is relatively standardized, and that’s the key.”
Charge more for added value
In addition to controlling your costs, private dining provides additional revenue opportunities that aren’t available in an a la carte dining setting.
“There’s a privilege that’s attached to private dining,” said Zagor, “so you have the ability to actually make more money on similar items, and you can charge for other things in a private dining environment that you don’t have in a restaurant. Room fees, for example. If you have a private room or part of a room that you can isolate off, you can charge your room fee for that, which has very little cost on it.”
Another way to make a few extra bucks is by acting as an agent for extra services a private party may want at their event, such as floral arrangements or access to audio-visual equipment.
“Agency fees are fees you get on top of a service that you don’t provide,” he said. For example, suppose you have a private dining event and the client wants flowers. If you have a relationship with a florist in the area, your events manager can offer to take care of those arrangements and add an agency fee of 10 or 15 percent on top of the florist’s price.
Zagor said best practice is to view your private dining as one of the primary elements of your restaurant business, not as an add-on service. “Look at it as a real opportunity. People will come in the door for a private dining event who may not have been in your restaurant before. It’s a chance to showcase the restaurant to a whole new clientele that might ultimately come back.”