One of the easiest ways to increase your profit margin is by optimizing your operating hours — but it might be trickier than you think.
Setting the opening hours of a retail space or restaurant is crucial to the success of any commercial space. While it may seem like a simple task of being open when there are more customers and closed when there are less, there is actually a lot more nuance to crafting operating hours to increase your profit margin.
Customers are also becoming more demanding than ever before for longer hours. Everything from extended hours during the holiday season to hours that fit their own personal lifestyle can positively or negatively affect your business.
There is no specific criteria to follow when trying to set the hours for your commercial space. However, there are some simple rules of thumb. For example, a restaurant will want to be open during the lunch and dinner rushes while almost all retailers tend to be open between the hours of 10 a.m. and 5 p.m. When deciding on hours, it usually tends to be the few hours before normal opening and closing time or around those rushes.
Factors to Consider when Setting Your Hours
- The competition. Knowing when your competitors are open, you get a good sense of what your operating hours should be. If they all seem to have similar hours it is a sign that your customers are more active around that time. However, you may also want to do a bit of competitive research and visit their venues to get a sense of the volume — especially during opening and closing hours.
- Holidays and special events. While operating hours tend to be the same day in and day out they can often be affected by the season, by holidays, or by special events. During the holiday season, for example, many retailers tend to stay open longer. When setting hours, it pays to also take seasonality and special circumstances into consideration when planning out for the whole year.
- Your customers. A third factor you may want to consider is the customers themselves. Simply put, ask them what operating hours would be most convenient for them! Running a simple poll, micro-survey, or online survey asking which times they would like your business to be open is an effective way to start tailoring your hours. Having said that, some customers may find it convenient to have your store open from 4 a.m. to midnight but they may not actually shop during those extended times. It would probably also not be practical to have such extended hours but you may see some patterns by polling more people. You could also ask which hour of the day is the most convenient rather than asking for a range.
Sometimes there are other factors that can affect when your venue is open or not which will affect your profit margin. If you are located in a shopping centre, you’ve almost certainly agreed to be open for specific hours as part of the lease. Changing your hours could also cause some confusion among customers so some thought should be given to the cost of communicating these new hours to them.
Another issue that may need to be thought about depends on whether you are running multiple locations. Standardized hours for all locations makes it easier for customers to remember when you’re open or closed but means that all your locations may not optimized for their specific neighbourhoods. However, if you use hours that are specific to each of your venues, you may be optimizing your operating times at the expense of customer confusion.