At RM5 a meal, Menu Rahmah restaurant operators still making profit. Why not?
Okay, someone has unlocked the secrets of the Menu Rahmah. It is no longer a secret that, if done well, businesses offering Menu Rahmah @ RM5 a meal will eventually make more profits.
For us Christians, we say God will bless us in return, when we start to bless others. Muslims say, “Apparently in Rahmah there is charity…the secret of GOD that we don’t know. Thank you unity government."
Think about it. Right after the pandemic was over, I visited my favourite Penang curry mee stall at the Lim's Sisters in Sri Sinar, Segambut.
Back in 2018, I had written about Joo Tiang's Penang Curry Mee, Lor Mee and Prawn Mee selling at RM4 a bowl. This was way before Menu Rahmah was suggested.
I was curious if Joo Tiang's stall was able to survive. Most other restaurants that I wrote about previously had closed down.
Lo and behold, Joo Tiang's stall did not only survive, but they were doing well that the son nowadays closes at about 11am once the day's stock is sold out.
To be honest, I had gone there several times only disappointed to find out that they had sold out before I could satisfy my crave for Penang curry mee.
At RM4 a bowl, right here in the city of Kuala Lumpur, it is really something that you won't dare to imagine.
One often equates profits with just high profit margins, that's greed. They have forgotten how China has become prosperous over the past two decades by raising its productivity level which drove down their cost of production in order to meet a bigger market reach.
The Chinese, and the Japanese, have learnt the secrets from Henry Ford and applied these business principles to their home-grown industries. In the past, we used to say that Japanese and Chinese products, although cheap, are not lasting.
However, over time, quality has also improved, and products from these two industrious nations have overtaken the products from other developed nations.
Publishers of books also know this very important secret: increase the number of books printed to drive down the cost of each book. The volume of raw materials purchased will also allow the publishers to negotiate the special prices for their raw materials.
If you print 1000 copies of the same book, it may cost you RM8 a book, but if you print 7000 copies, each book may cost only RM4. If your breakeven point is RM10,000, you need to only sell 1000 copies @ RM10 to recover your cost. The rest of the 6000 copies, you can sell at RM5, and it is still a profit of RM30,000. Does this sound familiar how the American publishers operate?
This is why after publishers have reached their breakeven point, or made enough profits for each title, they are willing to let go their books at Big Bad Wolf Book Sales for only RM1 copy!
The same principle works in restaurants offering buffet meals. They do not work on the cost of individual meal, like some calculative businessmen, but on the overall cost to produce the whole variety of food for the night.
Assuming that their cost to cook 20 dishes of cuisines works out to be RM2000 a night, which includes raw ingredients, utilities, wages, promotions and other overheads, all that they need to make profit is to attract more than 100 pax if they charge RM20 per pax.
They have to include some good stuff that make you think it is worth your RM20. That alone is enough to convince you to organise all your friends to eat there. Once their breakeven point is reached, every Sen they earn is profit for the night.
Multilevel marketing also operates on the same principle. The higher you move up the ladder, your commission is only a small percentage, but people earn thousands of Ringgit based on the total volume generated.
Focus On Fewer Dishes, Increase Volume
In the case of Menu Rahmah, restaurant operators have their fixed overheads in the form of workers' wages are already covered by the other dishes that they sell.
Their only costs are the variable costs such as the raw materials, the utilities used to produce these Menu Rahmah dishes, and if they provide quality food for RM5 a plate, word of mouth will soon spread.
To incentivise their workers, now they can even pay them higher wages so that they work harder.
Indeed, this is how Joo Tiang and her son, Vincent Ng make it with selling only RM4 a bowl of Penang curry mee, Prawn Mee or Lor Mee. I have suggested that they set up their small food trucks at strategic locations where offices are located. All that they need to do is to work harder and produce more bowls of the same cuisine for all the customers.
So, you can now understand why by 11am, I had to be disappointed because all the stuff are all sold out! These days, whenever I invite my friends there, I would have to ask them to go there by 8am, or latest by 9am.
One particular couple travelling quite a distance away from Petaling Jaya, for example, I even asked them to come before 8am just to make sure that we have a table to enjoy our breakfast together.
One bowl is sufficient for breakfast. Because it is RM4 a bowl, some friends even ordered two bowls -- one of each kind -- just to satisfy their belly. It's all a numbers game.
To read my article written in 2018, click on the image of the Penang curry mee above.
For restaurant operators, think of this maxim: Low profit margin, but high productivity, beats the game!
Also read this:
https://come-to-senses.blogspot.com/2023/02/malaysia-needs-integrity-business.html
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