If you’re fortunate enough to have a patio or other outdoor seating area, you have massive potential to create a new dimension of your restaurant experience. In many areas, though, harsh temperatures in both winter and summer can severely hinder this asset. Heating and misters...simple solutions, right? Maybe, but not always. 

The trick is assessing whether there will actually be a financial benefit to installing these items. Let’s walk through the strategy behind determining whether to invest in heating/cooling for your patio.

Have your numbers in order.

This assessment requires a mise en place layout of information. You should have the following information available for a true cost-benefit analysis:

• Number of covers, average check and average turnover time indoors

• Number of covers, average check and average turnover time outdoors

• Cost of purchase and installation for heating/cooling system(s) and any additional financing costs, if applicable

• Utilities and projected maintenance costs for desired system(s)

• Cost of staffing your outdoor seating area

Determine whether you have enough traffic to demand the extra seating.

Before assessing whether to invest in your patio, ask yourself whether you have the capacity to accommodate everyone indoors. If you have a line out the door during most of your operating hours or you’re often fully booked, it’s simple to see that a closed patio leads to a lot of lost revenue. If you’re just seeing wait times during limited peak hours, it could get a little
more complicated.

Assess how many covers you believe walk away from your restaurant due to wait time. Multiply that number by your average check, and subtract any additional staffing costs and utilities charges. Factor in depreciation from your system costs/maintenance as you see fit.  If the result is positive, you may want to open up your patio. If not, then the costs outweigh any additional revenue you’d get from adding capacity. 

Set temperature thresholds.

Operational costs change with the temperature. It’s one thing to run a heater to warm up a crisp night, it’s another to make your patio operational when it’s freezing outside. Two simple approaches exist to determine exactly where that line is drawn for you.

First, the consumer insights approach. During busy periods, have your host ask guests whether they would like indoor or outdoor seating. If they say indoor, have the host ask if they would be willing to forgo the wait to sit outdoors if it was heated/cooled. Count the yes’s and apply the framework above. 

Next, the financial approach. Measure how your costs change as the temperature becomes more extreme. Critical junctions will come when you would need to install more equipment, in which case most guests wouldn’t want to brave the weather anyway. 

Assess whether outdoor seating is integral to your atmosphere.

Patio seating can certainly go beyond the numbers. Some restaurants rest their livelihood on their patios, whether for beautiful views, entertaining people-watching or casting a lively environment to attract more guests through their doors. If any of these factors apply to your restaurant, then keeping your patio open
is non-negotiable.

In other cases, such as boardwalks and shopping malls, virtually every restaurant in the area has a patio. You definitely don’t want to be the only one that closes your patio, as this will lead to the perception that your restaurant is ‘dead’ and will minimize foot traffic conversion. Conversely, being the only one with outdoor seating can have a positive effect as long as your guests seated outside look happy. 

If your business is less reliant on the fact that you have outdoor seating, best to stick with
the financials. 

If you’re looking to create a patio for your restaurant, many of the methodologies above can apply in assessing the costs and benefits from both a financial and a brand standpoint. Similarly, determining whether to make an indoor expansion should take into account staffing and other variable costs. Just remember that in most cases, a patio is a guest’s first impression of your restaurant, whether they actually dine outside or not. Any equipment and remedies taken to brave weather conditions should be done tastefully and in a way that matches your atmosphere.