Tag Archives: consultant

There’s no better time than now to remember the old adage that the customer is always right

Great article by Roy Bergold via QSRMagazine.com

There’s no better time than now to remember the old adage that the customer is always right.

Show Winner Blames Chipotle for America’s Next Great Failure

Show Winner Blames Chipotle for America’s Next Great Failure.

It was supposed to be America’s Next Great Restaurant, but as soon as NBC’s hit spring show went off the air, winner Jamawn Woods allegedly found himself with an inexperienced team and no backing, forcing him to close his three locations in just two months.

Now he wants someone with deep pockets to pay—Chipotle.

Read more: http://www.portfolio.com/views/blogs/executive-style/2011/08/04/jamawn-woods-of-americas-next-great-restaurant-wants-chipotle-to-pay-for-failure#ixzz1UGRLkvj2

“Next Great Restaurant” New York location closed after 1 month

This story just goes to show that great food and a great concept just aren’t enough in the restaurant business. Even the best idea can fail without proper management and marketing. Check out the story here….

Do’s and don’ts for startup restaurants – vol. 2

Do:
Concentrate your marketing efforts and dollars on people who already know you.

Don’t:
Try to be all things to all people. Find your niche.

Do:
Incorporate a few “signature” items into your menu. Having items that your competitors don’t have gives your customers a reason to come to you instead of them.

Don’t:
Depend solely on word of mouth marketing. Word of mouth marketing only works AFTER a lot of people know who you are.

Do:
Update your prices at least 3 times per year. Small, incremental price increases are likely to go unseen by your customers. Wait too long, and you’ll have to significantly increase all your prices at once, which WILL be noticed. Those frequent small increases are better for cash flow than occasional big increases.

Do’s and don’ts for startup restaurants – vol. 1

Do:
Know your target market. Your target market is not the people you WANT to buy your food, but rather the ones MOST LIKELY to buy your food. A big red flag in any marketing plan is an assumption that your concept appeals to everyone.Don’t:
Have a large menu. Large menus confuse your concept, increase ticket times, decrease table turns, increase waste, make server training harder, and overall just make you lose money. You can’t be all things to all people. If you try, you’ll be very little to very few.Do:
Have an exit strategy. Knowing how you’re getting out of this venture if things don’t go right is more important than knowing how to get into it. What happens with your lease if your concept fails? Do you have provisions that protect you in case of road construction, building construction, or other cicumstances beyond your control?

Don’t:
Think if you “build it they will come”. Every new restaurateur thinks their food and product is so interesting and unique that people will flock to their restaurant just because they opened it.

Do:
Have a marketing plan. Word of mouth marketing only works if a lot of people already know about your business. You can’t depend on word of mouth for a startup. Marketing a startup takes money and a plan on how best to utilize that money to get people in your door, so you can build relationships and earn their referrals to their friends.

Don’t:
Sign a contract without having it reviewed by legal counsel, whether it’s for a lease, a partnership, or a vendor.

Do:
Create a unique selling point. Form an emotional bond with your customers by promising to make them FEEL something, then delivering on that promise. The memory of how you made someone feel with your restaurant will last long after they forget who served them and what they ate. “Good/great food and service” are NOT unique selling points. Every restaurant claims to have these. The emotion that you promise and deliver to your customers IS a unique selling point. Other restaurants will not have this.

Is it a good idea to shrink our Italian restaurant’s menu by 15-30%?

We currently have 60 entrees and 24 soup/salad/apps. We are known for our pizza, so we have a full pizza section which includes 6 sizes, 2 types of dough, 33 toppings, calzones, strombolis, 6 specialty pizzas, 7 sandwiches, beer, wine, and standard beverages.Which is better, 50 items or 100?

If you ask me, you need to eliminate 2/3rds of your menu. Big menus mean big waste, big inventory, big kitchen staff, big cost control issues, big ticket times and big confusion for your customers.

One thing to keep in mind with a restaurant. You are only ever going to be as profitable as your peak dining periods. Meaning….  when you have a large menu, you can not serve as many customers in any given period of time. With a large menu, people take longer to order. Big menus clutter POS’s, making the average time to input a ticket longer. They mean more prep for the kitchen, resulting in more kitchen employees in earlier to prep, and more employees on the line to produce too many different types of food. Even with more employees on the line, it takes longer to produce food when you have less multiple orders of the same items being made at the same time. All this extra time means you can’t serve as many people during your peak periods, which is where 80-90% of your revenue, and 100% of your profit is made. If you can increase your customer counts during peak periods by 10%, then you can increase your profit by more than 10%.

From a customer viewpoint, more choices doesn’t mean you’ll get more regulars because you have so much to choose from that people will keep coming back to try everything. That is a huge misnomer among owners and managers, that perpetuates the use of large, inefficient menus. More choices on a menu for customers means more confusion about who you are, what your specialities are, and why they should like you better than the Italian restaurant down the road.

Simply put, more choices isn’t better for business, it’s worse.

As far as what’s better, 50 items or 100? Neither. They’re both way too many. If you want to be known for having great food, you need to have a limited number of items, that stand out to people each on their own merit. If you have 4 or 5 great menu items that stand out from your others, people may remember them if there are only 10 or 15 surrounding them. If you bury them under 60 other items, people are less likely to remember what it was they had that was so great, and they’ll be less equipped to sell their friends on how great your food is. Confusing your customers isn’t good for business.

Stripping down a menu isn’t hard to do. The hardest part is convincing yourself it’s a good idea when you believe that more=better. Simply take your sales mix report, and eliminate most the items on the bottom half of your report that aren’t selling as much. Within the top half, keep all your top sellers, then make a list of what kitchen station those items are prepared in, saute, grill, fry, cold, etc. Use your top sellers, and a selection of the rest of the items you haven’t already eliminated to create a menu that balances your menu between each of your production stations. When you finish, I would suggest having NO MORE than 20 main course dishes, including sandwiches (10-15 would be better, I would eliminate the sandwiches altogether), 4-6 starters and 2-3 salads. If you are known for your pizza, then pizza should maybe make up 2/3rds of your main course selections. 6 sizes of pizzza is ridiculous though. Any more than 3 is complicating things unnecessarily. You could even think about going to only 1 individual adult size, and 1 individual kid size. This, and eliminating the sandwiches on your menu would greatly increase your average gross profit per item sold.

Stop worrying about trying to be everything to all your customers. While you should still accomodate special requests if possible, you should make sure you are charging a special price for that accomodation, and you also shouldn’t be encouraging them. Your servers and your kitchen staff don’t like it, regardless of what they tell you. It makes their job harder. If you cut your menu down, you are more likely to gain new customers, than to lose old ones. Take this statement to heart, THERE IS NO CUSTOMER OF YOURS THAT ORDERS ALL 60-80 MENU ITEMS. They WILL NOT be dissapointed enough about losing a few options to quit dining with you, especially if they are regulars, and especially if you train your staff to explain that your reduction in choices helps you give them better food, better service, and serve more people.

Discourage the ordering of those old menu items, clean up your POS, simplify your training, and make your operation capable of serving more people during your peak times. Your employees and your pocketbook will thank you.

Does this franchise restaurant have too high of food costs?

Is the cost of food and supplies less when you own a franchise because of their buying power, or the same, or even more because of kick-backs from suppliers?

The franchise I am looking at shows cost of goods to be from 34% – 38%.
This sounds a little high to me. Is this what the norm is in this industry?

It all depends on the menu and prices. If you’re evaluating a potential franchise purchase, the food cost percentage is the last thing you should be worried about. Percentages don’t equal profit.

You should be concentrating more on the average profit and investment, how large the investment is, how fast that profit will earn back your investment, and whether that profit makes the investment worth your time.

Franchises do normally have increased buying power. Whether that results in a lower food cost percentage depends on the pricing, not the purchasing.

There is no “norm” for the industry. Some operations make a profit with 45% food costs, some need to be under 20%. Achieving either one doesn’t mean either will even make a profit. The profit is made with the money that is left over AFTER you pay for the food. While operating efficiently, and not wasting product is important to profit, the importance of running a particular food cost percentage is grossly overstated in the restaurant business.

Can I use coupons to build my business? It works for restaurants like Papa John’s.

In most cases, coupons are a path to disaster. Coupons undervalue your product, and getting customers to come in with coupons doesn’t give them a good idea of what type of value you really offer. You end up with customers that think your restaurant is a good value, “with a coupon”. Then, they wait til the next coupon to come out before they come back to your restaurant.

As far as chains that use coupons, they know something the average independent operator doesn’t. They have a sales history showing them how much of their sales are given away in the form of coupons. They track their discounts, and they price their coupon marketing strategy into their menu. If a pizza costs them $3.00 to make, and they need to make $7 gross profit for every pizza they sell, they know they have to make the regular price of that pizza $12 or $13 so they can send you a coupon and make you think you’re getting a good deal paying only $10.

How many people really pay $18.00 for a large pizza at Papa John’s? None. People wait until they have coupons. Sure Papa John’s makes money, but they know they’re not earning repeat, full price, customers by sending out coupons. They know how much money couponing is costing them, and they adjust their prices accordingly. They then use coupons as a “trick” to build value into their product.

Can coupons be used responsibly and still allow for a profit? Sure, if that is part of your marketing and pricing strategy from the get-go. Outside of that, coupons should only be used to promote items that earn you MORE gross profit than you need to make money AFTER the discount is applied. Even then, I suggest never offering a flat percentage discount, and only using coupons to promote package values, or to give freebies that are “extras” that won’t detract from the gross profit you’ll make by selling the rest of the meal at full price.

Advice to an interim restaurant GM

Here is a reply I once posted to an assistant manager’s inquiry from a foodservice operation. It deals with a common situation in the food service industry. One that I have not been asked for advice on before, but one that I do have a strong opinion about, especially considering the initial response of other advisors. I think it was an important piece of advice.

“I have quick question…For the past 3 weeks have been the acting GM and have not been compensated for it. I am a team player, but was told that it will be another 12 weeks before they can get another GM trained and ready and that I have to continue in the same role until they find one. Is this right?”

Initial responses directed the person to quit and look for a job that paid what the person thought they were worth. I have a much different take on this situation and thought I would share it. I tend to be pretty straight forward with my opinions and apologize if it doesn’t sound sugar coated.

(Tom),

3 weeks filling in at a GM position doesn’t qualify you to be a GM. Every employee honestly believes they can outperform their boss, whether it’s the restaurant business or any other. That’s human nature. The truth of the matter is that most employees understand no more of their bosses job than what they know how to do themselves. This creates the picture that their boss is not working as hard as them because their boss is not accomplishing the volume of the same activities that the employee does. Thus creating the appearance to the employee that they can do their bosses job better.

An interim position as a GM does not require you to perform all of the duties required of a GM. As GM, what steps have you taken toward the restaurants long term planning goals? What are you doing as GM to increase the revenue of your store? Are you planning the stores marketing strategy? As GM in the last three weeks, what have you done to broaden your restaurants role in the community? Have you been attending Chamber meetings and networking with other area business people to help develop a plan to further your business community’s role in your local area government? What are you doing as interim GM to safeguard your owners against liabilities such as worker’s comp, unemployment insurance costs, lawsuits. Are you performing the restaurants safety plan audits to ensure compliance and reporting the results to the owners? Are you maintaining accurate day to day employee records and answering Department of Labor inquiries as to the status of terminated employees to reduce unnecessary payment of unemployment benefits? Have you started on next year’s financial budget? It’s September now, time to start planning. Do you know what percentages your restaurant has for goals on labor, COG’s? Do you know what COG’s are? Can you read a P&L, really? Can you look at last year’s P&L and know which expenses were out of line and where you can save? Do you know what is acceptable to your owners to plan for as an acceptable increase in sales? Do you know what market prices are acceptable for every item you buy in the restaurant? Do you know if you’re getting ripped off or getting a good deal? What do you do if you are getting ripped off? Are you capable of negotiating a contract with a new purveyor? Do you know how prices for your food items or other expenses are calculated with the companies you do business with? Have you familiarized yourself with pricing structures and payment terms with every company your restaurant has a contract with? Are you familiar with every report required of you as a GM? Are you completing the restaurants Accounts Payable logs, coding invoices for payment, auditing payroll to ensure accurate employee compensation? This is only a short, short list of the GM’s actual responsibilities.

The point here is this, as an assistant, you don’t yet understand what it takes to be a GM. That is why the owners are searching for someone else to fill this position rather than just promoting you. They’re not just idiots who are oblivious to your presence. Believe me, it’s been discussed whether or not they could just promote you. Day to day operations are the responsibility of the staff. They’re only 1/3 of the real responsibilities involved in running a restaurant. A GM who spends all their time concentrating on daily operations is an ineffective GM and most likely overworking themselves. So don’t expect it from the position.

You are in a position of opportunity right now. You have two choices:

1) Let your ignorance lead your actions and assume a negative position. Get mad because you think you are doing a GM’s job and not getting paid for it. Approach the owners from this negative position and create a negative image of yourself to them. Most likely you will quit or get fired when things don’t go your way. You will create a red flag on your resume. “Didn’t see eye to eye with owner” is not something you want to list as your reason for leaving.

2) Look for favorable outcomes that could happen and take a positive position to attack your situation. Ask the owners for a detailed GM’s job description so you can do the best job possible until they find a permanent replacement. Learn everything you can about job tasks you have never had to perform. Take on the tasks you know the most about and demonstrate your ability to the owners to do more than just day to day operations. Gain experience. Your positive actions will show the owners how valuable you are. They could possibly even decide you have enough potential and the right attitude to train into a GM position at that location. Maybe you’ll be the first consideration for GM at their next venture after you have more experience. Maybe they are ignorant fools and you can use this experience to pad your resume in the search for a GM position elsewhere. “Offered a better position” is something acceptable to list as a reason for leaving.

There are many positive outcomes possible here. Think about your future and your reputation and take the positive approach. Negative people are doomed to a life of being unappreciated, overworked, underpaid, and generally miserable whether it’s only imagined or a self fulfilling prophecy.

Opportunities in any occupation are created through adversity, a negative situation. The best outcome is not created with another negative but rather a larger positive. Be the larger positive.

 Brandon