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		<title>There’s no better time than now to remember the old adage that the customer is always right</title>
		<link>http://blog.bodellconsulting.com/2012/01/18/theres-no-better-time-than-now-to-remember-the-old-adage-that-the-customer-is-always-right/</link>
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		<pubDate>Wed, 18 Jan 2012 02:40:31 +0000</pubDate>
		<dc:creator>bodellconsulting</dc:creator>
				<category><![CDATA[Articles]]></category>
		<category><![CDATA[brandon odell]]></category>
		<category><![CDATA[consultant]]></category>
		<category><![CDATA[food]]></category>
		<category><![CDATA[qsr]]></category>
		<category><![CDATA[recipes]]></category>
		<category><![CDATA[restaurant]]></category>
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		<description><![CDATA[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.<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=blog.bodellconsulting.com&amp;blog=2484918&amp;post=334&amp;subd=bodellconsulting&amp;ref=&amp;feed=1" width="1" height="1" />]]></description>
			<content:encoded><![CDATA[<p>Great article by Roy Bergold via QSRMagazine.com</p>
<p><a href='http://www.foodservice.com/articles/show.cfm?contentid=33570#.TxYwnlxOzLA.wordpress'>There’s no better time than now to remember the old adage that the customer is always right</a>.</p>
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		<title>Keeping it simple: How to create a restaurant concept that can succeed</title>
		<link>http://blog.bodellconsulting.com/2010/09/20/keeping-it-simple-how-to-create-a-restaurant-concept-that-can-succeed/</link>
		<comments>http://blog.bodellconsulting.com/2010/09/20/keeping-it-simple-how-to-create-a-restaurant-concept-that-can-succeed/#comments</comments>
		<pubDate>Mon, 20 Sep 2010 17:21:42 +0000</pubDate>
		<dc:creator>bodellconsulting</dc:creator>
				<category><![CDATA[Articles]]></category>
		<category><![CDATA[80 seat restaurant]]></category>
		<category><![CDATA[big menus]]></category>
		<category><![CDATA[biggest mistakes restaurants make]]></category>
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		<description><![CDATA[High failure rates for restaurants. Yes they’re exagerated, but they’re still high. According to recent studies from Cornell and Ohio State universities, 59-60% of restaurants fail within the first three years. As many as 75% may fail within the first &#8230; <a href="http://blog.bodellconsulting.com/2010/09/20/keeping-it-simple-how-to-create-a-restaurant-concept-that-can-succeed/">Continue reading <span class="meta-nav">&#8594;</span></a><img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=blog.bodellconsulting.com&amp;blog=2484918&amp;post=103&amp;subd=bodellconsulting&amp;ref=&amp;feed=1" width="1" height="1" />]]></description>
			<content:encoded><![CDATA[<p>High failure rates for restaurants. Yes they’re exagerated, but they’re still high. According to recent studies from Cornell and Ohio State universities, 59-60% of restaurants fail within the first three years. As many as 75% may fail within the first five. Why are they so high? For a list of the six biggest reasons, see <a href="http://blog.bodellconsulting.com/2008/03/29/the-biggest-mistakes-restaurants-make-and-why-they-have-a-high-failure-rate/">The biggest mistakes restaurants make, and why they have a high failure rate.</a></p>
<p>For the purpose of this article, I’m going to talk about a key fundamental in restaurant concept design, keeping it simple.</p>
<p>Big menus with too many items, oversized dining rooms, multi-ingredient dishes, huge liquor selections and wine lists and over decorating. They’re all symptoms of the same problem, overcomplicating your concept.</p>
<p>As a restaurateur, you may find yourself getting bored with traditional menu items. For you, eating in a restaurant might need to be an adventure. You may have to see or try something you’ve never seen before to be impressed. Very well. I’m the same way.</p>
<p>This may be the underlying factor in why restaurant owners routinely go overboard when designing their concepts. They push their own sensibilities on the general public, not realizing that their tastes are the exception to the rule, and not indicative of the tastes of the public at large. Restaurateurs think they need to present every dish possible to make out of the ingredients they already carry. They think carrying 15 scotches instead of 5 will earn them more customers. If you have a larger selection, you’ll appeal to more people, right? Wrong.</p>
<p>Trying to please everyone leaves you unable to be defined. When you have too many colors in your decor, too many styles of fixtures and furniture, and menu items that represent too many styles of cuisine, your customers find it harder to describe you and recommend you. You find it harder to manage your business effectively and market your brand. You’re trying to stand for too many things at once. Cut out all the extras and keep it simple.</p>
<p>Here’s a short list of things you can do to keep your concept simple.</p>
<p>Choose two contrasting but complementary colors to design your concept around. You may use a third neutral color for accenting, but stay away from unneeded detail and too many extra colors in your scheme. To create a solid brand, you need to be more than attractive, you need to be memorable, and that means keeping your color scheme simple. Use these colors to design your logo, signage, marketing, and to decorate the inside and outside of your restaurant.</p>
<p>Keep your menu small. This serves many purposes, some of which are outlined in my article, Creating a manageable menu. A small menu is easier to control costs on, easier to prepare and order for, and easier to provide consistency with. By having a small menu, your service will be faster, your food quality will be better, and you’ll make more money. Keep your menu simple.</p>
<p>Keep your dining room simple. Smaller dining rooms are easier to manage. If you’re thinking of opening your first restaurant, don’t build a huge dining room with 200 seats. A large dining room takes a large management staff and lots of employees to run. If you find that your 80 seat restaurant gets full every night, then build another one. Don’t worry that you’re not building it big enough.</p>
<p>Keep your market simple. Don’t convince yourself that you want all people of all demographics to like your business. It’s not going to happen. By going after “everyone”, you’ll end up with no one. Even if your style of cooking has mass appeal, your location will determine who is most likely to come into your restaurant. Identify those person’s age, income level, sex, marital status and religion. They are your target market whether you like it or not. If your concept doesn’t appeal to the people in your area, then you don’t have a feasible concept and you aren’t likely to succeed. Keep your demographic simple and focused. For more on identifying your target market, read this article.</p>
<p>Keep your menu dishes simple. When you have too many ingredients, and/or too many touches that need to be made to the dish after it’s ordered, before it goes out, you slow down the production of your food. A ticket will only go out as fast as it’s slowest dish. Keep your food simple and easy to produce. Let the ingredients be the stars and don’t lose them in a mish mash of flavors.</p>
<p>Don’t try to carry every liquor any possible customer could want. If you don’t have Glen Fiddich, but you do have five other single malt scotches, any reasonable customer is not going to overlook your restaurant next time because you don’t carry their particular brand, and for the one in 1000 customers who will, so what. It is more important for you to have a manageable inventory and a selection small enough for your staff to become knowledgable on than it is to try and please every customer’s sense of taste. I’ve got a secret for you. Even if you carry 30 different vodkas, you’ll still end up with someone requesting one you don’t have. Keep your liquor and wine selection simple.</p>
<p>While this is the end of this short list, it’s not the end of the application of this fundamental philosophy of restaurant concept design. Any time you have the opportunity to simplify your concept, take it. You’ll end up with something that is simpler to manage, simpler to market, and simpler to turn a profit with.</p>
<p>Brandon O&#8217;Dell<br />
O&#8217;Dell Restaurant Consulting<br />
(888) 571-9068<br />
<a href="mailto:brandon@bodellconsulting.com">brandon@bodellconsulting.com</a><br />
<a href="http://www.bodellconsulting.com">www.bodellconsulting.com</a></p>
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		<title>How to design an effective logo</title>
		<link>http://blog.bodellconsulting.com/2009/03/20/how-to-design-an-effective-logo/</link>
		<comments>http://blog.bodellconsulting.com/2009/03/20/how-to-design-an-effective-logo/#comments</comments>
		<pubDate>Fri, 20 Mar 2009 10:30:52 +0000</pubDate>
		<dc:creator>bodellconsulting</dc:creator>
				<category><![CDATA[Articles]]></category>
		<category><![CDATA[consultant]]></category>
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		<category><![CDATA[graphic designer]]></category>
		<category><![CDATA[logo design]]></category>
		<category><![CDATA[logo designer]]></category>
		<category><![CDATA[restaurant]]></category>
		<category><![CDATA[restaurant logo]]></category>
		<category><![CDATA[restaurant logo design]]></category>

		<guid isPermaLink="false">http://blog.bodellconsulting.com/?p=67</guid>
		<description><![CDATA[In order to effectively convey what it takes to create an effective logo, I think it is important to outline the qualities of an effective logo. An effective logo is easy to recognize, even at a glance or at a &#8230; <a href="http://blog.bodellconsulting.com/2009/03/20/how-to-design-an-effective-logo/">Continue reading <span class="meta-nav">&#8594;</span></a><img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=blog.bodellconsulting.com&amp;blog=2484918&amp;post=67&amp;subd=bodellconsulting&amp;ref=&amp;feed=1" width="1" height="1" />]]></description>
			<content:encoded><![CDATA[<p>In order to effectively convey what it takes to create an effective logo, I think it is important to outline the qualities of an effective logo.</p>
<ul>
<li>An effective logo is easy to recognize, even at a glance or at a distance</li>
<li>An effective logo is easy to remember</li>
<li>An effective logo tells people who you are</li>
<li>An effective logo tells people what you do</li>
<li>An effective logo suggests your service style</li>
</ul>
<p>An effective logo may also have one &#8220;bonus&#8221; attribute that can make it not only effective, but outstanding. Your logo may also convey <a title="Unique selling point - vol. 1" href="http://blog.bodellconsulting.com/2008/01/13/unique-selling-point-vol-1/" target="_blank">your unique selling point</a>.</p>
<p>Knowing what it is that an effective logo conveys, we can start to look at some design qualities an effective logo has and doesn&#8217;t have, and why they are important.</p>
<p><strong>Color scheme</strong></p>
<p>Hopefully, your restaurant has a color scheme. Your scheme helps identify you and should consist of <strong>two contrasting colors</strong>. From those two colors, you can also find complimentary colors to use in the interior and exterior decoration of your restaurant. Often, the color black or another third color can be used to make the primary colors &#8220;pop&#8221;. It&#8217;s also good to know that certain colors have distinct psychological effects on how people behave. You may have noticed that many large chain restaurants use the colors red and yellow in their restaurant designs. These two colors make people feel &#8220;excited&#8221;. Research has shown that this excitement leads customers to eat more inside the restaurants they are used in.</p>
<p><strong>Gradients</strong></p>
<p>A gradient is the resulting color pattern when one color fades into another color. This effect may look artistic and interesting, but it muddles your logo and makes it harder to recognize at a glance or distance. It also makes reproducing your logo more expensive or even impossible with some reproduction methods, like embroidery. Stay away from gradients if you want a logo that is easy to recognize and easy to remember.</p>
<p><strong>Bevels and highlights</strong></p>
<p>Effects such as beveling, which makes the center of an object look raised while the edge appears to &#8220;drop down&#8221;, and highlighting serve to muddle an images appearance just as gradients do. While the effects look artistic and make the logo more interesting, it also makes the logo more difficult to see at a glance or distance, and harder to commit to memory. In logo design, too much detail results in a bad logo.</p>
<p><strong>Shadows</strong></p>
<p>After the last two paragraphs, I hope you don&#8217;t need much detail on why shadows, especially drop shadows, are bad for a logo. They add artsy detail that only serves to confuse the image. It&#8217;s extra detail that is there more for the logo artists ego than to make the logo more effective. Remember, &#8220;attractive&#8221; doesn&#8217;t equal &#8220;effective&#8221;.</p>
<p><strong>Fonts</strong></p>
<p>One of the most common logo design mistakes is using a font that is too hard to read, or putting a font on a background whose color does not contrast enough with the color of the font, resulting in lettering that doesn&#8217;t stand out enough. If the words on your logo are lost because they are too hard to read, you don&#8217;t have an effective logo.</p>
<p><strong>Wording</strong></p>
<p>What words you use in your logo and how they are emphasized based on the font size and color will greatly affect your logo&#8217;s ability to be recognized and remembered easily. More importantly, a poorly worded logo will not communicate to your potential customers who you are and what you do. Without communicating your identity and your message, your logo might as well be a blue dot with no words. An example would be a restaurant that just calls itself &#8220;Ralph&#8217;s&#8221; and has a logo consisting of the name &#8220;Ralph&#8217;s&#8221; over a plain background, like a circle, with no other words. This logo could easily convey what the business does by adding the word &#8220;restaurant&#8221; to the logo. It could communicate even better by including words that says what Ralph&#8217;s Restaurant sells, like &#8220;Ralph&#8217;s Sub Sandwiches&#8221;. Another approach would be to not have the extra words, but to use an image or background that infers &#8220;restaurant&#8221; or &#8220;sub sandwiches&#8221;. For example, Ralph&#8217;s could be spelled out between two hoagie bun images with a lettuce leaf on top and a tomato on bottom. This would leave no doubt that Ralph&#8217;s is selling sub sandwiches.</p>
<p><strong>Shape</strong></p>
<p>An effective logo doesn&#8217;t just need an easy to recognize color scheme, and words that effectively convey what the business sells. An effective logo also needs to utilize a basic geometric shape that helps identify the logo when someone is too far away to read the words. Along with a basic two color scheme, a shape in a logo makes that logo very easy to recognize. Think of McDonalds big yellow &#8220;M&#8221; or Burger King&#8217;s split yellow sphere (probably a bun) with a blue swoosh around the name and sphere. They create basic shapes and color patterns that are easy to recognize as soon as the sign comes into view, long before you are close enough to read the words.</p>
<p> </p>
<p>Overall, you can summarize these design points by just reminding yourself to &#8220;keep it simple&#8221;. Too much detail may win some &#8220;oohs&#8221; and &#8220;aahs&#8221; from your friends, or make you feel better about your design prowess, but it won&#8217;t result in a logo that accomplishes the most basic task a logo is intended for, making people remember you and what you do.</p>
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		<title>Is it a good idea to shrink our Italian restaurant&#8217;s menu by 15-30%?</title>
		<link>http://blog.bodellconsulting.com/2008/03/06/is-it-a-good-idea-to-shrink-our-italian-restaurants-menu-by-15-30/</link>
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		<pubDate>Thu, 06 Mar 2008 10:30:55 +0000</pubDate>
		<dc:creator>bodellconsulting</dc:creator>
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		<category><![CDATA[eliminating menu items]]></category>
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		<category><![CDATA[menu mix]]></category>
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		<category><![CDATA[shrinking menu]]></category>
		<category><![CDATA[too many menu items]]></category>

		<guid isPermaLink="false">http://bodellconsulting.wordpress.com/?p=26</guid>
		<description><![CDATA[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, &#8230; <a href="http://blog.bodellconsulting.com/2008/03/06/is-it-a-good-idea-to-shrink-our-italian-restaurants-menu-by-15-30/">Continue reading <span class="meta-nav">&#8594;</span></a><img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=blog.bodellconsulting.com&amp;blog=2484918&amp;post=26&amp;subd=bodellconsulting&amp;ref=&amp;feed=1" width="1" height="1" />]]></description>
			<content:encoded><![CDATA[<blockquote><p>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?</p></blockquote>
<p>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.</p>
<p>One thing to keep in mind with a restaurant. You are only ever going to be as profitable as your peak dining periods. Meaning&#8230;.  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&#8217;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&#8217;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%.</p>
<p>From a customer viewpoint, more choices doesn&#8217;t mean you&#8217;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.</p>
<p>Simply put, more choices isn&#8217;t better for business, it&#8217;s worse.</p>
<p>As far as what&#8217;s better, 50 items or 100? Neither. They&#8217;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&#8217;ll be less equipped to sell their friends on how great your food is. Confusing your customers isn&#8217;t good for business.</p>
<p>Stripping down a menu isn&#8217;t hard to do. The hardest part is convincing yourself it&#8217;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&#8217;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&#8217;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.</p>
<p>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&#8217;t be encouraging them. Your servers and your kitchen staff don&#8217;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.</p>
<p>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.</p>
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		<title>Does this franchise restaurant have too high of food costs?</title>
		<link>http://blog.bodellconsulting.com/2008/03/05/does-this-franchise-restaurant-have-too-high-of-food-costs/</link>
		<comments>http://blog.bodellconsulting.com/2008/03/05/does-this-franchise-restaurant-have-too-high-of-food-costs/#comments</comments>
		<pubDate>Wed, 05 Mar 2008 10:30:59 +0000</pubDate>
		<dc:creator>bodellconsulting</dc:creator>
				<category><![CDATA[Questions]]></category>
		<category><![CDATA[consultant]]></category>
		<category><![CDATA[consulting]]></category>
		<category><![CDATA[food cost]]></category>
		<category><![CDATA[franchise]]></category>
		<category><![CDATA[gross profit]]></category>
		<category><![CDATA[menu pricing]]></category>
		<category><![CDATA[question about franchise]]></category>
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		<guid isPermaLink="false">http://bodellconsulting.wordpress.com/2008/03/05/does-this-franchise-restaurant-have-too-high-of-food-costs/</guid>
		<description><![CDATA[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 &#8230; <a href="http://blog.bodellconsulting.com/2008/03/05/does-this-franchise-restaurant-have-too-high-of-food-costs/">Continue reading <span class="meta-nav">&#8594;</span></a><img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=blog.bodellconsulting.com&amp;blog=2484918&amp;post=25&amp;subd=bodellconsulting&amp;ref=&amp;feed=1" width="1" height="1" />]]></description>
			<content:encoded><![CDATA[<blockquote><p>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?</p>
<p>The franchise I am looking at shows cost of goods to be from 34% &#8211; 38%.<br />
This sounds a little high to me. Is this what the norm is in this industry?</p></blockquote>
<p>It all depends on the menu and prices. If you&#8217;re evaluating a potential franchise purchase, the food cost percentage is the last thing you should be worried about. Percentages don&#8217;t equal profit.</p>
<p>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.</p>
<p>Franchises do normally have increased buying power. Whether that results in a lower food cost percentage depends on the pricing, not the purchasing.</p>
<p>There is no &#8220;norm&#8221; for the industry. Some operations make a profit with 45% food costs, some need to be under 20%. Achieving either one doesn&#8217;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.</p>
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		<title>Can I use coupons to build my business? It works for restaurants like Papa John&#8217;s.</title>
		<link>http://blog.bodellconsulting.com/2008/03/02/can-i-use-coupons-to-build-my-business-it-works-for-restaurants-like-papa-johns/</link>
		<comments>http://blog.bodellconsulting.com/2008/03/02/can-i-use-coupons-to-build-my-business-it-works-for-restaurants-like-papa-johns/#comments</comments>
		<pubDate>Sun, 02 Mar 2008 10:30:12 +0000</pubDate>
		<dc:creator>bodellconsulting</dc:creator>
				<category><![CDATA[Questions]]></category>
		<category><![CDATA[building sales]]></category>
		<category><![CDATA[consultant]]></category>
		<category><![CDATA[consulting]]></category>
		<category><![CDATA[coupons]]></category>
		<category><![CDATA[marketing]]></category>
		<category><![CDATA[Papa Johns]]></category>
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		<category><![CDATA[using coupons]]></category>

		<guid isPermaLink="false">http://bodellconsulting.wordpress.com/2008/03/02/can-i-use-coupons-to-build-my-business-it-works-for-restaurants-like-papa-johns/</guid>
		<description><![CDATA[In most cases, coupons are a path to disaster. Coupons undervalue your product, and getting customers to come in with coupons doesn&#8217;t give them a good idea of what type of value you really offer. You end up with customers &#8230; <a href="http://blog.bodellconsulting.com/2008/03/02/can-i-use-coupons-to-build-my-business-it-works-for-restaurants-like-papa-johns/">Continue reading <span class="meta-nav">&#8594;</span></a><img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=blog.bodellconsulting.com&amp;blog=2484918&amp;post=24&amp;subd=bodellconsulting&amp;ref=&amp;feed=1" width="1" height="1" />]]></description>
			<content:encoded><![CDATA[<p>In most cases, coupons are a path to disaster. Coupons undervalue your product, and getting customers to come in with coupons doesn&#8217;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, &#8220;with a coupon&#8221;. Then, they wait til the next coupon to come out before they come back to your restaurant.</p>
<p>As far as chains that use coupons, they know something the average independent operator doesn&#8217;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&#8217;re getting a good deal paying only $10.</p>
<p>How many people really pay $18.00 for a large pizza at Papa John&#8217;s? None. People wait until they have coupons. Sure Papa John&#8217;s makes money, but they know they&#8217;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 &#8220;trick&#8221; to build value into their product.</p>
<p>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 &#8220;extras&#8221; that won&#8217;t detract from the gross profit you&#8217;ll make by selling the rest of the meal at full price.</p>
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		<title>Advice to an interim restaurant GM</title>
		<link>http://blog.bodellconsulting.com/2008/02/16/advice-to-an-interim-restaurant-gm/</link>
		<comments>http://blog.bodellconsulting.com/2008/02/16/advice-to-an-interim-restaurant-gm/#comments</comments>
		<pubDate>Sat, 16 Feb 2008 10:30:01 +0000</pubDate>
		<dc:creator>bodellconsulting</dc:creator>
				<category><![CDATA[Questions]]></category>
		<category><![CDATA[advice]]></category>
		<category><![CDATA[consultant]]></category>
		<category><![CDATA[consulting]]></category>
		<category><![CDATA[employee abuse]]></category>
		<category><![CDATA[general manager]]></category>
		<category><![CDATA[interim GM]]></category>
		<category><![CDATA[management]]></category>
		<category><![CDATA[restaurant]]></category>
		<category><![CDATA[unfair]]></category>

		<guid isPermaLink="false">http://bodellconsulting.wordpress.com/?p=18</guid>
		<description><![CDATA[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 &#8230; <a href="http://blog.bodellconsulting.com/2008/02/16/advice-to-an-interim-restaurant-gm/">Continue reading <span class="meta-nav">&#8594;</span></a><img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=blog.bodellconsulting.com&amp;blog=2484918&amp;post=18&amp;subd=bodellconsulting&amp;ref=&amp;feed=1" width="1" height="1" />]]></description>
			<content:encoded><![CDATA[<p><em>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.</em></p>
<blockquote><p>“I have quick question&#8230;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?”</p></blockquote>
<p><em>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.</em></p>
<p><em></em></p>
<p style="margin:0;" class="MsoNormal"><font face="Times New Roman">(Tom),</font></p>
<p><font face="Times New Roman"></font></p>
<p style="margin:0;" class="MsoNormal"><font face="Times New Roman">3 weeks filling in at a GM position doesn&#8217;t qualify you to be a GM. Every employee honestly believes they can outperform their boss, whether it&#8217;s the restaurant business or any other. That&#8217;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. </font></p>
<p><font face="Times New Roman"></font></p>
<p style="margin:0;" class="MsoNormal"><font face="Times New Roman">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&#8217;s role in your local area government? What are you doing as interim GM to safeguard your owners against liabilities such as worker&#8217;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&#8217;s financial budget? It&#8217;s September now, time to start planning. Do you know what percentages your restaurant has for goals on labor, COG&#8217;s? Do you know what COG&#8217;s are? Can you read a P&amp;L, really? Can you look at last year&#8217;s P&amp;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&#8217;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&#8217;s actual responsibilities.</font></p>
<p><font face="Times New Roman"></font></p>
<p style="margin:0;" class="MsoNormal"><font face="Times New Roman">The point here is this, as an assistant, you don&#8217;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&#8217;re not just idiots who are oblivious to your presence. Believe me, it&#8217;s been discussed whether or not they could just promote you. Day to day operations are the responsibility of the staff. They&#8217;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&#8217;t expect it from the position.</font></p>
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<p style="margin:0;" class="MsoNormal"><font face="Times New Roman">You are in a position of opportunity right now. You have two choices:</font></p>
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<p style="margin:0;" class="MsoNormal"><font face="Times New Roman">1) Let your ignorance lead your actions and assume a negative position. Get mad because you think you are doing a GM&#8217;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&#8217;t go your way. You will create a red flag on your resume. &#8220;Didn&#8217;t see eye to eye with owner&#8221; is not something you want to list as your reason for leaving.</font></p>
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<p style="margin:0;" class="MsoNormal"><font face="Times New Roman">2) Look for favorable outcomes that could happen and take a positive position to attack your situation. Ask the owners for a detailed GM&#8217;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&#8217;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. &#8220;Offered a better position&#8221; is something acceptable to list as a reason for leaving.</font></p>
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<p style="margin:0;" class="MsoNormal"><font face="Times New Roman">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&#8217;s only imagined or a self fulfilling prophecy. </font></p>
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<p style="margin:0;" class="MsoNormal"><font face="Times New Roman">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.</font></p>
<p><font face="Times New Roman"> </font><span style="font-size:12pt;font-family:'Times New Roman',serif;">Brandon</span></p>
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		<title>Implementing a slip and fall prevention program</title>
		<link>http://blog.bodellconsulting.com/2008/02/15/implementing-a-slip-and-fall-prevention-program/</link>
		<comments>http://blog.bodellconsulting.com/2008/02/15/implementing-a-slip-and-fall-prevention-program/#comments</comments>
		<pubDate>Fri, 15 Feb 2008 10:30:42 +0000</pubDate>
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		<description><![CDATA[Controlling Losses – Implementing a Slip and Fall Prevention Program                                                 By Brandon O’Dell                                         All over the country and the world, owners and managers are asking themselves, “What can we do better? What separates us from the really &#8230; <a href="http://blog.bodellconsulting.com/2008/02/15/implementing-a-slip-and-fall-prevention-program/">Continue reading <span class="meta-nav">&#8594;</span></a><img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=blog.bodellconsulting.com&amp;blog=2484918&amp;post=17&amp;subd=bodellconsulting&amp;ref=&amp;feed=1" width="1" height="1" />]]></description>
			<content:encoded><![CDATA[<p><b><font face="Times New Roman">Controlling Losses – Implementing a Slip and Fall Prevention Program</font></b></p>
<p style="margin:0;" class="MsoNormal"><b><font face="Times New Roman"><span>                                                </span>By Brandon O’Dell<span>   </span><span>                                    </span></font></b></p>
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<p style="text-indent:.25in;margin:0 0 0 .25in;" class="MsoNormal"><font face="Times New Roman">All over the country and the world, owners and managers are asking themselves, “What can we do better? What separates us from the really profitable companies?” Operators want to know what the most successful companies do different that makes them consistently profitable and spurs growth. The answer? <span> </span>Profitable operators understand that success requires a plan for absolutely everything in their operation. They have effective programs to control losses and increase revenue in all areas. They don’t just concentrate on the “big two”, labor and product cost, there is a plan for everything. This article addresses an often overlooked area in many restaurants, slip prevention.</font></p>
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<p style="margin:0 0 0 .25in;" class="MsoNormal"><font face="Times New Roman"><span>      </span>According to the American Society of Safety Engineers (ASSE), slip and fall accidents are the second leading cause of on-the-job deaths, second only to automobile accidents. The U.S. Department of Labor states that 15% of workplace deaths are caused by slips, trips and falls. The ASSE, whose building codes are adopted as law in most cities and states across the country, recently released a new American National Standard which focuses on reducing slip and fall accidents in the workplace. Up to 9 million disabling slip and fall accidents each year, that’s 25,000 per day, are attributed to slip and fall accidents by the National Safety Council. The Americans with Disabilities Act (ADA) and the Occupational Safety and Health Administration (OSHA) both mandate that walk surfaces should be slip resistant. With the high amount of expedient walking and ever changing and even wet conditions, restaurants become a high risk environment for slip and fall accidents. What should a restaurant owner or manager do to limit the restaurant’s liabilities?</font></p>
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<p style="margin:0 0 0 .25in;" class="MsoNormal"><font face="Times New Roman"><span>      </span>Implementing an effective slip and fall prevention program is a restaurants best defense against getting caught with high workers compensation insurance, liability insurance, ADA or OSHA fines, or a lawsuit. There are five key areas to an effective slip and fall prevention program. Though concentrating on any one area can reduce risks, using a complete program that addresses all the areas is the only way to ensure a successful program. Here are the five areas your program should address:</font></p>
<p style="text-indent:-.5in;margin:0 0 0 1.5in;" class="MsoNormal"><font face="Times New Roman"><span>1.<span style="font:7pt 'Times New Roman';">                  </span></span><b>Flooring surface</b> – This is the foundation to a slip prevention program. The more dangerous the environment around the surface, the more slip resistant the actual surface itself should be. Slip resistance is measured by a ratio called the <i>coefficient of friction</i>. There are numerous devices used to measure the coefficient of friction of a floor, though no one device is recognized by the ADA, OSHA or court system to be the correct device. Slip resistant flooring surfaces and treatments to change existing flooring surfaces are available to correct a low friction surface situation. The presence and placement of floor drains in kitchen floors should be considered a major factor in evaluating the surface itself.</font></p>
<p style="text-indent:-.5in;margin:0 0 0 1.5in;" class="MsoNormal"><font face="Times New Roman"><span>2.<span style="font:7pt 'Times New Roman';">                  </span></span><b>Proper cleaning methods</b> – Without the use of proper cleaning methods, even the most slip resistant surface can become slippery. Food particles, dirt, grease and even cleaning agents all build up and fill in the tread patterns on a floor without the use of proper cleaning methods. Once the tread is filled in, there is nothing left to create friction against a shoe. The three biggest cleaning mistakes made by restaurants include 1) using a mop as the primary cleaning tool, 2) mixing a high concentration of soap or degreaser into the cleaning solution and 3) not having a rinsing cycle for the floor to remove soaps and degreasers. Ideally, restaurants should use the same type of cleaning method other high risk businesses, such as butcher shops, are required by law to use.</font></p>
<p style="text-indent:.5in;margin:0 0 0 1.5in;" class="MsoNormal"><font face="Times New Roman">A proper floor cleaning starts with applying a correctly diluted degreaser or cleaner. A higher degreaser ratio is needed for more contaminated floors, lower for less contaminated floors. Most systems that mix chemicals automatically dispense at a ratio only correct for the greasiest of floors. Entry ways, for example, require a low concentration of cleaner while kitchens require a higher concentration. By applying cleaners with a pump sprayer, instead of a mop and bucket, and properly mixing cleaners, operations can save a significant amount of money on chemicals by not wasting. The use of pump sprayers also reduces the spreading around of grease from one area to another. </font></p>
<p style="text-indent:.5in;margin:0 0 0 1.5in;" class="MsoNormal"><font face="Times New Roman">Next, the floor should be scrubbed with a deck brush. Mops to not move into the pores and crevices of a floor to break out buildup, deck brushes do. </font></p>
<p style="text-indent:.5in;margin:0 0 0 1.5in;" class="MsoNormal"><font face="Times New Roman">After scrubbing the floor, the contaminants and cleaner have to be removed. They are removed through squeegeeing into a drain, or into an area with a wet/dry vacuum if floor drains are not present. <u>Mopping alone does not pick up the majority of the contaminants</u>. Mops only push the contaminants around. They end up in the pores they were just removed from.</font></p>
<p style="text-indent:.5in;margin:0 0 0 1.5in;" class="MsoNormal"><font face="Times New Roman">Lastly, a floor needs to be rinsed with hot, clean water. Ideally, the restaurant is equipped with floor drains and equipment and product is organized to allow for the used of a hose and squeegee rinsing. If this is not possible, using hot clean water in a clean mop bucket and a clean, uncontaminated mop head will suffice. Simply wetting, wringing often and mopping over the surface will provide for the best rinse possible without a hose.</font></p>
<p style="text-indent:.5in;margin:0 0 0 1.5in;" class="MsoNormal"><font face="Times New Roman">Low traffic and low contamination areas may not be required to be cleaned in this method on a daily basis if a regular weekly proper cleaning is administered to avoid buildup.</font></p>
<p style="text-indent:.5in;margin:0 0 0 1.5in;" class="MsoNormal"><font face="Times New Roman">Another cleaning option that should be considered in addition to the above proper cleaning method, or to help work around a restaurant with cleaning challenges, is monthly restoration cleanings. Very strong cleaners are available from restoration product companies or mainline suppliers that, when used once a month, can strip your floor of any buildup that may be effecting the surface.</font></p>
<p style="text-indent:.5in;margin:0 0 0 1.5in;" class="MsoNormal"><font face="Times New Roman">A trend in chemical companies recently has been to offer floor cleaners that leave a polymer buildup on floors to create “tread”. While some may help less porous floors with a small amount of preexisting tread, they often serve to fill in pores and tread on more porous floors. In a dry condition, the slip resistance is slightly improved, but the polymer buildup over the pores may serve to make the floor more dangerous wet instead of safer. In any case, proper cleaning procedures and permanently changing the surface itself are much more effective and less expensive in the long run.</font></p>
<p style="text-indent:.5in;margin:0 0 0 1.5in;" class="MsoNormal"><font face="Times New Roman">Proper cleaning procedures should be part of every employee’s training. Most employees come from one of the estimated 90% of operations that do not use proper cleaning methods.</font></p>
<p style="text-indent:-.5in;margin:0 0 0 1.5in;" class="MsoNormal"><font face="Times New Roman"><span>3.<span style="font:7pt 'Times New Roman';">                  </span></span><b>Surface evaluation and documentation</b> – Measuring the coefficient of friction of your walkways and keeping a record of the readings not only gives you a measuring stick to help you gauge the success of your slip and fall prevention program, it also provides up to date accurate data on the condition of floors and documents the operations efforts to comply with ADA and OSHA requirements in addition to court recognized minimum slip resistance. In the big picture, this step could possibly save the operation more money than all other steps combined.</font></p>
<p style="text-indent:-.5in;margin:0 0 0 1.5in;" class="MsoNormal"><font face="Times New Roman"><span>4.<span style="font:7pt 'Times New Roman';">                  </span></span><b>Footwear</b> – Slip resistant footwear has increasingly become a tool for slip prevention. Many shoe manufacturers now make slip resistant footwear specifically designed for wet or oily conditions. While requiring slip resistant shoes to be warn in an operation is a necessary step in slip and fall prevention, the use of shoes alone does not constitute an effective slip and fall prevention program.</font></p>
<p style="text-indent:-.5in;margin:0 0 0 1.5in;" class="MsoNormal"><font face="Times New Roman"><span>5.<span style="font:7pt 'Times New Roman';">                  </span></span><b>Hazard Warnings </b>– Proper signage and its’ correct use is the final ingredient to a slip and fall prevention program. The use of signage alone does not release an operation from liability in the event of an accident. Too often, operations do not remove signs after floors have dried. Employees and patrons become complacent when approaching areas with wet floor signs because, more often than not, they are no longer wet. Many operations buy two sided wet floor signs that cannot be read from the sides. Four sided wet floor signs should always be used. Improper use of signage and/or the use of ineffective signs could be the deciding factor of liability in a slip and fall lawsuit.</font></p>
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<p style="text-indent:.5in;margin:0;" class="MsoNormal"><font face="Times New Roman">The benefits of implementing a good slip and fall prevention program are numerous. Some, such as the added protection against lawsuits are immeasurable. Evidence of compliance to ADA and OSHA requirements and court recognized minimum standards of slip resistance can help protect you from not only law suits, but also fines that can be levied by the ADA and OSHA. While neither organization recognizes a ratio of minimum slip resistance because they cannot agree on a method to measure it, both do require all walkways to be slip resistant. Without an absolute ratio to measure compliance, the determination of compliance is left to the opinion of the inspector. </font></p>
<p style="text-indent:.5in;margin:0;" class="MsoNormal"><font face="Times New Roman">Lowered worker compensation insurance and liability insurance are a definite benefit of a good slip and fall prevention program. Decreasing the likelihood of a fall helps to decrease the number of accidents, in turn helping to hold down or even reduce insurance premiums. The implementation of a solid plan alone may be enough for an insurance company to offer a discount.</font></p>
<p style="text-indent:.5in;margin:0;" class="MsoNormal"><font face="Times New Roman">Increased employee productivity is another benefit that is hard to measure, but absolutely present. Sure footing increases the speed of an employee’s gait. Employees work faster when they walk faster. They get more accomplished in a shorter period of time. The added confidence and reduced stress affecting employees with a safe surface to walk on can improve every aspect of their work, including their attitude.</font></p>
<p style="text-indent:.5in;margin:0;" class="MsoNormal"><font face="Times New Roman">Another hard to measure benefit of a good slip and fall prevention program is the psychological effect a safe walking surface and sure footing may have on your customers. Elderly customers often avoid restaurants with floors they consider slippery. A slip and fall accident to an elderly customer could mean surgery or even death. Not a good payoff for the risk of going to a restaurant that serves their favorite hamburger. Families with children just learning to walk may avoid restaurants with unsafe surfaces. Lack of sure footing and slip resistant surfaces are factors customers just can’t put their finger on when they attempt to explain why they do not eat at a certain establishment. Their decision is often made subconsciously as a protective reflex.</font></p>
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<p style="text-indent:.5in;margin:0;" class="MsoNormal"><font face="Times New Roman">As a contributing factor to loss prevention and even increasing revenue, implementing a proper slip and fall safety program can help a restaurant take one step closer to the profitability owners and operators see in other restaurants. Take one more step toward becoming a professionally organized and managed operation idolized by others. Have a plan for everything, including slip and fall prevention, and reap the benefits.</font></p>
<p><font face="Times New Roman"> </font><font face="Times New Roman"> </font><font face="Times New Roman"> </font></p>
<p style="margin:0;" class="MsoNormal"><font face="Times New Roman">Brandon O’Dell</font></p>
<p style="margin:0;" class="MsoNormal"><font face="Times New Roman">O’Dell Consulting</font></p>
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		<title>Conversations about pricing by gross profit</title>
		<link>http://blog.bodellconsulting.com/2008/02/15/a-conversation-about-gross-profit-pricing/</link>
		<comments>http://blog.bodellconsulting.com/2008/02/15/a-conversation-about-gross-profit-pricing/#comments</comments>
		<pubDate>Fri, 15 Feb 2008 10:30:32 +0000</pubDate>
		<dc:creator>bodellconsulting</dc:creator>
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		<description><![CDATA[The following are excerpts from discussions I had with restaurant owners in the Restaurantowner.com discussion forums regarding pricing by gross profit. From “Pricing by gross profit” thread – RO.com Posted Jul 30,2004 1:08 PM brandon I realized while typing a post in the &#8230; <a href="http://blog.bodellconsulting.com/2008/02/15/a-conversation-about-gross-profit-pricing/">Continue reading <span class="meta-nav">&#8594;</span></a><img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=blog.bodellconsulting.com&amp;blog=2484918&amp;post=16&amp;subd=bodellconsulting&amp;ref=&amp;feed=1" width="1" height="1" />]]></description>
			<content:encoded><![CDATA[<p><em>The following are excerpts from discussions I had with restaurant owners in the Restaurantowner.com discussion forums regarding pricing by gross profit.</em></p>
<p><strong></strong></p>
<p><strong><span style="font-family:Times New Roman;">From “Pricing by gross profit” thread – RO.com</span></strong></p>
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<p class="MsoNormal" style="margin:0;"><span style="font-size:7.5pt;color:#000000;font-family:Verdana,sans-serif;">Posted Jul 30,2004 1:08 PM </span></p>
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<td style="width:72.98%;background-color:transparent;border:#f0f0f0;padding:.75pt;" width="72%"><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><strong>brandon</strong> </span></td>
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<td style="width:99.4%;background-color:transparent;border:#f0f0f0;padding:.75pt;" colspan="2" width="99%"><span style="font-size:x-small;">I realized while typing a post in the bar pricing program thread, I might as well start a thread discussing pricing as a whole and explain how to price by gross profit for food too for those that don&#8217;t know how. Pricing by gross profit is really the only sure fire method I&#8217;ve found to price a profit into your sales items. Many operators have gotten by from having enough experience working with certain types of food to know if they price by a certain cost percentage and work with menu foods that have worked in their system in the past, they can control cost well enough to make a profit. I have done the same in the past and have made my operations money doing it, but it seemed every once in awhile, something did not calculate right and I would inexplicably lose money or make less in a month I could&#8217;ve swore was a good month. By pricing by gross profit, I&#8217;ve come to realize the most important factor in my profitability in congruency to how many items I sell, is which items I sell. The majority of our mentors in this business have preached &#8220;cost percentage, food cost, liquor cost&#8221;. While controlling cost percentages is a needed part of the equation of profitability, it is not the most important part. All too often operators build their marketing around their low cost menu items. While these items return them a great cost percentage, they most often don&#8217;t return the gross profit per item that higher cost items may.</span><span style="font-size:x-small;">I would like to start with a question to managers and operators out there. How many of you currently structure your pricing off of a target cost percentage? How many of you already price based on a target gross profit per item? For those of you, likely the majority based on my experience, who price by cost percentage, has anyone ever shown you how to price by gross profit and explained the differences between the two systems?<span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><a href="http://www.restaurantowner.com/members/forum/replyto.cfm?articleID=1703&amp;forum=1"><span style="color:#0d2155;text-decoration:none;">Reply</span></a></span></span></td>
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<td style="background-color:transparent;border:#f0f0f0;padding:.75pt;" valign="top"><span style="font-size:7.5pt;color:#000000;font-family:Verdana,sans-serif;">Posted Jul 30,2004 8:39 PM </span></td>
<td style="width:72.98%;background-color:transparent;border:#f0f0f0;padding:.75pt;" width="72%"><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><strong>Clemmons8085</strong> </span></td>
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<p class="forum" style="margin:auto 0;"><span style="font-size:x-small;">Brandon<br />
I am going to try your method and see how it works. How do you price your bar items beer, wine liquor?<br />
Kyle </span></p>
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<td style="background-color:transparent;border:#f0f0f0;padding:.75pt;" valign="top"><span style="font-size:7.5pt;color:#000000;font-family:Verdana,sans-serif;">Posted Jul 31,2004 6:06 AM </span></td>
<td style="width:72.98%;background-color:transparent;border:#f0f0f0;padding:.75pt;" width="72%"><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><strong>VirginiaBeach717</strong> </span></td>
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<p class="forum" style="margin:auto 0;"><span style="font-size:x-small;">I&#8217;ve been trying to use your pricing concept since 1980. I&#8217;m running a low food cost on most sandwiches and appetizers and a high food cost on dinner entrees. It just makes since that if you sell a dinner with a 45% food cost and make $9.00, that you&#8217;d want to sell more of those than a sandwich at 18% that you make $3.50 profit. I keep trying to jack up the sandwich prices to make it easier for the customer to &#8220;jump&#8221; up to a dinner entre. Over the last four years I&#8217;ve become much more aggressive in this marketing attempt. There has been a 2% increase in dinner entrees which is statistically insignificant. The good news that I&#8217;m making a lot more money on the low end of the menu. In June I increased prices on the biggest sellers in the sand and app category by as much as 10-15% (with some masking of certain items). There was nary a word said from the customers and I would know because we have a solid group of regulars, daily, weekly and bi-weekly and I talk to most of them. (Sales have continued to grow as well, not just from the price increases.) At that time I raised alcohol prices after 7PM by 10% and it virtually went unnoticed (again our regulars would have let me know and quite vocally at that). Sales taxes increase Sept. 1 and I plan to use this as an opportunity to raise prices for Happy Hour. Again I&#8217;ll use &#8220;masking&#8221; because instead of raising the price of drinks, I&#8217;m &#8220;lowering&#8221; the price two cents but adding the sales tax to the item instead of including it. I realize I have gotten off the original topic but I wanted to share this experience since Jim&#8217;s survey and some earlier threads about wholesale price increases and the need to raise retail prices. My advice: If you have a good operation, DON&#8217;T BE AFRAID. </span></p>
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<td style="background-color:transparent;border:#f0f0f0;padding:.75pt;" valign="top"><span style="font-size:7.5pt;color:#000000;font-family:Verdana,sans-serif;">Posted Jul 31,2004 1:49 PM </span></td>
<td style="width:72.98%;background-color:transparent;border:#f0f0f0;padding:.75pt;" width="72%"><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><strong>brandon</strong> </span></td>
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<td style="width:99.4%;background-color:transparent;border:#f0f0f0;padding:.75pt;" colspan="2" width="99%"><span style="font-size:x-small;">I think that was right on topic. You seem to be well ahead of the pack on your pricing structure. This obviously isn&#8217;t my original idea, many consultants have been trying to educate restaurant owners for years. I have just managed to use it to create my own personal structure and used the pricing method to drive customers toward higher cost, higher gross profit menu items. Congratulations on your forward thinking and resulting success.</span><span style="font-size:x-small;">Brandon<span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><a href="http://www.restaurantowner.com/members/forum/replyto.cfm?articleID=1709&amp;forum=1"><span style="color:#0d2155;text-decoration:none;">Reply</span></a></span></span></td>
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<td style="background-color:transparent;border:#f0f0f0;padding:.75pt;" valign="top"><span style="font-size:7.5pt;color:#000000;font-family:Verdana,sans-serif;">Posted Jul 31,2004 2:35 PM </span></td>
<td style="width:72.98%;background-color:transparent;border:#f0f0f0;padding:.75pt;" width="72%"><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><strong>brandon</strong> </span></td>
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<p class="forum" style="margin:auto 0;"><span style="font-size:x-small;">I&#8217;ll continue my explanation of pricing out bar items in the &#8220;Bar Pricing Program&#8221; thread Kyle. Maybe we can continue with food on this thread. Food is slightly more complicated, but your existing experience with pricing will keep it reasonably simple still. </span></p>
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<td style="background-color:transparent;border:#f0f0f0;padding:.75pt;" valign="top"><span style="font-size:7.5pt;color:#000000;font-family:Verdana,sans-serif;">Posted Aug 03,2004 11:53 AM </span></td>
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<p class="forum" style="margin:auto 0;"><span style="font-size:x-small;">Well, i guess it starts with the basic thought of what you are here to do. Maximize profits or minimize costs. Basic economic theory states that the level of maximum profitability is when the marginal revenue meets the marginal profit meets marginal cost. In other words you are here to maximize profit and if by lowering your price outside your target range of food /liquor cost you can sell more then you should as long as the additional gross profit is greater than the reduction in price </span></p>
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<td style="background-color:transparent;border:#f0f0f0;padding:.75pt;" valign="top"><span style="font-size:7.5pt;color:#000000;font-family:Verdana,sans-serif;">Posted Aug 11,2004 6:42 AM </span></td>
<td style="width:72.98%;background-color:transparent;border:#f0f0f0;padding:.75pt;" width="72%"><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><strong>toms</strong> </span></td>
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<td style="width:99.4%;background-color:transparent;border:#f0f0f0;padding:.75pt;" colspan="2" width="99%"><span style="font-size:x-small;">Hi Brandon and everyone else,</span><span style="font-size:x-small;">Brandon- I just joined RestaurantOwner.com based on your advice from another site&#8217;s discussion forum. Thanks for the advice. I really believe it&#8217;s going to pay off. I realize I need to think of myself as a marketer first and a restaurateur second if there is going to be any success here.Anyway, to your topic. About 4 months ago I changed my price structure from a food cost % pricing structure to a gross profit per item structure. I was tired of worrying about the percentages if we were selling a lot of high cost (%) items. I repriced to achieve about an $8 gross profit on all dinner entrees. Now I don&#8217;t have to worry about what we&#8217;re selling. It&#8217;s all good. And percentages have stay in line as well. From this point forward all menu categories will have an assured gross profit built into the pricing. I think it foolish to do it any other way.<span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><a href="http://www.restaurantowner.com/members/forum/replyto.cfm?articleID=1814&amp;forum=1"><span style="color:#0d2155;text-decoration:none;">Reply</span></a></span></span></td>
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<td style="background-color:transparent;border:#f0f0f0;padding:.75pt;" valign="top"><span style="font-size:7.5pt;color:#000000;font-family:Verdana,sans-serif;">Posted Aug 11,2004 3:15 PM </span></td>
<td style="width:72.98%;background-color:transparent;border:#f0f0f0;padding:.75pt;" width="72%"><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><strong>brandon</strong> </span></td>
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<td style="width:99.4%;background-color:transparent;border:#f0f0f0;padding:.75pt;" colspan="2" width="99%"><span style="font-size:x-small;">Welcome Tom,</span><span style="font-size:x-small;">Good to see you here. Maybe you can help explain pricing by gross profit for food while I&#8217;m still posting about beer, liquor and wine. I&#8217;m sure people would love to hear from another person who&#8217;s already adopted the technique.Brandon<span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><a href="http://www.restaurantowner.com/members/forum/replyto.cfm?articleID=1815&amp;forum=1"><span style="color:#0d2155;text-decoration:none;">Reply</span></a></span></span></td>
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<td style="background-color:transparent;border:#f0f0f0;padding:.75pt;" valign="top"><span style="font-size:7.5pt;color:#000000;font-family:Verdana,sans-serif;">Posted Aug 12,2004 1:34 PM </span></td>
<td style="width:72.98%;background-color:transparent;border:#f0f0f0;padding:.75pt;" width="72%"><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><strong>toms</strong> </span></td>
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<td style="width:99.4%;background-color:transparent;border:#f0f0f0;padding:.75pt;" colspan="2" width="99%"><span style="font-size:x-small;">1. Decide on what you want your gross profit in each category. Say on apps you want to achieve a $4.50 gross per item sold, entrees an $8.00 gross and desserts a $3.00 gross.</span><span style="font-size:x-small;">2. Then cost out your menu item by item. Then add your target gross to each item cost to achieve your menu pricing. Of course you will have to raise or lower the prices to based on percieved value and prep times.Example: Spinach &amp; Artichoke Dip with Toasted Ciabatta Bread<br />
Cost: $2.13<br />
Target Gross: $4.50<br />
Total of Cost plus Gross: $6.63 or $6.95 Menu price<span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><a href="http://www.restaurantowner.com/members/forum/replyto.cfm?articleID=1823&amp;forum=1"><span style="color:#0d2155;text-decoration:none;">Reply</span></a></span></span></td>
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<p><strong></strong><strong><span style="font-size:18pt;"><span style="font-family:Times New Roman;"> </span></span></strong><strong><span style="font-family:Times New Roman;">From “Bar pricing programs” thread – RO.com</span></strong></p>
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<p class="MsoNormal" style="margin:0;"><span style="font-size:7.5pt;color:#000000;font-family:Verdana,sans-serif;">Posted Jul 28,2004 11:14 AM </span></p>
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<td style="width:72.98%;background-color:transparent;border:#f0f0f0;padding:.75pt;" width="72%"><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><strong>brandon</strong> </span></td>
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<td style="width:99.4%;background-color:transparent;border:#f0f0f0;padding:.75pt;" colspan="2" width="99%"><span style="font-size:x-small;">After posting with a couple other members in here, I am curious to see how many members have an actual plan for bar pricing. Do you use formulas? Do you attempt simply to price match with competitors? Do you try to keep your price changes to categories such as well, calls, premiums and super-premiums with liquor and make everything just fit into one or the other? Do you concentrate on selling the lower cost percentage items such as draft beer and well liquors, or do you concentrate on the high gross profit items such as wine and premium scotches or martinis?</span><span style="font-size:x-small;">I think the majority of restaurants and bars price their drinks out on a simple cost percentage markup or maybe with no formula at all, just using their experience in selling alcohol for so long.What do you do?<span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><a href="http://www.restaurantowner.com/members/forum/replyto.cfm?articleID=1678&amp;forum=1"><span style="color:#0d2155;text-decoration:none;">Reply</span></a></span></span></td>
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<td style="background-color:transparent;border:#f0f0f0;padding:.75pt;" valign="top"><span style="font-size:7.5pt;color:#000000;font-family:Verdana,sans-serif;">Posted Jul 28,2004 10:00 PM </span></td>
<td style="width:72.98%;background-color:transparent;border:#f0f0f0;padding:.75pt;" width="72%"><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><strong>Clemmons8085</strong> </span></td>
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<td style="width:99.4%;background-color:transparent;border:#f0f0f0;padding:.75pt;" colspan="2" width="99%"><span style="font-size:x-small;">We price based on cost and also what the market will pay. We also sell alot of martinis, in our town I have seen them anywhere from $5 to $10.<br />
We charge $7.00 for house 5oz<br />
$7.50 call Absolul, stoli, ketele<br />
$8.00 for Goose, belvedere<br />
Beers like Bud lt Bud, miller lt coors $2.75<br />
Imports like Corona ect&#8230; $3.25<br />
Draft pints $3.75 for everything from Ultra, New Castle, Sam Adams</span><span style="font-size:x-small;">How do you guys charge for rocks drinks and doubles. Are your doubles true doubles or long pours?<br />
Thanks<span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><a href="http://www.restaurantowner.com/members/forum/replyto.cfm?articleID=1681&amp;forum=1"><span style="color:#0d2155;text-decoration:none;">Reply</span></a></span></span></td>
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<td style="background-color:transparent;border:#f0f0f0;padding:.75pt;" valign="top"><span style="font-size:7.5pt;color:#000000;font-family:Verdana,sans-serif;">Posted Jul 29,2004 10:21 AM </span></td>
<td style="width:72.98%;background-color:transparent;border:#f0f0f0;padding:.75pt;" width="72%"><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><strong>brandon</strong> </span></td>
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<td style="width:99.4%;background-color:transparent;border:#f0f0f0;padding:.75pt;" colspan="2" width="99%"><span style="font-size:x-small;">When you say, &#8220;price based on cost&#8221;, what type of formula do you use? Do you mark up to obtain a certain cost percentage?</span><span style="font-size:x-small;">A big martini market helps the profitability a lot. The objective of selling martinis is to get the most money out of one drink as possible while still offering value, saving money on labor, glassware, condiments, garnishes, mixes, etc. You&#8217;re fortunate to have a big martini crowd.In your martini pricing and pouring, 5 oz. is a huge pour for any drink, but $7 is a good amount to get for it too. Maybe that is your draw. In your 5 oz martinis, are you stating the glass size, the amount of liquor, or the amount of liquor + vermouth? Or is it 5 oz when talking of martini cocktails in general, but less for the traditional martini? I ask because martinis vary so much regionally. In a certain area, people expect certain things.The tradition martini recipe found in many book call for 2 oz of gin or vodka mixed with 1/2 oz of dry vermouth. In my area, if you put more than a drop of vermouth in a martini, you&#8217;ll be strung up. Many operations here drizzle and swirl a small amount of vermouth in a glass or a shaker, pour the excess out, add ice, then add 2 1/4 oz gin or vodka. If the martini is on the rocks, you make it in a glass, garnish, then serve. If it is up, it&#8217;s made the same way in a mixing tin, swirled, then strained. In the finished product, most restaurants here only have around 2 1/2 oz of liquid in the drink. In my operations, I serve and price every martini simply as a double. Two 1 1/2 oz shots of gin or vodka, drop of vermouth. When served on the rocks, it fills a 10 oz rocks glass and results in quite a big martini, compared to what other restaurants are serving here. The exceptions are the martini cocktails popularized by martini bars. The amount of booze in these martinis are about the same as a traditional martini, but after adding ingredients like sour mix, grenadine and fruit juices, they come out to around 5 or 6 oz.That should give you a basis for information to compare to my pricing program. I&#8217;ll start a new post for that so this one doesn&#8217;t ramble on so much.Brandon<span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><a href="http://www.restaurantowner.com/members/forum/replyto.cfm?articleID=1686&amp;forum=1"><span style="color:#0d2155;text-decoration:none;">Reply</span></a></span></p>
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<td style="background-color:transparent;border:#f0f0f0;padding:.75pt;" valign="top"><span style="font-size:7.5pt;color:#000000;font-family:Verdana,sans-serif;">Posted Jul 30,2004 12:47 PM </span></td>
<td style="width:72.98%;background-color:transparent;border:#f0f0f0;padding:.75pt;" width="72%"><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><strong>brandon</strong> </span></td>
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<td style="width:99.4%;background-color:transparent;border:#f0f0f0;padding:.75pt;" colspan="2" width="99%"><span style="font-size:x-small;">Pricing</span><span style="font-size:x-small;">Here&#8217;s how I price out all my sales items.First thought in pricing is not what kind of percentage cost I want to sell items at, it&#8217;s how much gross profit I need to make per item to cover everything other than the product cost including profit. Gross profit figured by simply adding every cost in your restaurant, other than product cost, but including profit (yes, you should consider this a cost of doing business), then determine what proportion of that total cost should be used to cover the sale of a particular sales category.? </span><span style="font-size:x-small;">Not as difficult as it sounds if you keep a good P&amp;L. The easy way to figure this would be use your year end P&amp;L from last year. Take your total expenses for the year. Subtract your product cost for the year. Add the dollar amount of profit you SHOULD have made for the year, maybe 15-20% of sales. Maybe more, maybe less. Your choice. This number equals your Accumulated Gross Profit for the year, meaning, your sales minus product cost (gross profit) should add up to equal your expenses plus profit minus product cost. It will be necessary to add an increase to last year&#8217;s expenses to cover costs other than product that may have risen in the last year. (Remember, product cost is not figured into gross profit). Usually a standard cost of living index increase will do, about 4% most years.</span><span style="font-size:x-small;">Now that we&#8217;ve figured what we need to make in Accumulated Gross Profit, we need to break it down to figure how much gross profit we need to make in food, beer, liquor and wine separately. This is the reason it is important for operations to track these sales and these costs separately. Each has a different cost structure and requires a different pricing structure. To figure how much gross profit we need for each different area, we simply look at our sales mix from the previous year and determine what percentage of total sales was due to liquor, for example, then divide the Accumulated Gross Profit between each of the sales categories proportionate to their portion of last year&#8217;s total sales. These will then show you the Accumulated Gross Profit for Food, Accumulated Gross Profit for Beer, Accumulated Gross Profit for Liquor and Accumulated Gross Profit for Wine.From the Accumulated Gross Profit for each sales category, we need to determine a gross profit per item needed. This is the number that shapes the pricing structure. In order to figure gross profit per item, you need to have accurate sales counts in each of the sales categories. Item counts. This is where a POS system takes a huge load of work from you. Many operators do still track sales items by hand on a daily basis. Those that don&#8217;t track at all, there&#8217;s a good reason why you may not be making as much money as you could.</p>
<p>The Accumulated Gross Profit for each sales category is then divided by the total item count sold in that category. If you are figuring liquor, for example, each drink counts as one item. Doubles are only one item. Each individual sale counts as one. Food is the same way, if a food item is sold at a separate price, appetizers for example, that item counts as 1, if you charge extra for salads, that counts too. The focus is to get a needed average gross profit per item, no matter how big or small.</p>
<p>The gross profit per item we need is the basis for the pricing structure of every item we sell. If collect the proper gross profit per item, plus the cost we are paying for the product, we will achieve the profit we priced for. This is the only pricing method I know of that allows you to pick how much money you want to make and accurately budget for it.</p>
<p>I was intended to go into detail about liquor pricing in this post, but realized without explaining gross profit, it was pointless. I will continue in another post.</p>
<p>Brandon</p>
<p><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><a href="http://www.restaurantowner.com/members/forum/replyto.cfm?articleID=1702&amp;forum=1"><span style="color:#0d2155;text-decoration:none;">Reply</span></a></span></p>
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<td style="background-color:transparent;border:#f0f0f0;padding:.75pt;" valign="top"><span style="font-size:7.5pt;color:#000000;font-family:Verdana,sans-serif;">Posted Aug 01,2004 2:15 AM </span></td>
<td style="width:72.98%;background-color:transparent;border:#f0f0f0;padding:.75pt;" width="72%"><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><strong>brandon</strong> </span></td>
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<td style="width:99.4%;background-color:transparent;border:#f0f0f0;padding:.75pt;" colspan="2" width="99%"><span style="font-size:x-small;">Pricing Beer by Gross Profit</span><span style="font-size:x-small;">I thought I&#8217;d start with beer since there are less variations in pricing in the beer category.From the &#8220;Pricing&#8221; post, we have already established a needed gross profit per item on beer from dividing our accumulated gross profit by the sales mix percentage for beer.Ex. -<br />
Total Accumulated Gross Profit = Expenses + Needed Profit + Cost of Living Increase </span><span style="font-size:x-small;">Accumulated Gross Profit*Beer Sales Mix Percentage (% of total sales dollar volume attributed to beer) = Accumulated Gross Profit for Beer</span><span style="font-size:x-small;">Accumulated Gross Profit for Beer/Total Units of Beer Sold = Gross Profit per Item on BeerThis number is what we need to average for every beer sold in order for our beer sales to hold up their end of our profitability program. For the purpose of this post, we&#8217;ll say that number came out to be $2.00 per item. That is the amount we need to average above our product cost in order to achieve the amount of profit we budgeted into our needed gross profit.</p>
<p>The first step to pricing based on gross profit is simply to add our needed gross profit per item to our product cost plus tax and waste. We will later adjust up or down from there based on a couple factors to influence our customer&#8217;s buying habits and increase our realized gross profit per item purchased.</p>
<p>Ex. -<br />
Domestic draft 16oz &#8211; $76.55 after tax and waste / 150 pours per keg = $.51 per draft product cost. $2.00 needed gross profit per item + $.51 product cost = $2.51 needed per domestic draft</p>
<p>Premium draft 16oz &#8211; $153.10 after tax and waste (great beer) / 150 pours per keg = $1.02 per draft product cost. $2.00 needed gross profit per item + $1.02 product cost = $3.02 needed per premium draft</p>
<p>Domestic bottle &#8211; $.78 per bottle product cost after tax and waste + $2.00 needed gross profit per item = $2.78 needed per domestic bottle</p>
<p>Premium bottle &#8211; $1.19 per bottle product cost after tax and waste + $2.00 needed gross profit per item = $3.19 needed per premium bottle</p>
<p>The first thing you may notice when performing this first step in pricing by gross profit is that while lower priced items seem to be about what you are used to seeing, you don&#8217;t seem to need near as much for premium items as you were taught to believe. The main point at this stage of implementing this pricing structure is to figure a base price to adjust from that will allow us to obtain our profit margin we calculated into our gross profit. If we sold all of these items at the prices we determined with our gross profit per item markup, we will achieve that profit margin.</p>
<p>Now that we have a profitable formula, next we will try to manipulate it to exceed our profit goals as opposed to just realizing them. That will be our next post.</p>
<p><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><a href="http://www.restaurantowner.com/members/forum/replyto.cfm?articleID=1719&amp;forum=1"><span style="color:#0d2155;text-decoration:none;">Reply</span></a></span></p>
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<td style="background-color:transparent;border:#f0f0f0;padding:.75pt;" valign="top"><span style="font-size:7.5pt;color:#000000;font-family:Verdana,sans-serif;">Posted Aug 04,2004 7:48 AM </span></td>
<td style="width:72.98%;background-color:transparent;border:#f0f0f0;padding:.75pt;" width="72%"><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><strong>VirginiaBeach717</strong> </span></td>
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<p class="forum" style="margin:auto 0;"><span style="font-size:x-small;">WOW!!!What a concept. Is anyone reading this?? I&#8217;ve been waiting days to see if someone would respond. I&#8217;m not sure I buy into this concept; heck, I&#8217;m not even sure I understand it completely but here goes anyway. Say I want to make $50K more next year. If I follow what you say, then I need to break out my beer percentage sales. So I take 28.19%(beer sales) of $50K which gives me $14095 profit dollars for beer sales. I then divide that by 132,126 unit sales of beer which comes to ten cents per beer. Ten Cents!!! That&#8217;s all?? Of course, I&#8217;ve got to apply the same theory to all other items. But I just raised the price of beer .25 so I should enjoy a handsome $49,333 additional profit from the beer alone. (Mixed beverages went up a quarter and food prices caught with the increase in cost of goods.) I can see new golf clubs in my future. Am I understanding this correctly?<br />
Which leads to a comment I wanted to make on a previous thread regarding purchasing new autos. I made the mistake of buying a nice boat. Even though the customers got to go fishing for free, it wasn&#8217;t enough. I remodeled the bar, new carpet, new dishes and decorations and I then heard from several people &#8220;We like how you&#8217;re spending our money&#8221; I guess it&#8217;s important to &#8220;share the wealth&#8221;. </span></p>
<p><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><a href="http://www.restaurantowner.com/members/forum/replyto.cfm?articleID=1759&amp;forum=1"><span style="color:#0d2155;text-decoration:none;">Reply</span></a></span></td>
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<td style="background-color:transparent;border:#f0f0f0;padding:.75pt;" valign="top"><span style="font-size:7.5pt;color:#000000;font-family:Verdana,sans-serif;">Posted Aug 04,2004 8:55 AM </span></td>
<td style="width:72.98%;background-color:transparent;border:#f0f0f0;padding:.75pt;" width="72%"><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><strong>VirginiaBeach717</strong> </span></td>
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<p class="forum" style="margin:auto 0;"><span style="font-size:x-small;">Don&#8217;t you hate interruptions? My profit with a twenty-five cent increase is $33031. Sorry about the math. </span></p>
<p><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><a href="http://www.restaurantowner.com/members/forum/replyto.cfm?articleID=1762&amp;forum=1"><span style="color:#0d2155;text-decoration:none;">Reply</span></a></span></td>
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<td style="background-color:transparent;border:#f0f0f0;padding:.75pt;" valign="top"><span style="font-size:7.5pt;color:#000000;font-family:Verdana,sans-serif;">Posted Aug 04,2004 8:39 PM </span></td>
<td style="width:72.98%;background-color:transparent;border:#f0f0f0;padding:.75pt;" width="72%"><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><strong>Clemmons8085</strong> </span></td>
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<p class="forum" style="margin:auto 0;"><span style="font-size:x-small;">Virginiabeach, I am with you,<br />
I am trying to break it all down to fit my concept and see how the numbers come out. I hope for your sake that you will enjoy the increases!<br />
Kyle<br />
PS you might not need Roys system! </span></p>
<p><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><a href="http://www.restaurantowner.com/members/forum/replyto.cfm?articleID=1768&amp;forum=1"><span style="color:#0d2155;text-decoration:none;">Reply</span></a></span></td>
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<td style="background-color:transparent;border:#f0f0f0;padding:.75pt;" valign="top"><span style="font-size:7.5pt;color:#000000;font-family:Verdana,sans-serif;">Posted Aug 06,2004 3:22 PM </span></td>
<td style="width:72.98%;background-color:transparent;border:#f0f0f0;padding:.75pt;" width="72%"><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><strong>brandon</strong> </span></td>
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<td style="width:99.4%;background-color:transparent;border:#f0f0f0;padding:.75pt;" colspan="2" width="99%"><span style="font-size:x-small;">&gt;&gt;&gt;I&#8217;m not sure I buy into this concept; heck, I&#8217;m not even sure I understand it completely but here goes anyway. Say I want to make $50K more next year. If I follow what you say, then I need to break out my beer percentage sales. So I take 28.19%(beer sales) of $50K which gives me $14095 profit dollars for beer sales. I then divide that by 132,126 unit sales of beer which comes to ten cents per beer. Ten Cents!!! That&#8217;s all?? Of course, I&#8217;ve got to apply the same theory to all other items. But I just raised the price of beer .25 so I should enjoy a handsome $49,333 additional profit from the beer alone.&lt;&lt;&lt;</span><span style="font-size:x-small;">Not sure I follow your math, but you have the numbers necessary to figure out how to make more money next year. If you are trying to make $50,000 on your bottom line next year, you simply have to increase sales by $50,000 without increasing expenses. A price raise would accomplish this, but the math needs to be a little different. A $.10 price increase across 132,000 units, without a drop in # of items sold, would result in $13,200 straight to the bottom line, not $50,000. To reach $50,000 you divide $50,000 across 132,000 units sold to figure how much more you need per unit. It comes out to just under $.38 per unit in needed price increase without a drop in volume.Brandon<span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><a href="http://www.restaurantowner.com/members/forum/replyto.cfm?articleID=1780&amp;forum=1"><span style="color:#0d2155;text-decoration:none;">Reply</span></a></span></span></td>
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<td style="background-color:transparent;border:#f0f0f0;padding:.75pt;" valign="top"><span style="font-size:7.5pt;color:#000000;font-family:Verdana,sans-serif;">Posted Aug 06,2004 3:23 PM </span></td>
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<td style="width:99.4%;background-color:transparent;border:#f0f0f0;padding:.75pt;" colspan="2" width="99%"><span style="font-size:x-small;">&gt;&gt;&gt;Don&#8217;t you hate interruptions? My profit with a twenty-five cent increase is $33031. Sorry about the math.&lt;&lt;&lt;</span><span style="font-size:x-small;">Sorry, didn&#8217;t realize you had already corrected your math.<span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><a href="http://www.restaurantowner.com/members/forum/replyto.cfm?articleID=1781&amp;forum=1"><span style="color:#0d2155;text-decoration:none;">Reply</span></a></span></span></td>
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<td style="background-color:transparent;border:#f0f0f0;padding:.75pt;" valign="top"><span style="font-size:7.5pt;color:#000000;font-family:Verdana,sans-serif;">Posted Aug 06,2004 4:16 PM </span></td>
<td style="width:72.98%;background-color:transparent;border:#f0f0f0;padding:.75pt;" width="72%"><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><strong>brandon</strong> </span></td>
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<td style="width:99.4%;background-color:transparent;border:#f0f0f0;padding:.75pt;" colspan="2" width="99%"><span style="font-size:x-small;">Price Structuring</span><span style="font-size:x-small;">Now that we have a profitable formula, next we will try to manipulate it to exceed our profit goals as opposed to just realizing them. That will be our next post.&#8221;We left off by determining a needed gross profit per item and adding it to our product cost to create a formula that will net us the profit we priced for. For many people, this is enough, but you will notice, while bottom prices are somewhat comparable and not necessarily a great bargain in comparison to other operations, the premium prices seem like a steal. This is where many operations run afowl and lose focus on the ultimate goal, increasing the average gross profit per item.By pricing by product cost, most operations come out with comparable prices on the low price items as they would in pricing by gross profit. Their prices on the premium items are usually well above the baseline price for pricing by gross profit though. Pricing by product cost encourages the idea that most people come in your restaurant/bar to drink what&#8217;s cheap, then you make up as much as possible on the premium drinks with the people who simply won&#8217;t sacrifice quality. </span><span style="font-size:x-small;">We need to set up our pricing structure so it not only increases the perception of value, but encourages the sale of premium products through agressive pricing and results in an increase of gross profit per item through the increased sale volume of premium items. Our goal is to become &#8220;The Place&#8221; to drink premium drinks affordably.</span><span style="font-size:x-small;">With our baseline pricing, currently we are making the same gross profit per item on premium beers as we are on domestic beers, but we left ourselves a lot of room to manuveur on the premium beer pricing and a little room to use added value on domestic beers to further draw in a crowd.Stated example for our baseline pricing from earlier:<br />
&#8220;Ex. -<br />
Domestic draft 16oz &#8211; $76.55 after tax and waste / 150 pours per keg = $.51 per draft product cost. $2.00 needed gross profit per item + $.51 product cost = $2.51 needed per domestic draft</p>
<p>Premium draft 16oz &#8211; $153.10 after tax and waste (great beer) / 150 pours per keg = $1.02 per draft product cost. $2.00 needed gross profit per item + $1.02 product cost = $3.02 needed per premium draft</p>
<p>Domestic bottle &#8211; $.78 per bottle product cost after tax and waste + $2.00 needed gross profit per item = $2.78 needed per domestic bottle</p>
<p>Premium bottle &#8211; $1.19 per bottle product cost after tax and waste + $2.00 needed gross profit per item = $3.19 needed per premium bottle&#8221;</p>
<p>Now we adjust the baseline pricing to 1) Still meet the average gross profit per item if our sales mix does not change, and 2) Increase our gross profit per item when value in premium beer is realized and sales mix shifts further toward premiums.</p>
<p>We do this by doing two things:<br />
- Slightly decreasing the price of domestic beers to create value for the current bulk of our customers<br />
- Increasing the price, from the gross profit baseline, of the premium products to realize a greater gross profit per item on premium sales, but keeping the price significantly below the competition.</p>
<p>Truthfully, on beer, there is not a lot of room to play with pricing because of the limited range of product sold in the beer category, but there still is some room.</p>
<p>First we set a minimum markup that will still allow us to sustain our average gross profit per item, then we set a maximum gross profit per item necessary. The minimum markup will apply to all items, no matter how little they cost us. The maximum markup will also apply to all items, no matter how much it costs us.</p>
<p>Given the example baseline prices we determined above, here is how I would structure them:</p>
<p>Domestic draft:<br />
baseline price $2.51<br />
structured price $2.25<br />
markup $1.74<br />
This price decrease helps create the perception of value</p>
<p>Premium draft:<br />
baseline price $3.02<br />
structured price $3.50<br />
markup $2.48<br />
This increase still keeps our premium draft well below most our competition, but raises our gross profit per item significantly.</p>
<p>Domestic bottle:<br />
baseline price $2.78<br />
structured price $2.75<br />
markup $1.97<br />
This decrease is very slight, but serves to keep us $.25 or more below most of the competition while still helping to maintain our average gross profit per item until our increased volume of premiums sold increases it.</p>
<p>Premium bottle:<br />
baseline price $3.19<br />
structured price $3.50<br />
markup $2.31<br />
This price is still fairly agressive for a premium bottle and will help us build volume in premium bottle sales.</p>
<p>Our established minimum markup for beer products is $1.74. Our established maximum markup is $2.31. No matter how much we pay for a 12 oz bottle of beer, the most we will mark it up is $2.31.</p>
<p>The focus now that the prices are set is to start marketing our premium beers. Increasing the selection of premium beers and focusing in house marketing, such as a monthly featured beer or beer suggestions with the specials, on the premium beers are going to help draw focus to our new agressive pricing. The low reasonably low prices on domestics in addition to very low prices on premiums serve to break down the resistance of our customers to trying new beers. They know they are always paying a good price, and the more expensive the beer, the better the value (remember, we never mark any beer up more than $2.31). The more you focus on beers that normally cost you too much to make a good product cost percentage on, the more your agressive pricing will be evident to your customers. Instead of having to charge $6 to make your percentage on an expensive imported beer that cost you $2, you now only have to charge $4.31, blowing out the competition.</p>
<p>The ending result is to try and make your place, &#8220;The Place&#8221; to go for a great beer for a great price not the place to go to drink cheap. People come in because they know everything is a bargain, not because Tuesdays are 2-4-1 drafts or beers are $1 from 4 to 6 on Happy Hour Wednesdays. Your customers focus should be on the special selection, not the deal that&#8217;s too good to pass up one day a week.</p>
<p>We started with beer because of the simplicity of the beer pricing. The basic premise of pricing by gross profit should be clear now. Next, we&#8217;ll focus on liquor, where the difference in pricing by gross profit and pricing by product cost are easier to realize.</p>
<p>Brandon</p>
<p><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><a href="http://www.restaurantowner.com/members/forum/replyto.cfm?articleID=1782&amp;forum=1"><span style="color:#0d2155;text-decoration:none;">Reply</span></a></span></p>
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<td style="background-color:transparent;border:#f0f0f0;padding:.75pt;" valign="top"><span style="font-size:7.5pt;color:#000000;font-family:Verdana,sans-serif;">Posted Aug 06,2004 4:20 PM </span></td>
<td style="width:72.98%;background-color:transparent;border:#f0f0f0;padding:.75pt;" width="72%"><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><strong>brandon</strong> </span></td>
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<td style="width:99.4%;background-color:transparent;border:#f0f0f0;padding:.75pt;" colspan="2" width="99%"><span style="font-size:x-small;">After re-reading, I see I stated our maximum markup at $2.31 whereas we used $2.48 in the example.</span><span style="font-size:x-small;">The maximum markup stated for any product should be $2.48, not $2.31.</span></td>
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<p><strong><span style="font-size:18pt;"> </span></strong><strong><span style="font-family:Times New Roman;">From “</span></strong><span class="forum1"><strong><span style="font-size:10pt;"><span style="font-family:Verdana;">Liquor and Wine cost percentages for fine dining</span></span></strong></span><strong><span style="font-family:Times New Roman;">” thread – RO.com</span></strong></p>
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<p class="MsoNormal" style="margin:0;"><span style="font-size:7.5pt;color:#000000;font-family:Verdana,sans-serif;">Posted Jul 26,2004 1:21 PM </span></p>
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<td style="width:73.04%;background-color:transparent;border:#f0f0f0;padding:.75pt;" width="73%"><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><strong>edfeakum</strong> </span></td>
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<td style="width:99.4%;background-color:transparent;border:#f0f0f0;padding:.75pt;" colspan="2" width="99%"><span style="font-size:x-small;">We are a fine dining restaurant (white table cloth only at dinner)located in the Pittsburgh area. Our Per Person Average is $30.33 (including lunch and dinner). I would like to see Liquor Cost Percent, Wine Cost Percent and Food Cost Percent for similar restaurants. Thank you</span><span style="font-size:x-small;">Ed Lewis<br />
Bruschetta&#8217;s Restaurant<br />
412-431-3535<br />
<a href="mailto:edlewis@ifm-pgh.com"><span style="font-size:x-small;color:#2a4175;">edlewis@ifm-pgh.com</span></a><span style="font-size:x-small;"> </span><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><a href="http://www.restaurantowner.com/members/forum/replyto.cfm?articleID=1647&amp;forum=1"><span style="color:#0d2155;text-decoration:none;">Reply</span></a></span></span></td>
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<td style="background:#eeeeee;width:26.06%;border:#f0f0f0;padding:.75pt;" width="26%" valign="top"><a title="1649" name="1649"></a><span class="forumcolumn1"><span style="font-size:10pt;">message</span></span></td>
<td style="background:#eeeeee;width:73.04%;border:#f0f0f0;padding:.75pt;" width="73%" valign="top"><span class="forumcolumn1"><span style="font-size:10pt;">Posted By</span></span></td>
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<td style="background-color:transparent;border:#f0f0f0;padding:.75pt;" valign="top"><span style="font-size:7.5pt;color:#000000;font-family:Verdana,sans-serif;">Posted Jul 26,2004 4:06 PM </span></td>
<td style="width:73.04%;background-color:transparent;border:#f0f0f0;padding:.75pt;" width="73%"><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><strong>brandon</strong> </span></td>
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<td style="width:99.4%;background-color:transparent;border:#f0f0f0;padding:.75pt;" colspan="2" width="99%"><span style="font-size:x-small;">Percentages are really only useful after you have a profitable formula worked out to determine what your pricing should be in order to make a profit. Comparing your cost percentage to a different operation&#8217;s cost percentage could be very misleading. Another operation may have higher product cost percentages but make it up in saved labor, low rent or no advertising costs. Comparing your cost percentage really is not going to give you much useful information.</span><span style="font-size:x-small;">That being said, I&#8217;ll still offer what I&#8217;ve done at some locations. My background includes quite a bit of time in Country Club settings. Overhead in those settings are completely different, but cost percentages are usually higher than in public settings so they may give you some sort of maximum guideline. With an 8-10% profit margin in a Country Club setting which included 4 ala carte dining rooms, 8 banquet rooms and 4 snack outlets, our year end costs would break down to something similar to this: 35% food cost including soft beverages (free snacks to members and employee meals expensed out), 24% liquor cost, 35% beer cost, 31% wine cost.Our overall alcoholic beverage cost for the year would be around 29.5%. That would be considered high in many restaurants, but the cost reflects a mixture of 60% of our alcoholic beverage sales being wine. 75% if I looked at ala carte exclusively. My beverage program was very, very profitable due to my high mixture of wine sales. My wine cost percentage was not indicative of my wine pricing structure either. I offered very aggressive pricing on wine that showed more value, the more expensive the wine cost was. My members flocked to the wines. Many people that were not habitual wine drinkers started drinking more wine because of the buzz created and the natural resistance that accompanies insecurity about their ability to choose wine. They knew they always received a great value. The increase in sales of our low, low cost, good quality house wines due to the break down of the resistance of fence sitting could-be wine drinkers drove our wine cost percentage down and our sales of all wines, especially the premium wines through the roof. All that despite the fact that outside of my house wines, I never marked a bottle up more than $25 over what I paid for it.1999 Chateau Lafite Rothschild (France)&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;$230<br />
Two restaurants down the street sold the same wine for $475 (40% cost)Members would notice my price on the most expensive wines were below the price they paid at the liquor store. The whole focus was to drive everyone toward bottles that returned me a $6.25 gross profit per glass instead of the $3.50 per glass I made on the house wines or the $2 per drink I made on beer. Pricing for liquor was equally aggressive on the high end liquors to push people toward drinks that return a higher profit dollar, not lower cost percentage.I would be more that willing to talk more about structuring your beverage program if you&#8217;re interested. I have reproduced my method, even in small towns, to success in every instance.Brandon</p>
<p><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><a href="http://www.restaurantowner.com/members/forum/replyto.cfm?articleID=1649&amp;forum=1"><span style="color:#0d2155;text-decoration:none;">Reply</span></a></span></p>
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<td style="background:#eeeeee;width:26.06%;border:#f0f0f0;padding:.75pt;" width="26%" valign="top"><a title="1660" name="1660"></a><span class="forumcolumn1"><span style="font-size:10pt;">message</span></span></td>
<td style="background:#eeeeee;width:73.04%;border:#f0f0f0;padding:.75pt;" width="73%" valign="top"><span class="forumcolumn1"><span style="font-size:10pt;">Posted By</span></span></td>
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<td style="background-color:transparent;border:#f0f0f0;padding:.75pt;" valign="top"><span style="font-size:7.5pt;color:#000000;font-family:Verdana,sans-serif;">Posted Jul 27,2004 8:11 AM </span></td>
<td style="width:73.04%;background-color:transparent;border:#f0f0f0;padding:.75pt;" width="73%"><span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><strong>jimlaube</strong> </span></td>
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<td style="width:99.4%;background-color:transparent;border:#f0f0f0;padding:.75pt;" colspan="2" width="99%"><span style="font-size:x-small;">Ed, according to the latest NRA Industry Operations Report for Restaurants with a PPA of $25 to $32.99, the median (half above and have below) is 31.3% for all alcoholic beverages combined. This is not broken down by category so I know it&#8217;s of limited value. Sales mix, pricing structure, etc. can have a major impact on beverage costs. From my experience in upper casual and fine dining restaurants, I&#8217;ve normally seen a straight liquor cost of 18%-20%, however, I have seen it as low as 14%. Once in a Mexican restaurant that sold LOTS of margaritas and at a high end restaurant in Vail (very high price points). Many restaurant break out bar consumables and reflect those items that includes garnishes, cocktail mixes, etc. in a separate account within the cost of sales category. Bar consumables normally runs 4%-5% of liquor sales.</span><span style="font-size:x-small;">Personally, I like to see draft and bottled beer broken out both as sales and costs because the cost structure is very different. Draft normally runs 14% &#8211; 18% while bottled 24% &#8211; 28%. Selling a large share of imported or specialty beers can however push these percentages up.Wines cost, as Brandon alluded to, can be all over the board depending on bottled versus by the glass sales and the type of wine list you have. Obviously the more expensive the bottled wine the higher the cost but the greater the gross profit margin. I&#8217;ve seen wine sales in higher end restaurants run anywhere from the low 30&#8242;s to 40%.I think Brandon&#8217;s wine strategy is brilliant and I&#8217;ve seen a few restaurant operators take a similar approach in developing a &#8220;bargain&#8221; reputation on quality wine with much success.Let me know if you have any follow up questions or comments.Jim<span style="font-size:10pt;color:#000000;font-family:Verdana,sans-serif;"><a href="http://www.restaurantowner.com/members/forum/replyto.cfm?articleID=1660&amp;forum=1"><span style="color:#0d2155;text-decoration:none;">Reply</span></a></span></p>
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		<title>How much should I budget for marketing in my startup?</title>
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		<pubDate>Mon, 04 Feb 2008 10:30:13 +0000</pubDate>
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		<description><![CDATA[It&#8217;s common for startup restaurants to budget an initial 10% of their sales to go toward marketing in the first few months. If no one knows who you are, it can take some $&#8217;s to get known. After that, it&#8217;s &#8230; <a href="http://blog.bodellconsulting.com/2008/02/04/how-much-should-i-budget-for-marketing-in-my-startup/">Continue reading <span class="meta-nav">&#8594;</span></a><img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=blog.bodellconsulting.com&amp;blog=2484918&amp;post=15&amp;subd=bodellconsulting&amp;ref=&amp;feed=1" width="1" height="1" />]]></description>
			<content:encoded><![CDATA[<p>It&#8217;s common for startup restaurants to budget an initial 10% of their sales to go toward marketing in the first few months. If no one knows who you are, it can take some $&#8217;s to get known.</p>
<p>After that, it&#8217;s more common to see 2-4% of your sales being directed toward marketing. As far as how to break that down, that depends on a lot of factors, including your ability to do much of the work yourself. The less you are in the business working, and the greater ability you have to design and print your own materials, the less of your sales you will spend on marketing. Different marketing mediums work differently for each business also.</p>
<p>No matter what you budget, you&#8217;ll want to focus your personal effort first on the most inexpensive marketing tactics, like shaking hands and giving out samples with menus to get your name and product in front of people. You&#8217;ll also want to concentrate a lot of effort on building your customer database. Marketing dollars spent communicating with anyone who has already been in your restaurant will most likely yield the greatest return on marketing dollars.</p>
<p>Of other factors that will determine how much you need to budget, your location, visibility, and accessability are the most important. A good location, combined with ease of access, and visible, well designed signage can go a long ways to drive traffic into your business, eliminating some of the need for costly marketing campaigns.</p>
<p>Your message itself will also affect how much you will have to spend on marketing too. If you have a good unique selling proposition, and use it effectively, you&#8217;ll have to spend less to get people in your door. If your concept is confusing to people, if you try to be too many different things to too many people, or if you fail to follow through with your USP&#8217;s promise, you&#8217;ll have a hard time filling seats no matter how much you spend.</p>
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