Monthly Archives: August 2012

Huge potential in QSR segment for ethnic restaurants

Here is an article citing some consumer feedback on the availability of ethnic foods in full service and quick service restaurants. Not surprisingly, there is a lot of potential for growth in both the full service and quick service restaurant segments for ethnic cuisine.

Take a look at the article and let us know on our blog what ethnic restaurants you wish you had in your market that you don’t…

Only 23% of Consumers Satisfied with Ethnic Offerings

Brandon O’Dell and O’Dell Restaurant Consulting offer operations and brand strategy advice for independent restaurants. Learn more at www.bodellconsulting.com.

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What mobile apps are helpful to restaurants?

The potential of apps in business settings is mind boggling. Every time you turn around, someone introduces another fantastic app that automates a process or system for your business or personal life for a very cheap price. Unlike software, apps don’t carry a lot of packages, postage and marketing overhead. An app is hosted on a website and you use it via the internet, making traditional distribution methods for software worthless overhead.

Five years ago, when Microsoft and other companies were predicting that we would all be using internet applications instead of software someday, I thought they were crazy. Now, the writing is one the wall. Great applications are coming out constantly and business owners that don’t learn how to use them face the possibility of not being able to compete with business owners that do. Restaurants are no exception.

The following is a great article I found on mobile apps that are designed specifically for restaurants that really give you a good idea of some of the potential uses for apps. Some of them are already popular and some still have a little growth needed before they become mainstream and really effective. Either way, this article from Software Advice’s Stephanie Shih is a must read for any restaurant owner or marketing professional that wants to stay ahead of the competition.

Check it out here: 6 mobile apps restaurants should know about

Brandon O’Dell of O’Dell Restaurant Consulting offers operations and marketing assistance to independent restaurant owners and small chains. Learn more at www.bodellconsulting.com.

Are daily deal sites like Groupon good for restaurants?

With most of these sites, you offer a gift certificate that is sold on the site for 50% off. That’s a pretty big hit already, and by itself would turn one of these deals into a money loser. To make it really expensive though, these deal sites demand 50% of the money that is collected, and expect you to pay for the processing cost of the transactions for your gift certificates.

In numbers, here is how the “deal” looks.

  • You offer a $50 gift certificate for $25.
  • Groupon keeps $12.50, you keep $12.50.
  • You pay a 3.5% processing charge on the full $50 sale, which is $1.75.
  • You net $10.75 for $50 worth of your product.
  • The customer comes in and spends $10 over the gift certificate with a net tab of $60 (if you’re lucky).
  • You run a food cost of 33% on your product meaning that the food you sold cost you $20 to sell.
  • You normally run a 30% labor cost. You think it will go down when these deals get redeemed since you are busier, but you forget to factor in your loss of revenue so your labor cost actually goes up to 40%, not down, costing you $24 in labor.

Without calculating in other costs like laundry, chemicals, wear and tear on furniture, fixtures and equipment, and every other cost of you doing business outside of the 10% of your budget that is fixed, this daily deal that netted you $20.75 in sales (thanks to the extra $10 they spent) cost you $44 to sell. That’s a net loss of $23.25 for every deal that you sell. Since most deals sell 1000+ gift certificates, you could be looking at your Groupon, Restaurant.com or LivingSocial “advertising” campaign costing you $23,000 or more.

In contrast, that amount of money could buy you a premium billboard location ad for a year, two years worth of cable TV ads or 6 months of prime network television ads, two to four years of radio advertising, two years of service from a professional public relations specialist or full page color ads in two premium magazine circulations for an entire year.

One of the “selling points” for the daily deal is that the cost is spread out so you don’t have to pay for it all at once. In truth though, all advertisers will do this for you. The daily deal sites are doing you any favors or offering you anything you can’t get from another advertising medium. What they ARE very effective at is getting customers through your door, who will likely be loyal to the daily deal site instead of your restaurant, who will tip your servers low because of their low check averages, and who you will likely never see again.

There are a few businesses that daily deal sites could be good for, but restaurants are not one of them. For some great analysis on other problems created by these sites, for both business owners and buyers of these deals, check out the following article from USA Today, based on a study by Applied Predictive Technologies…

Daily coupon deals may not work for buyers, sellers | USAToday.com

Brandon O’Dell and O’Dell Restaurant Consulting offer operations and marketing consulting for independent restaurants, private clubs and food services. Learn more at www.bodellconsulting.com.

Are you taking advantage of low lobster prices? | O’Dell Restaurant Consulting blog

Lobster prices | NPR.orgWhen prices move significantly on food, it usually worries restaurant owners. There are times when prices going down OR up can offer you a good opportunity to earn extra revenue though.

Currently, Maine lobster prices are tanking. There has been a glut of Maine lobsters caught this year and prices for lobsters on the East coast have hit a record low. While a restaurant owner might normally think “prices are down, that’s great for me“, it can be a double edged sword. You do not want prices on your already low priced products going down, especially if those products make up a large portion of your sales. While initially you may earn more money from lower recipe costs from those items, eventually your customer is going to want some of those savings passed on to them. When you do decide to drop your prices or offer featured items with these low priced ingredients, what you might experience is a skewing of your product mix to those lower priced items. This can actually canabalize sales of other items that may have a higher food cost percentage, but also likely contribute more gross profit dollars to your bottom line. That means less money in the bank.

Low lobster prices are a different story. When typically high priced food items drop in price, they allow you to lower your prices and skew your sales mix toward those items. Even though those items cost less than they normally do, the lobster is probably still going to be higher priced than your average sale and contribute more gross profit dollars than your average item sold. This represents a huge opportunity to improve both sales and profitability. By offering a lower price on lobster, your guests perceive that they are getting an incredible value so more of them order the lobster. Your average ticket goes up and so does your average gross profit per item sold. Win for you and a win for your customer.

O’Dell Restaurant Consulting offers operations and marketing consulting for independent restaurants. Visit www.bodellconsulting.com for more information.

Restaurants to Face Higher Food Costs | WSJ.com

Drought Forces Restaurants to Face Higher Food Costs – WSJ.com.

This shouldn’t come as a surprise to any restaurant owner, but food costs are on their way up this year thanks to the drought and resulting decimation of the corn and other crops.

Direct feedback from Robert Irvine on my Poco’s in KC article | O’Dell Restaurant Consulting blog

I recieved some feedback via Twitter from Robert Irvine of Restaurant Impossible about my recent article Restaurant Impossible at Poco’s in Kansas City.

I posted some pics of the outside of Poco’s in Kansas City while the Restaurant Impossible crew was there giving the restaurant the “Robert Irvine treatment”. In the article, I commented that I didn’t see the “frenzy” of activity I always see on the show and I asked some questions that I’ve been curious about since shows like Restaurant Makeover, Gordon Ramsay’s Kitchen Nightmares and Restaurant Impossible have been helping struggling restaurant owners fix their menus, their decor, and even their attitudes.

My questions include inquiries about what happens after the Restaurant Impossible crew is gone. Is there support after the makeover? You can read those specific questions in my article here.

I tweeted a link of my article to Robert Irvine and apparently he read it because he tweeted back to directly answer my most pressing questions. Here is our Twitter conversation, and make sure you are reading my own tweets back to keep everything in context. Also, I believe in full disclosure. I am a fan of the show, though it does not reflect the type of work I do with restaurants, and I appreciate Robert’s willingness to engage his fans.

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Restaurant Impossible at Poco’s in Kansas City | O’Dell Restaurant Consulting blog

Poco's Latin restaurant

Poco’s on the Boulevard in Kansas City, MO

I took a drive by Poco’s on the Boulevard today to snap some pictures of Robert Irvine’s Restaurant Impossible crew in action. Poco’s is a Latin restaurant that is near Kansas City, Missouri’s hispanic neighborhoods, and competes with a lot of great Mexican restaurants located just down the street.

Restaurant Impossible at Poco's in Kansas City

The “rear” view of Poco’s in Kansas City, MO and the Restaurant Impossible tents

When I drove up to Poco’s I expected to see a beehive of activity. Based on the show, the two day makeover is a mad dash to get finished, with Chef Robert yelling that they’ll “never get done on time”. That’s not at all what I saw though. What I witnessed was what appeared to be an organized and calm effort, with most the people helping either sitting or standing around. No running or hurrying and no stress. At least not outside the restaurant. Behind the restaurant, I saw servers in Poco’s uniforms sitting and talking. From across the street, I couldn’t tell what they were doing, whether it was training or helping with the remodel or something else.

As a restaurant and food service consultant, I’ve always wondered what happens when the Restaurant Impossible or Ramsay’s Kitchen Nightmares crew leaves. The restaurant has a new look, the menu is smaller, fresher, and likely higher priced, there is a boost in business due to the publicity and the owners have a new energy to “make it work this time”. My real concern for these restaurants is what happens next. Are the owners left with their same bad habits, only to revert to what is easiest? Do they continue to cling to the old crowd of customers that wasn’t enough to keep them in business, and alienate all the new potential customers by reverting to old habits and menus? Do they have new organizational systems in place or someone teaching them what information to record and how to organize their restaurant’s data to make sure they can be successful in the long run? Is there support after the reboot?

I don’t have the answers to any of those questions, but I do know one thing. More restaurants fail as a result of bad management practices than bad food. That doesn’t mean you can plan on being successful with bad food. The food is obviously very important. It just means that having good food isn’t enough. You have to have management systems in place and a process for tracking and saving important information about your restaurant, to allow you to make better, more informed decisions. You also need to have someone to talk to that knows what successful restaurants are doing that you aren’t, outside of the food.

Restaurant Impossible in the parking lot of Poco's in Kansas City

Most of the Restaurant Impossible staff sitting outside of the restaurant

These restaurants that receive free makeovers from the likes of Robert Irvine, Gordon Ramsay, or the Restaurant Makeover show are getting an incredible gift. The type of remodels and assistance they are getting is worth many, many times the $10,000 budget these shows stick to. The publicity they are getting is absolutely priceless. I don’t expect to be able to get into Poco’s for the next month. Especially in a food crazy town like Kansas City. I just hope the makeover shows are doing something to provide these restaurants with some support after the makeover. THAT is where the battle will truly be won or lost.

Update 8/10/12 – Robert Irvine answered some of the questions raised in this article via Twitter. See his replies here.

Brandon O’Dell and O’Dell Restaurant Consulting provide marketing and operations consulting services to small and medium budget independent restaurants and small chains, and offers downloadable organizational tools on their website. Brandon also operates a home chef service in the Kansas City and Wichita, KS metropolitan areas. Visit visit www.bodellconsulting.com and www.friendthatcooks.com for details.

Why you should hire a veteran | Monkeydish.com

American flagGreat article off Monkeydish.com about hiring veterans, why it’s a good idea and why restaurant chains are doing it…

Franchisors are courting veterans

Life after Restaurant Impossible | New York Times

Restaurant Impossible article pictureRestaurant Impossible is visiting a little restaurant in the Kansas City metro named Poco’s. They are there right now, as I type this, remaking Poco’s interior, tearing down the menu and likely putting something in place that is smaller and uses fresher ingredients. I’ve only been to Poco’s one time myself. I had some tacos that were okay, but what stuck out to me was how hungry I was when I left. The serving was very small and they didn’t have the customary bottomless chips and salsa you get at every Mexican restaurant in the area. While Poco’s considers itself more “Latin” than “Mexican”, the menu was more Mexican and customers likely made the comparison to Mexican restaurants. I don’t know if I was just there on an off day, but it doesn’t surprise me that they were a candidate for Robert Irvine’s Restaurant Impossible.

In the spirit of Restaurant Impossible being in my neck of the woods, I wanted to share this article from the New York Times about some restaurants that recieved the Restaurant Impossible treatment. As a restaurant and food service consultant, I’m not one to suggest that anyone can fix a restaurant in 48 hours, but it sure makes for fun television.

After the cameras leave the kitchen… from the New York Times – July 9, 2012

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