Tag Archives: gross profit pricing

Are you overloading your kitchen stations?

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Long ticket times are a common problem in restaurants, and nothing will scare a potential regular customer away like having to wait 45+ minutes to get their food.

There are many factors that can increase ticket times. In this post, I would like to cover one of those issues, overloading a kitchen station.

Part of designing a menu that works is making sure you are not overloading one station in the kitchen, or one piece of equipment. Your menu needs to be designed with constraints in mind to prevent you from doing this. Here’s some tips.

    create a graph showing which kitchen station(s) each menu item is prepared in
    within that graph, list which piece of equipment is necessary to the production of each item
    balance your menu items between each kitchen station and each piece of equipment within stations
    eliminate or change menu items that require production from more than two stations

It really can be as simple as that. Without the graph as a visual tool, it’s easy to overlook the fact that you have overloaded a particular station. You’ll likely have a propencity to do just that, based on your own tastes and experiences in cooking particular dishes.

When you sit down to write a menu, I think it’s a good idea to have a rough “sketched to scale” diagram of your kitchen in front of you. You need to constantly be thinking about how many burners you have, how many ovens, how much flat top space, and what your fryer capacity and recovery ability is. With a sketch in front of you, you’ll consider all these factors during the origination process of your menu, instead of after your first 45 minute ticket time.

Remember, you only have one chance to make a good first impression. Work out details like this before you open your doors, or you’ll be closing them a lot sooner than you want to.

Brandon O’Dell
O’Dell Restaurant Consulting
www.bodellconsulting.com
blog.bodellconsulting.com
brandon@bodellconsulting.com
Office: (888) 571-9068

Does your restaurant have an identity?

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Who are we?
What do we want our restaurant to be known for?
What style of service do we offer?
What kind of food do we cook?
What can our customers get from us that they can’t get anywhere else?
How can we make our customers FEEL?
What is our color scheme?

These are all questions you should ask yourself about your restaurant long before you open your doors. The answers to these questions will determine whether potential customers will ever make their way through your doors. They need to know the answers before they will make their decision. Planning to answer them after they get to your restaurant is not good enough. Answering these questions for your customers is what marketing is all about, not promoting discounts, coupons and specials. Answering these questions, in addition to getting your customer’s feedback on your performance, IS communicating, and a lack of communicating with customers will close a restaurant faster than an “F” from the health department.

There are many ways to answer these questions. All of them are forms of marketing, and work together to make up your marketing plan.

Who are we?
What do we want our restaurant to be known for?
What style of service do we offer?
What kind of food do we cook?

These are all questions that can be answered without direct communication. You don’t have to send everyone in the town a personalized letter to tell them what you do (though that would be effective too) if you design your name, logo and decor correctly.

Your name itself, and the font you use should answer many questions for your customers. If your business is “Joe’s Crab Shack” and it’s written in a silly or fun font, your customers can deduce without asking that you are a casual seafood restaurant specializing in crab, that you are most likely “kid friendly”, and that you are probably a sit down restaurant, as “crab shacks” usually are. This is a name that communicates who you are and what you do very well. It answers questions, and people who are looking for that type of restaurant will feel very comfortable making the decision to eat there.

A logo can convey many of the same things a name does. The words and the font the name is printed in is a major part of the logo. In addition, a logo can reinforce your identity by using pictures or symbols that also say what you do or sell. Keeping these pictures or symbols simple and easily recognizable is key. A person should be able to recognize a logo at a glance. It should convey everything it needs to convey in less than half a second, as that is all the attention it will be given. If a logo is too busy, uses too many colors, too detailed of graphics, or has too many words, it’s not as likely that a person will get the message they are supposed to out of the logo. A busy logo is like a long winded storyteller. Though they think they are communicating more effectively because they are going into greater detail, the average person’s attention span isn’t near long enough to absorb all the information they offer, so much of the message is lost. Another key element in making a logo easy to remember is using a basic geometric shape in the design.

What can our customers get from us that they can’t get anywhere else?
How can we make our customers FEEL?

These are two often overlooked aspects of running a successful restaurant. Most new restaurateurs see how other restaurants run themselves, and they think it looks easy. They convince themselves that all they have to do is to do the same thing, only better, and that this will make them successful. The problem with this philosophy is that it doesn’t give your customers any reason to eat at your restaurant than they have to eat at the next one down the road. You’re the same. You think your food is better. All your competitors think their food is better. Both your messages tell your potential customers that YOU are the best at what you do, but by having the same message, you are essentially the same in the eyes of those customers. You need a different message, and the easiest way to have a different message is to offer something your competition doesn’t.

When we’re talking about differentiating you from your competition, we’re not talking about having a couple dishes different on your menu. That’s not enough. You need to have a conceptual difference between you and the restaurant down the street. You need to offer not just food, but an experience they can’t get there. Your concept has to be deeper than your food, because good food and service isn’t a special reason to dine with you, it’s the minimum expectation your customers have for the money they are spending. So your food is great. So what, it’s supposed to be!

What you have to do to differentiate yourself is to create an emotional connection between yourself and your customers. You need to make them FEEL something! Choose a particular emotion to build your concept around. Hardrock Cafe offers “nostalgia”. McDonalds was built on “convenience”. Applebees gives their customers a “neighborly” feeling. Hooters feels “sexy”.

Strong brands are built around strong emotional bonds with your customers. Long after people forget what they ate, and who served them at your restaurant, they will remember how eating at your restaurant made them feel. Then, when they get an urge to feel that way again, they will think of you.

What is our color scheme?

The easiest way to get people to identify you, your building, your menu and your marketing is by using a set color scheme. Choose two to three colors, and possibly a pattern, to use in the design of everything you do. Use it in your logo, your signage, your newsletter, your menu, your indoor and outdoor decor, and anywhere else you can. Having a color scheme makes you easy to identify and easy to find.

Whether you are just entertaining the thought of opening up a restaurant, or have been open for 30 years, ask yourself all these questions. Then ask some of your customers. If they can’t answer these questions, your concept isn’t communicating well with them. If they aren’t having the answers to all these questions effectively communicated to them, imagine how hard it is for them to communicate who you are and what you do to others. Remeber that “word of mouth” advertising you thought you were going to build your business with? There’s a reason why it’s not happening. There’s no reason why it shouldn’t though. Take these questions and build an identity for yourself! Let people know who you are! Communicate! Make your customers FEEL! You’ll soon have more business than you know what to do with.

Brandon O’Dell
O’Dell Restaurant Consulting
www.bodellconsulting.com
blog.bodellconsulting.com
brandon@bodellconsulting.com
Office: (888) 571-9068

O’Dell Restaurant Consulting Weblog moves to new address!

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Hello everyone. Thank you for tuning in to the web log for O’Dell Restaurant Consulting. We have decided to move our blog from WordPress to our own web host! Please make note of the new address. You can follow links on the top right of the page to subscribe to this new address.

http://blog.bodellconsulting.com

We hope to see you at our new address. All new content will be coming to that address, and not to this one, so don’t miss out! Please join us there.

Sincerely,

Brandon O’Dell

What reports are needed to run a restaurant right?

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That’s an important question. There isn’t enough reporting and record keeping in the restaurant business. Many chain restaurant can see by the end of the week whether they made money or not. Most independents have to wait until their accountant returns the monthly numbers anywhere from 4 days to 4 weeks after the end of the month. In my opinion, this is too late. If you don’t know how you did in the first week until the end of the month, you’re not managing proactively in my opinion. You need to be on top of a problem as close to when it happens as possible to solve it.

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Minimum reports I suggest for every restaurant owner:

Sales by item – day/week/period
Purchases & Expenses – week
Inventory – week
Ideal cost of sales – week
Prime cost – week
Budget – week/period
Preliminary P&L – week/period
Actual P&L – period/year
Guest counts – day/week/period
Gross profit per customer/item – week
Labor – day/week/period
Cash reconciliation report – server/shift/day

Each of these reports should include the necessary comparisons to sales, budgets, etc. Reports have to be designed properly, and include all the information needed. With just the budget, labor, purchases, inventory and sales reports, you can generate about anything you need, most importantly a preliminary P&L. If your reports aren’t enough to build a preliminary weekly P&L or cash flow statement out of, most POS software don’t, they aren’t enough in my opinion.

Of course there are other useful reports to have, but most I think can be ran on an “as needed” basis. There are also shift reports that are necessary to the operation of your business, but those aren’t included here.

Quick Tips – Keep your menu simple

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Large menus have a lot of downfalls. Large menus require excessive prep, cause long ticket times, are hard to educate service staff on, need too much storage space, and generally drive down the profitability of your restaurant. Keep your menu as small as you can, focused on your concept, and easy to produce.

Quick Tips – Use color on your menu design

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A great way to make your menu stand out, and to draw people to certain items, is through the use of color. When you add color to your menu, use the color scheme you’ve chosen for your restaurant. Use other colors to highlight, surround, or shade menu items you want people to notice. Color icons are a great way to tell more about a menu item, whether it’s spicy, a customer favorite, or a great value.

How can I make my employees accountable?

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Question:

When you work in an excuse-driven culture, how do you change the mindset and teach others to become accountable?

Answer:

Unfortunately, the most effective method for me to implement quick changes in attitude is through forcing it. That almost always requires “executing a hostage in front of the firing squad”.

Words are the first step. Accountability has to be taught as an expectation. You tell employees that your business expects them to be accountable, which means doing everything THEY can do to fix a situation rather than concentrating on what someone else should have done to avoid it.

I teach that they only have control over themselves, and they will get the most accomplished by concentrating on what they DO have control of (themself) rather than what they DON’T have control of (others).

Once they know you expect them to be accountable, you have to hold them accountable. That means no exceptions to the rules, no favorite employees who get away with things, and unequal punishment. It also means having pre-determined punishment for violations to documented rules, and making sure employees are taught those rules and sign an agreement to follow them.

Once the rules and the punishments are in place. The only thing left is equal and fair enforcement. Even a tough boss will be seen as fair if everyone is playing by the same rules. The bad attitudes most often come when there isn’t enough accountability, and people are allowed to break the rules. Then, employees who follow the rules are the ones who feel slighted, and they end up being the ones who leave. When rules are fair, and enforced consistently, the bad employees are the ones who leave.

Any time a situation gets bad, I’ve found it’s often necessary to fire someone to get compliance from the rest. This is especially necessary when there has been an extended lack of rule enforcement.

When I observe an “excuse-driven” culture, it almost always means there is a lack of consistent enforcement of the rules.

Quick Tips – Get some signature menu items

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A good way to make your food stand out, and to communicate what your food is all about is by creating a signature item in each of your menu categories. These items should be your highest gross profit earners, and the centerpieces of your direct marketing efforts. They help define you and your restaurant. You don’t need “a bunch” of signature items either. The more items you have that claim to be “special” or “signature”, the less special each of them are. Save your other great, creative ideas for your daily or weekly features.

Don’t give your customers what you want

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How to make sure your products will sell

Pretty confusing main title, isn’t it? I’ll bet you’re wondering exactly what I’m talking about.

Along with the other biggest mistakes restaurants owners make, offering customers what the owner thinks is good, instead of what the customer thinks is good, is a surefire way to lose money in the restaurant business.

Here’s the scenario I’ve seen a dozen times.

  • Young couple sells their house and moves to a new city
  • New city doesn’t have restaurants offering their favorite foods from previous city
  • Couple decides to leverage all their assets and open a restaurant selling the fantastic food from their last city that they know everyone will love if they would just try it
  • Couple doesn’t realize the complexity of the restaurant business, and opens up underfunded and underexperienced
  • No one comes to restaurant, and couple blames their vendors, their employees, their landlord and their customers for their failure
  • Couple loses their restaurant, still owes $100,000 to the bank, loses their home which they used as collateral for the loan, owes $500,000 for the next 10 years of the restaurant lease, files bankruptcy and spends the next 20 years paying off their debt

Pretty sad scenario, isn’t it? It’s very common though. As a matter of fact, failure in the restaurant business is more common than success. Studies from Cornell University, Michigan State University and Ohio State University have found that around 60% of new restaurants fail around the three year mark. Between the 5th and 10th year, closer to 70% fail. While that is no where near the long-rumored 90-% failure rate that has been unsubstantially perpetuated for years, it’s still playing against the odds.

Now you’re supposed to ask, “How do I beat the odds?”. I’m glad you asked, and I’m going to help you past the first hurdle, and a common mistake, giving customers what YOU want, instead of what they want. Restaurant owners are notoriously egotistical. Sorry if I’m offending anyone, but it’s true. I’ve been this same way myself. Owners have the bad habit of projecting their own tastes on their public. They think because they believe something is delicious, that everyone else will too. Some of them are right. Many of them have eclectic tastes, and find themselves to be wrong though.

Our egos tell us that if we like something, it must be good. If we really like something, and we believe ourselves to be very knowledgable about that something, then it must be great, and will make us millions if we bring it to people who haven’t had it before.

The fatal flaw with this reasoning is that people who haven’t had something before will not have a craving for that something. There will be no demand for that something. So, while rotisserie fired Peking Duck may have been a hot ticket in your eclectic little community in San Francisco, that doesn’t mean it will be all the rage when you move to Phoenix. I know what you’re thinking, “You obviously haven’t tried Peking Duck, if you had, you would love it.”

You may be right. Your favorite food from your last home may be fantastic. It could possibly even spurn a following in a new community, and support a restaurant, once everyone develops a taste for it. There is the kicker. How can people have a taste for something they haven’t had? They can’t. You can’t build a following for a fantastic new dish or type of food in an area where people don’t crave that food. At least not without having a huge marketing budget to give free food to ten times the people you need to sustain your business. Until someone knows what they are missing, they can’t miss it, and they won’t crave it.

The moral to my point is this. Don’t let your emotions and your ego decide what you are going to offer your guests. You may think something is the greatest dish, or type of food, in the world, but if the people you are trying to sell it to don’t know about it, it’s not going to sell. Give your customers something they already want. If you don’t know, conduct a survey. Ask them if they know about a particular food, if they would go to a restaurant just to get it, how far they would drive for it, and what they would pay. Let your customers determine what you are going to offer them.

Don’t give your customers what you want, give them what they want.