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Convenience Store Decisions | Convenience and Versatility Power Pizza

OnSite Team — Sat, 16 Feb 2013 08:40:04 +0000

Convenience and Versatility Power Pizza

Howard Riell | Jan 30, 2013 | 0 Comments

More Americans than ever are eating pizza, according to data from consumer research firm Technomic. A full 41% of respondents to a Technomic survey said that they now eat pizza at least once a week, up from 26% two years ago.

Howard Riell, Associate Editor.

Americans’ love affair with pizza isn’t likely to end any time soon.

That said, the issue becomes how to best present the category in order to maximize sales opportunities. For many chains, partnering with a branded program has been their top priority because it takes a lot of the guesswork out of the equation. Plus, recognizable brands resonate with consumers.

Americans continue to choose pizza at an impressive rate. According to Chicago-based research and consulting firm Technomic Inc., 41% of consumers polled said that they are now eating pizza once a week, compared to 26% only two years ago.

Consumers who are feeling the financial pinch are attracted to the special offers and coupons, said Technomic Executive Vice President Darren Tristano. Combo-meat varieties and calzone-style stuffed pizzas stand out as growth areas, as do veggie/garden and combo-meat pizzas.

Expanding the Menu
Marty Mylor, president and owner of Sparta Quik Stop stores in Sparta, Ky., has worked with Hunt Brothers Pizza for more than 25 years. In addition to the turn-key nature of the program, he said he likes the limited-time menu additions it offers throughout the year.

Specialty offerings, such as the Philly cheesesteak pizza, have proven extremely popular in helping battle menu fatigue and jumpstarting sales during peak periods, maximizing sales. The limited-run generally lasts for up to three months. The addition of chicken wings to the mix only heightens the consumer response.

Another successful limited-time menu addition was Hunt Brothers’ Buffalo chicken pizza, which is rolled out each January in time for the football playoffs. It contains white meat chicken topped with ranch dressing, Buffalo sauce and mozzarella and Monterey Jack cheese.

Mylor bundles the foodservice offerings—various combinations of pizza, wings, chips and soft drinks—and offers discounts, yet another incentive for customers.

“I think a system like Hunt Brothers does make sense in a convenience store setting that lacks proper kitchen facilities and ovens, and where the employees would not have the time or the skills to prepare their own fresh dough every morning and do all the necessary prep work for pizza making,” said Rick Hynum, editor of PMQ Pizza Magazine. “From the customer’s point of view, if he’s in a hurry, convenience store pizza works just fine and it beats the heck out of a bag of chips. If you’re a convenience store owner and you’ve got the opportunity to sell some version of pizza, why wouldn’t you do it? It’s the world’s most popular food.”
Individuality is important, according to foodservice consultant Greg Christian, CEO and founder of Beyond Green Foodservice Consultants, and for 17 years the owner and executive chef of Greg Christian Catering. “The good thing about any plug-in pizza program is that once you find a trusted partner it’s an easy program to implement,” he said.

Arlene Spiegel, a veteran foodservice consultant and president of Arlene Spiegel & Associates, breaks down the pluses and minuses of turn-key pizza operations in general this way: Turn-key programs are good for inexperienced operators because systems and protocols are set, the supplier network is in place and successful locations can be modeled.

Among the negatives, Spiegel said, is relatively little ability to customize the products or the experience, and that could be somewhat limiting for more experienced operators or in markets where customers crave variety.

Pizza Expectations
Consumers increasingly view pizza as the ‘go-to’ food when they don’t feel like cooking. “Operators can emphasize convenience in their marketing message, positioning pizza as an easy, convenient and affordable meal solution that will appeal to an entire group or family. It’s a message that resonates with many customers,” Tristano said.

As such, pizza is as popular as ever. “It’s very affordable and convenient for the consumer, it’s one of the few foods that kids and adults love equally, and it’s available in all kinds of varieties—from the high-dollar Neapolitan style pizzas to mobile units with pizza ovens in their trailers to take-and-bake to plain cheese slices for a buck or a buck-fifty a slice,” said Hynum.

A major development to look out for in the next year or so, Hynum reported, is the government’s requirement that pizzerias and restaurants serving pizza provide nutrition labeling info for their pizzas. When this requirement was first announced, many in the industry balked, saying that it would be extremely difficult to come up with accurate nutritional information for all of the numerous varieties of pizza.

This rule hasn’t been implemented yet, as the government tries to figure out a way to accommodate the pizza industry while still fulfilling, at least, the spirit of the law.

In response, the three biggest pizza chains, Pizza Hut, Domino’s and Papa John’s, have teamed up, along with a growing number of smaller chains and independents, to form an organization called the American Pizza Community, which is now representing the pizza industry in discussions with congressional leaders to work out this problem. Certainly, should a regulation be implemented, it would be applied to c-stores serving pizza, as well.

“People like to say a c-store pizza customer is similar to a ‘pizza store’ customer, and the only way to drive sales is by having a unique and specialty pizza solution,” said consultant James Sinclair of OnSite Consulting Inc. in Los Angeles. “This is just flat out not true. A c-store requires by its very nature—unless it is subbing out part of its footprint to this pizza experience—that it must fall within the business model of replicatable results and a great product.”

While Sinclair is not suggesting that large slabs of dough with some sauce is enough, he is suggesting that c-store operators need to be less concerned about individual pizza innovation and more on the overall traffic drive and programming. “A c-store has a real ability to take revenue out of the standard restaurant by delivering a consistent, good tasting, good value product that is not a grease ball, but these c-store operators adding wood stone pizza ovens are not c-stores anymore, they are pizza stores that also sell
convenience products,” he added.

Operators need to understand what they are and where their revenue comes from.

“C-stores should recognize and understand that adding a sprinkle of basil does not make you artisan,” Sinclair warned. “If you want to steal share from the restaurant industry then convenience remains the key. I love the idea of a c-store being split into a c-store and restaurant, but you have to be aware of what you are doing. Foodservice is not a part-time novelty. If you are going to do it, especially in a convenience store, you have to do it right.”

Entrepreneur Magazine | Biggest Franchise Trends for 2013

OnSite Team — Wed, 23 Jan 2013 00:54:26 +0000

Biggest Franchise Trends for 2013

Posted by Jason Daley | December 28, 2012

URL: http://www.entrepreneur.com/article/225024

Franchising has changed dramatically over the last five years. There are more multi-unit and area developers, more high-tech ways to optimize sales and leaner and meaner corporations honed by the recession. At the same time, franchising remains subject to the challenges it has always faced: the fads, the bubbles and the whims of public taste. We can’t say for sure how the next year in franchising will shake out, but here are our picks for the trends that will have the biggest impact.

Area Bombardment
When the economy headed south, franchisors did, too–and east and west and north. A soft franchising market in the U.S. sent many franchisors overseas, and the lesson they learned is that area development is the way to go. Instead of searching out dozens or even hundreds of mom-and-pop franchisees, many American concepts are partnering with a deep-pocketed overseas developer who can navigate the culture and open and operate numerous units at once.

It’s a lesson many franchisors have brought home, and after several years of increasing growth, area development is settling in as the new normal. According to research firm Frandata, more than 50 percent of franchises are held by multiple-unit owners, and many of them act as area developers, building out entire metro areas, counties or even states.

“Franchisors are realizing the advantage of dealing with area developers,” says Bret Lowell, a partner at the Reston, Va., office of business law firm DLA Piper and author of Multiple-Unit Franchising: The Key to Rapid System Growth. “When they open their second, third and fourth units, the franchisor doesn’t have to go through the sales process and doesn’t have to deal with six people opening six different units. There are economies of scale and added efficiency with area developers.”

Other economic factors have also driven area development in franchising. Banks are more likely to lend to franchisees with successful track records, and franchisors reduce risk by letting proven operators open stores, rather than rolling the dice with a newbie. Lowell believes that even as lending continues to unfreeze and the economy improves, franchises will still favor area developers and multi-unit operators. “I think the economy and efficiencies will cause it to remain,” he says. “My sense is, franchisors like to have that multiple-unit arrow in their quiver. In many cases, it’s a good option.”

Mark Siebert, CEO of Homewood, Ill.-based franchise developer iFranchise Group, also sees a rosy future for area developers. “There is still a lot of real estate available, and landlords are still aggressive on pricing,” he says. “Franchisors targeting area developers are going to continue to do well in this economy.”

Refranchising Rambles On
Refranchising–in which a company sells its corporate-owned stores to franchisees–is often taken by the marketplace as a sign that a business is in distress. But if that’s the case, then franchising must be in a free fall. In recent years, Arby’s began divesting itself of corporate units, while Burger King, Pizza Hut, KFC, ampm and dozens of other high-profile franchises launched refranchising efforts. In the last year, Taco Bell announced plans to refranchise 400 units.

Kevin Burke–managing partner of Los Angeles-based Trinity Capital Management, which has financed billions of dollars in refranchising deals over the last two decades–says the trend should be interpreted not as weakness but as vitality. “In the beginning, a lot of refranchising was about franchisors trying to pay down debt, but now it’s a strategic move,” he explains. “A franchisor’s skill set is very different from the disciplines needed for a franchisee to run store operations. They want to have a lineup of executives who are well-versed in policing brand standards, working on products and promotions and overall strategy. They don’t need to be running the stores themselves. From a strategic point of view, companies are saying, ‘We want to stick to our knitting and what we’re good at.’”

There are economic incentives for getting out of running company stores as well. Collecting royalties is much easier than actually selling mufflers or sandwiches, and securities analysts are more enthusiastic about royalty streams than store revenue. At the same time, as units begin to age, franchisors question the logic of investing $500,000 or $1 million in a remodeling effort when they can sell the location off to a franchisee who will foot the bill and still pay royalties for the next decade. “A lot of things can go wrong between sales and the bottom line,” Burke says. “Franchisors have realized that collecting royalties is the purest play.”

Fast Food Gets Healthy (Really)
Remember the McLean burger? The Burger King Baguette? The Frescata sandwiches from Wendy’s? The fast-food road is littered with failed bids to get Americans to eat healthfully from the drive-thru window.

It once seemed like an exercise in futility, but after throwing slimmed-down burgers and other dietary monstrosities at the wall for the last two decades, franchises are finally creating healthful fast food that sticks. Case in point: The introduction of a low-cal turkey burger last year at sibling chains Hardee’s and Carl’s Jr. may have been one of the franchise’s most popular product launches ever. Meanwhile, Burger King’s Garden Fresh salads and chicken wraps spearheaded that company’s largest menu expansion. At McDonald’s, consumers seem stuck on oatmeal, and the chain has slimmed down its Happy Meal, as well as added calorie counts to its drive-thru menu boards–a move now required, per healthcare legislation, of restaurant chains with 20 or more outlets.

So have the fast-food chains finally gotten the menu right, or have Americans finally awakened to their button-popping waistlines? According to Darren Tristano, executive vice president of the Chicago-based restaurant research firm Technomic, the answer is a little of both. “Yes, they’ve found appealing flavors,” he says, “but consumers are also interested in taking control of their diets.”

It also seems that the big franchises are interested in getting ahead of concepts like Energy Kitchen and Evos, which are luring health-conscious consumers with bison burgers and air-baked French fries. Even fast-casual burrito and burger joints are often seen as smarter choices than the traditional fast-food options. But the big guys seem most concerned about LYFE Kitchen, a Palo-Alto, Calif.-based concept run by former McDonald’s bigwigs, which is recruiting franchisees and reportedly may build up to 250 units over the next five years.

Digital Aids
For most of its existence, franchising has been a strange combination of intuition and research. Franchisors have to know instinctively which candidates will do well in their system, and they use traffic patterns and local income levels to choose real estate–though in the end it’s been primarily a gut decision. But more and more are seeing the advantages of digital-age data collecting, and services that aid franchisors in site selection, franchisee selection and customer retention are becoming must-haves.

Site Analytics and other services, which use hard data and detailed traffic patterns to help franchisors decide where to place their stores, were used by just a handful of franchises a few years ago. Today companies are clamoring for these services. Google and Facebook recently launched features designed specifically to help franchisors and franchisees collaborate on social media branding and promotions, both of which will see wider adaption in the coming year.

Even something as simple as digital menu boards, which franchises resisted for the better part of a decade, will see wide deployment as companies realize the opportunities they present, such as the ability to add happy-hour offerings, hold one-day promotions or disseminate personalized messaging. Meanwhile, the Franchise Business Index (launched by the International Franchise Association) is tracking monthly growth of the sector and providing insights into the direction it’s headed–a strong symbol of how far and how quickly franchising has moved into the information age.

Bursting Bubbles?
How much is too much? For certain franchising food trends that have proliferated at a rapid rate–and will likely continue to do so in the coming year–the saturation point may be approaching.

Frozen-yogurt franchises like Red Mango, Pinkberry, Menchie’s, Yogurtland, 16 Handles and dozens of regional players are almost as thick as Starbucks–but without the caffeine-addicted customers and with limited winter appeal. Because they’re cheap to open, frozen-yogurt franchises are multiplying like locusts.

“The problem with frozen yogurt is that it’s location-driven and largely undifferentiated,” says iFranchise Group’s Siebert. “It has low barriers to entry and a lot of players. I’m not sure if it has totally run its course, but we’re rapidly coming to the point where winners will be sorted out from losers.”

James Sinclair–founder of OnSite Consulting, a Los Angeles-based hospitality consultancy that analyzes the restaurant industry–says he and his colleagues have determined that a fro-yo store can be opened for about $20,000. “Granted, it would be a horrible store,” he admits. “The point is, I think we’re reaching the down-slide of the cycle. It’s been just as much driven by property owners. These stores open quickly and don’t take any significant modifications, so landlords have encouraged these places to open in the down economy. Everywhere you go you see three yogurt stores on any given corner. And there’ve been tremendous closures.”

Another franchising craze, quick-serve “better burgers,” also seems close to saturation. Five Guys opened more than 1,000 franchises in less than five years; other companies in the category include Smashburger, The Counter and BurgerFi.

“I think the whole burger concept is reflective of the marketplace and the fact that people were craving somewhere in the middle,” Sinclair says. “They don’t want to have a long, drawn-out meal with table service, but they don’t want a cheap environment, either. That’s what sprouted this whole burger thing.”

“The American appetite for burgers seems almost endless,” says Technomic’s Tristano, pointing out that so-called better burgers aren’t necessarily cannibalizing sales from fast-food joints, but are going head-to-head with fast-casual concepts like Chipotle and Noodles & Company, a market segment in which there seems to be plenty of room for growth. Still, the CEOs of better-burger franchises are getting nervous about market saturation, with almost all of them giving recent interviews explaining why their concept will survive the coming “shakeout.”

IMT | Cutting through Red Tape in Government Procurement

OnSite Team — Fri, 27 Jul 2012 20:43:09 +0000

Cutting through Red Tape in Government Procurement

Despite the many obstacles to contracting with the government, the second half of 2012 offers many lucrative government selling opportunities, GovPro.comâ€™s Mike Keating writes in this Expertâ€™s Corner.

Do government purchasing departments drown prospective vendors and contractors in paperwork and procedures?

“I certainly believe there is too much red tape in selling to the government, which is driving up procurement costs on lower ticket items, which is the core of our business,” Steven Bosio, president of Grand Rapids, Mich.-based MarketLab, told IMT. MarketLab is a direct-mail catalog supplier of specialty products and services for health care professionals.

â€œWe have been seeing a phased approach in eliminating government procurement cards, and have also started to see headcount reduction in the purchasing functions that is forcing centralized purchasing for even the smallest items,â€ Bosio adds. â€œWe continue to hear from our [government] customers that this will be the new process for all items going forward.â€

At Los Angeles-based OnSite Consulting, founder and principal James SinclairÂ says his restaurant consultancy had to stop accepting and responding to government requests for proposals (RFPs) last year, even though â€œalmost all the time we had the most cost-effective and viable solutionâ€ in the RFPs his firm submitted to cities, states, development zones and municipal properties.

â€œItâ€™s not that the hoops weed out the under-performers,â€ Sinclair says. â€œInstead, they weed out companies who recognize that the value/time of preparing the document and follow-up work just doesn’t make sense. So super-large companies that have divisions set up just to write documents and lobby for the contracts are the only ones left in the game, hence the incredible lack of evolution, innovation or care in these units.â€

There is plenty of red tape for manufacturers looking to land government business, according to Mark Amtower, a government marketing expert at Amtower & Co. â€œIn part, the hoops are there â€“ registering with the Central Contractor Registration-CCR System, for example â€“ to ensure that the business is legitimate and established,â€ Amtower says. â€œThe small biz regulations are there for the â€˜level playing field,â€™ but they are complicated and sometimes with loopholes that can be exploited by larger businesses.”

For most manufacturers, Amtower advises using channel partners, or resellers. â€œIt is the best way to go. That way the manufacturer can avoid the red tape and avoid setting up a government unit for sales, marketing, accounting and bidding.â€

Manufacturers looking to break into the government market should acquaint themselves with one of the 93 procurement technical assistance centers around the U.S. (Check here to locate the center nearest you.)

â€œOur common mission is to assist businesses that are seeking to do business with the government,â€ Chuck Schadl, group manager of contracting services at Georgia Institute of Technologyâ€™s procurement assistance center, told IMT. â€œWe teach, advise and coach companies on how to do business in the government sector.

â€œThese days, more than ever, our advice for businesses is to be realistic and to allow for a realistic amount of time to effectively market to the government,â€ Schadl explains. â€œIt doesnâ€™t really matter whether a company is new or very well established. If they donâ€™t have previous experience selling to the government, then itâ€™s going to take a while to learn how to do that because the government sector is different from the commercial sector.â€

The Washington-based Coalition for Government Procurement offers training workshops for companies new to the federal GSA Schedules program and those with contracting experience. The Multiple Award Schedule (MAS) Basic Training workshop provides companies with the tools and information to obtain and manage a Schedule contract and become familiar with the Schedules program. MAS Basic Training is offered quarterly. (Checkhere for training guidelines.)

Lukewarm economic news and uneven revenue growth in governments translate into minimal growth in government purchases. In 2012, government purchases of goods and services will total $3.03 trillion, the same as 2011, according to economic forecasting firm IHS Global Insight, with federal government purchases reaching $1.22 trillion and state and local government purchases reaching $1.81 trillion. In 2013, government purchases are expected to rise to just $3.04 trillion, and in 2014, purchases will grow to $3.07 trillion, IHS forecasts.

State tax revenue is one bright spot. In the final quarter of 2011, states recorded their eighth consecutive quarter of revenue growth. In fact, in Q4 2011, overall state tax collections finally reached levels last seen in the final quarters of 2007 and 2008, when the recession first took hold.

State fiscal conditions are continuing to improve into fiscal 2013, although many state budgets are not fully back to pre-recession levels. The National Governors Association and the National Association of State Budget Officersâ€™ Spring 2012 Fiscal Survey of States report shows governors and legislatures are keeping a tight grip on state spending, even as state revenues are expected to top the levels last seen before the height of the recession.

Fiscal 2013 general fund revenues for the states are projected to increase by $27.4 billion, or 4.1 percent, but recommended spending in the states is projected to increase by $14.6 billion, or 2.2 percent, suggesting that states remain cautious about the strength of the national economic recovery.

Benjamin Dunay, founder of Cambridge, Mass.-based Sixthree Technology Marketing, LLC, a company that helps small businesses sell to the military and government consumers, sees several opportunities in the market through the rest of 2012. â€œI remain bullish on the defense marketplace generally, and specifically in the clean energy, IT and surveillance sectors â€“ each of which has wide-reaching technology sub-sectors and each of which is being driven by real, operational needs (and not budgetary or economic drivers).â€

â€œIn some cases, government business is definitely worth it, as margins can be good and companies can become adept at how to most effectively deal with government contracts,â€ Lisa Anderson, founder and president of Claremont, Calif.-based LMA Consulting Group, says.

Anderson, whose firm consults with businesses on strategic operations, supply chain, operations management and other disciplines, nevertheless cautions, â€œIf your business isnâ€™t focused around a core competency that relates to government contracts, it can be an overwhelming burden.â€

Michael Keating is senior editor for Government Product News and a contributing editor forAmerican City and County, both published by Penton Media Inc. His Â 2012 government budget forecast is available at GovPro.com; as well as the mid-year 2012 forecast. Go herefor his IMT 2012 outlook on government selling. Keating has written about do-it-yourself market research for manufacturers and manufacturer-distributor relationships for IMT. Keating has written articles on the government market for more than 100 publications, including USA Today, Sanitary Maintenance, IndustryWeek and the Costco Connection. Mike can be reached through his website, MikeKeat.net.

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The ‘Agglomeration’ Effect for Fun and Profit

OnSite Team — Mon, 09 Jul 2012 05:29:52 +0000

The ‘Agglomeration’ Effect for Fun and Profit

‘Like all strategies, agglomeration works – and it doesn’t work,’ Ryan Mathews says.

By Howard Riell // Restaurant Startup & Growth // Download Full Article

“If YOU build it,” goes the famous line from “Field of Dreams,” “they will come.”

Will they still come if several restaurants all decide to build in the same general location or you’re offered a leased spot in a “restaurant row”? More and more would-be operators and experienced restaurateurs opening additional locations are being offered the opportunity to be part of what’s called “The Agglomeration Effect” -businesses “clumping” to share and thus build business in the same general location. Is it a worthwhile endeavor for the independent? If you’re considering such a move, how do you turn it to your advantage, what are the dangers, and will it work for you?

“Like all strategies, agglomeration works – and it doesn’t work,” says Ryan Mathews, founder and CEO of Detroit-based Black Monk Consulting and a globally recognized futurist and consultant. “Put another way, it all depends.” There never seems to be a black-and-white answer to anything in the restaurant business.

Food courts work, Mathews says, because they act as a magnet for all of the hungry shoppers in a mall “Shoppers know where to go and are likely going to give each individual seller more business than if they were isolated in, say, a corner of the mall.” The same holds true, he says, for certain “hot strips” of restaurants and bars. “People come to the neighborhood and, in an extension of the mall example, distribute themselves between individual operators.”

The issue, Mathews says, is that agglomeration “is really only as strong as its weakest links. lf people come to an area and walk away with the impression that all the food is mediocre they won’t visit anyone in the area. So there is no question that restaurant operators can make agglomeration work if, and only if, they like their neighbors.”

“The topic is very interesting,” says Georgie Shockey, principal along with Carolyn Ruck in Ruck-Shockey Associates Inc., a foodservice consultancy in Alameda, California. “I see this happening in urban settings-for example, the Heights area in Houston. There were one or two restaurants: now there are six to 10 in a few-city block area. So it does have an effect, and l would say that sometimes restaurants -good ones -could help a redeveloping area. Portland, Maine, is another example of this effect.” Often this effect works best in big cities like Chicago, Atlanta or New York. In smaller cities the population density may not be there, and then all the members of the cluster suffer.

Shockey sees a parallel, as well, in a healthcare account she services, Massachusetts General Hospital, which has 16 retail sites. “They recently closed one site for expansion and to remodel a coffee bar. They reopened just a few months ago and the city is coming in for their fresh-baked pastries, macaroons to muffins. It gives a great community sense to a big teaching hospital in the heart of Boston.”

Piggybacking

“I think [restaurateurs] talk more about piggybacking than agglomeration,” says Darren Tristano, executive vice president of Technomic Inc., the renowned food service research and consulting firm based in Chicago. “What piggybacking is is this: someone just opened a restaurant and you are a complementary-type business, so you piggyback on them. I think that’s something you tend to see more. I’m not sure it’s perceived as being a fair and appropriate way to expand your units. But if a theater opens up there is likely going to be some snack and dessert concepts that will open up nearby within the trade area, so to some extent, agglomeration makes sense.”

According to Tristano and his trend watching colleagues, more restaurant operators with less money are looking at things like this: “If this concept is here and that concept is here, then if I am perceived as complementary I’ll just piggyback on their efforts and investments and build alongside them.”

Locating a unit in an area with lots of restaurants figuring that when hungry consumers go looking for options they’ll necessarily find yours is smart, according to Tristano. “That goes back to a lot of the older, more traditional malls that would rely on anchor stores to drive traffic to a mall area. I still think there is some part of it where you’re either a food court concept or an anchor store within a mall – or you’re a peripheral kind of company that builds around the periphery of the mall.”

Additional outliers could inhabit retail developments that are close to the mall but outside of that space, where costs are lower. “Certainly there are companies that are taking advantage of those situations,” Tristano says. “It’s not unlike Walmart, which takes a big chunk of Land, builds the Walmart, and then sells off or leases the additional space because they know their store is a driver for a trade area, and that restaurants are going to drive additional traffic.”

It is important to remember, of course, that any tactic you can use your competitors can use, too. As Tristano says, “Obviously in certain areas you’ve got noncompetes, where you want to get into a space but there is already, let’s say, a Panera, and so there is a restriction against another bakery cafe. There is a Limited ability to get into that trade center, so therefore locating outside of it might be the only option.”

Leasing space without such a noncompete clause could be asking for problems, he says. “If you don’t have that type of clause there are going to be problems. You could end up with an immediate competitor right next to you. If you’re a frozen yogurt concept, for instance, and your development is not limited to one frozen yogurt concept, obviously somebody could come in and take over some of your business, Make sure to protect your self against additional businesses. I think it happens quite frequently, to be honest with you.”

Tristano also urges restaurateurs to be aware, and take advantage, of what he likes to call “opportunistic expansion.” There have, he says, been a number of closures, especially in major trade areas, that create opportunistic conditions. Kona Grill, for example, the publicly held steak, sushi and designer cocktails concept, looks for mall space that is easy to adapt but has been vacated, and where the leasehold improvements and the lease terms are advantageous. “If somebody closes you want to get into that space very quickly to take advantage of the conditions,” Tristano says.

Being part of a crowd of restaurants is fine, says veteran consultant Foster Frable, FCSI, president and principal of Clevenger Frable LaVallee Inc. in White Plains, New York, as long as operators maintain their unique identities in consumers’ eyes.

“I see a lot of use of video display or kiosks in front of the restaurants to show what is offered,” Frable says. “You could also have videos running in displays in elevators, corridors to parking areas, etc.”

The Greatest Motivator

“I often have this conversation with my clients and with other brokers or consultants in the industry,” says James Sinclair, principal of OnSite Consulting Inc. in Los Angeles, a hospitality consulting firm that focuses on concept repositioning, distress and growth. ”I think, in general, density creates a forced environment for innovation (and) for progress, and most of all to deliver value and experience to the guests.” Competition, he says, is the greatest motivator, and that it is then “up to the operator to rise up to the challenge or be the only empty restaurant in a block of seven.”

When that happens, Sinclair says, “and when you look up and down the block and wonder why you are the only empty restaurant, I am sure you will find every excuse in the book that does not direct it back to your restaurant. They have a better patio, they have a bigger kitchen so can offer a bigger menu, they have nicer sign. In honesty, it is probably you and your concept.”

Having said that, Sinclair says that there are instances when someone new comes in nearby and almost accidentally does things right “Their gross lack of experience and fiscal management lets them offer deals, prices or services that you cannot compete with, and may even take a percentage of your customers away. [It's similar to] the Groupon experience.” His advice: “Stand your ground and don’t be a ‘short-termist.’”

Sinclair underscores the fact that restaurants surviving on looks alone will have continued and prolonged difficulty staying solvent in this market, he says. “The reality is that there needs to be some business brains, innovation and math behind such venues guiding the back of house, management and operations of these units.” The collateral damage imposed by the current state of financial markets is that restaurants that have survived by riding the boom as opposed to economics and strategy are likely to sink, while the restaurants with great concepts, customer service and value for money will survive, Sinclair says.

The economy, he says, has served as a catalyst and much-needed adjustment to the uncontrolled growth that the food-and-beverage industry has experienced over the last five years. “The sector has been bubbling to the point of oversaturation, and I expect the economic downturn to provide operators with strong concepts, consumer-orientated focus and back-of-house diligence to come out of this alive,” he says.

A climate like this, Sinclair is convinced, provides an opportunity for lateral thinkers and those with entrepreneurial flair to excel in the short, medium and long terms. “Those who choose to panic and implement strategies with a ‘shoot from the hip’ mentality without thinking of the repercussions of those strategies will be unlikely to survive.” His advice, again, is to short-term strategies, he says, and focus on the fundamentals of the business: profitability, efficiency and sustainability.

The economic reality, Sinclair says is inescapable. “However, while doom and gloom may be the flavor of the month – and for many months to come – that is not the only thing I see ” Arguably, he says, a recessionary environment can provide a platform for innovation and economic growth through entrepreneurialism and creative thinking, whether surrounded by other restaurants or standing alone.

“I think people need reality checks more than a helpful pat on the back on most occasions,” Sinclair says, “especially start-up operators who dive in head first without checking to see if the pool has water.”

Brand Out

“To me it’s about brand,” says Chef Greg Christian, the principal of Beyond Green, a sustainability consulting firm that partners with schools, institutions and foodservice companies to design holistic foodservice strategies. “What’s your target and how are you different? There are many mall-goers; are you really thinking you can get all of them to walk in? The answer is no. So who do you want to walk in?”

Christian recommends narrowing the brand until it becomes well-defined enough to unmistakably differentiate the operation. “You want one that is crystal-clear, and do not vary from this to try to get more business. Do the one you decided is right. Do not change it. People shift and change with the wind [but] they do not last. In the beginning of my ‘old catering life’ I tried to be all things to all people. Impossible.”

It is likewise inadvisable, Christian says, to differentiate your business by trumpeting quality.” Do not talk about quality: ‘Our stuff is good quality. Well, it better be, or why are you in business? ‘Quality’ is not helpful to a brand. It’s a given.”

If he was selling burgers in a mall, Christian says, his tag line would be something like, “‘Burgers that are good for you and the environment and the animals.’ Everything I did would (adhere) to that brand, all the time, everywhere. The staff would know all about it. The customers would know it. And the ones that this was important for would come in.”

Agglomeration works best, says T.W. MacDermott, FCSI, president of the Clarion Group, a dining and hospitality services consultancy in Kingston, New Hampshire, when the restaurants are similar in general market niche -fast-food/fast-casual, casual dining, etc., and are different from each other.

“A Pizza Hut, Taco Bell, McDonald’s and maybe a Friendly’s-style restaurant clustered together give potential customers a reason to visit the area and decide what they’d like to eat,” he says. “A McDonald’s, Burger King and Wendy’s in a group are self defeating; each one’s customer is one less for the other two.”

At a higher end of the scale, MacDermott says, Italian, Mexican, Indian and Chinese and steakhouse restaurants together will attract customers to their neighborhood. “They compete, but not negatively. Someone who’s looking for Mexican isn’t going to consider Chinese or Indian. Someone who’s undecided has a ‘menu’ of restaurants to review.”

If the operators are friendly, he says, they can support each other in such areas as sharing employees when one is short-handed, borrowing or lending products ”and maybe do some joint purchasing if they’re independents.”

Learning From Hotels

Dr. H.G. Parsa, a professor at the Rosen College of Hospitality Management at the University of Central Florida in Orlando, likes the agglomeration effect. To illustrate why, he uses the example of the hotels. A study done by the hotel industry looked at properties all across the country and came to a variety of conclusions. Among them was that not all competitors are competitors.

“Hyatt Hotels always fought having the midpriced hotels next door,” Parsa says, “They didn’t want it; they thought it was diluting their business.” Hyatt wasn’t alone. The big hotel companies always fought giving licenses to smaller hotels on the same streets. What the study showed, how ever, was something else. “If I put a Red Roof Inn next to a Hyatt there is absolutely no effect on Hyatt because Hyatt people are not staying in Red Roof Inns.”

Problems arose, however, if a midpriced hotel property such as a Quality Inn opened nearby. So what’s the take away? “People step down a little, but not all the way down,” Parsa says. “So hotels are wrong to think that somehow their brand is diluted having a small hotel next door.”

With that in mind, the question becomes how this model applies to the restaurant business. The parallels are most clearly shown when looking at destination restaurants.

“People will drive miles and miles to go to these restaurants,” Parsa says. “We have one here in Tampa, Bern’s Steak House, one of the top 100 restaurants in the country. It’s a great steakhouse, and people do drive miles to go there. People aren’t making a choice at the last minute, either in fact, they may plan for some time to go there. So for them it doesn’t matter who the restaurant next door is.”

Indeed, Bern’s reinforces its brand and place in the segment pecking order by maintaining a strict dress code for its guests: “The appropriate attire at either Bern’s Steak House or SideBern’s is business casual to semi-formal. We ask that not-shirts, tennis shoes, Hip-flops, shorts, or blue jeans be worn. If any of these items are worn to Bern’s, you may be seated in our lounge area instead of one of the dining rooms. Jackets and ties are encouraged, but not officially required. It is quite common to see formal wear in our restaurants since we are fortunate to be visited often for special occasion meals.”

What about restaurant row? Most towns have one. Does a spot in restaurant row help or hurt an operator’?

“For someone in the fast-food business, boy, restaurant row is a nice place to be,” Parsa says. Why? “Because the consumer’s decision was made instantly, on impulse – ‘Hey, do you want to go to Taco Bell? Nab, I want to go to KFC,’ or ‘I want to go to McDonald’s.’ The point is, there is not that much difference between those three. They want variety in the same price point”

A restaurant row, then, is a major plus for low-end restaurants. “There is a pull factor,” Parsa says. ”The pull factor is, peop1e like to go where restaurant rows are, where one is busier than the next one. It’s good for business, good for traffic, good for flow. When I had my own restaurant in Oklahoma City we had only one; we had a Mexican restaurant next door, and then a third, and we were happy. More people were coming to us from downtown. So restaurant rows have a really good effect.”

With the midpriced segment, the equation changes to something less attractive. “It can be really tough,” Parsa says. “We did a study on that when I was in Buffalo, New York; we actually observed it.” While the agglomeration of restaurants can indeed prove good for business, that is true only to a degree. There is, he says, an optimum point at which oversaturation occurs and results in cannibalization. Exactly where and when that saturation point occurs remains the subject of conjecture.

“I don’t have a magic formula for that,” Parsa says. “I don’t have that answer yet maybe in a couple of years I might find that answer. Very little research has been done to find out what is that optimum point.”

What is known is that it varies and, like so much in life, favors the large and already successful. ”What McDonald’s says is, if there are 10,000 people (in a local market) that’s good for McDonald’s,”Parsa says. “They use the 10,000 formula: They can open up a McDonald’s with only a 10,000 population and be successful. That means that if there are 40,000 people they can have four restaurants, easily.”

For a much smaller concept like Starbucks, however, the scenario shifts. “There are times when you will have two of them in a mall Parsa says “It’s not even a restaurant, it’s a kiosk. They don’t really have anything to eat, either. So for them it doesn’t take that long before they are saturated.”

Avoiding the Restaurant Graveyard

The agglomeration effect then, Parsa says, is a good thing. “It brings people in. It’s the same for car dealerships. A car dealership row brings people in in any city.”

The hitch is the number of units open, competing with each other, the number of restaurants per capita. In Orlando, Parsa says, lots of restaurants have congregated on Colonial Avenue which, as a result, has earned a nickname.

“They call that the Restaurant Graveyard, “he says.”[Operators] come and go constantly, constantly.” The killer is oversaturation, and there appears to be no end in sight. More restaurants continue to land there, he says. “One comes and another one dies because the holding capacity is only so much. The neighborhood is not growing. Business is not growing. When the population is stab1e when you open a restaurant the pie gets smaller and smaller, and when profits are shrinking what happens is the weakest link is going to get hurt”

And just as in the wild, the strong ones with deep pockets, like McDonald’s, can survive and succeed. As Parsa says, “They can take losses three or four years in a row.”

Like so much in the restaurant business, research and planning are key to successfully using the “agglomeration effect” for any restaurant you plan to open and grow. There is strength in numbers – if done right.

RIM

LA DOWNTOWN NEWS | The Rise of Mo-Chica’s Ricardo Zarate

OnSite Team — Wed, 04 Jul 2012 07:30:10 +0000

The Rise of Mo-Chica’s Ricardo Zarate

by Richard Guzmán | Posted: Monday, July 2, 2012 6:00 am

DOWNTOWN LOS ANGELES – At about 3 p.m. on May 30, Ricardo Zarate stood near his bustling open kitchen, the scents of freshly sliced vegetables and spices wafting in the air. His Seventh Street restaurant Mo-Chica had opened just three hours before. This was his first extended break.

With his short dark hair falling over his forehead, Zarate leaned his stocky frame against a booth. He flashed a bright, easy smile while he looked around his new place with a sense of wonder and a bit of pride. Although the rush was slowing down, he was still buzzing with excitement.

“I’ve been amazed and so grateful for the reaction from people,” he said. “This is where I always wanted to be, in Downtown, and this is what I always wanted Mo-Chica to be.”

He then ran into the back of the restaurant to grab a large Peruvian flag for a photo shoot.

With a desire to turn his country’s food into a familiar California flavor, Mo-Chica has been the 38-year-old chef’s dream for more than a decade. Still, that long-running desire could hardly prepare him for the long, winding road he endured.

Zarate literally travelled the globe, hopping continents and paying dues in his evolving culinary career. Then, in the last three years, he took off like a rocket. In that time he went from running a tiny food stall in a far-off-the-beaten track locale to opening two nearly million-dollar restaurants in the space of nine months.

“He didn’t give up. He stuck to his dream,” said Walter Manzke, a well-known chef who is working on opening a French restaurant in the Arts District and who got to know Zarate after Mo-Chica debuted. Manzke, who has helmed the kitchens of Bastide and Downtown’s Church & State, praised Zarate’s skills as a chef and his tenacity as a businessman.

“He’s a great chef and he has fantastic energy and great training,” Manzke said.

Widespread Praise

Zarate got on Los Angeles’ culinary radar screen in 2009, when he opened the first Mo-Chica in Mercado La Paloma. The indoor market at 36th and Grand Avenue features a combination of food stalls and vendors selling things such as artisan jewelry, pottery and even sports equipment.

The approximately 11 items on the menu were a hit. Crowds came for dishes like his ceviche and seco de cordero (lamb shank).

Then there were the glowing reviews and awards. Los Angeles Magazine named Mo-Chica one of its Best New Restaurants of 2009. Last year, after Zarate opened Picca, a Peruvian establishment in Beverly Hills, Food & Wine Magazine awarded him its Best New Chef prize.

Merrill Shindler, who hosts a weekly radio show on dining and restaurants on KABC 790 AM and who is a contributing editor to the Zagat Los Angeles restaurant guide, praised Zarate’s strategy.

“Opening in el Mercado La Paloma was really clever,” said Shindler. “The cost was low so he was able to do it on a shoestring budget, get himself noticed and find a cult following.”

The following will only expand at the new Mo-Chica, an 1,800-square-foot spot on the ground floor of the Coulter and Mandel Building at 514 W. Seventh Street. The modern, lounge-like restaurant features rich red walls, a graffiti-style mural, cement floors and a full bar.

There are nearly three times as many menu options as there were in Mercado La Paloma. They include unexpected offerings such as a hamburger with a Peruvian twist — the patty is a mix of alpaca and lamb covered in an aji amarillo (a Peruvian yellow chile) yogurt dressing.

Other dishes include the hefty Cau Cau, a tripe stew served with Peruvian potatoes and mint chimichurri, and the Paiche, a large fish found in the Amazon. It is served with ajiaco de arroz, a sort of stew, and cherry tomato escabeche.

Shindler credits Zarate for generating interest in Peruvian food, noting that it has been a seeming next-big-thing for a few years.

For Zarate, it’s a point of pride to serve the cuisine of his homeland. It’s a subject that makes him wax eloquent.

“Peruvian food is like a pot that has been cooking for more than 500 years,” he says, his constant smile flashing even wider. “It has ingredients from the Incas — the potatoes, the yucca, the maize. It has Spanish and Arab influences and European as well.

“It was then followed by Chinese and Japanese influences and all this fusion that’s been cooking for hundreds of years,” he continued. “It’s something that’s ready to be exported.”

Lima Beginnings

Before the food could be exported, Zarate had to export himself.

As one of 13 children in a working-class family from Lima, cooking was never really a choice for Zarate. It was more like a duty.

“We all had to take a turn in the kitchen helping my mom,” Zarate recalled at the restaurant, during a break between lunch and dinner service about two weeks after Mo-Chica opened “I just happened to get ahead of everyone else.”

After learning from his mom, who was a good cook but didn’t really enjoy the kitchen, Zarate picked up tips from his friends’ mothers. He became known in the neighborhood as the kid who could cook. As a teenager he got a job catering a banquet. He recruited friends to help him buy the ingredients, which included a live octopus they had to haul back in a taxi.

At 17 he applied to Lima’s top culinary school, the Institute of the Americas. After graduating two years later a cousin told him there was a wealth of restaurant jobs in London. Zarate made the move but it didn’t turn out as he had hoped — his first job was as a dishwasher atv Benihana.

Unwittingly that exposure to Japanese cuisine would pay off. After six months Zarate convinced his bosses to let him try out for a position as hibachi chef. He would ultimately spend about 12 years cooking in England, taking jobs at places such as Axis at One Aldwych and Zuma, a respected Japanese restaurant.

It was during this time that he started dreaming of Mo-Chica and showing off the cuisine of his homeland.

“I must have cooked 50 or more dinners for investors to get them interested,” he said. “They all loved the food but said the same thing: that no one knew about Peruvian food here.”

With his attempts to open his own place in England going nowhere, Zarate accepted an offer from the Millennium Hotel Group to run the kitchen at Sai Sai in Downtown Los Angeles’ Biltmore Hotel. He arrived in 2003 and spent 18 months revamping the menu. He said sales increased by 300%.

After a short stint back in London he returned to the United States and landed at Wabi-Sabi in Venice. Still determined to open Mo-Chica, he decided to invest his life savings of $30,000.

“It was time,” he recalled thinking. “Either I do it now or it’s over.”

Double Tasking

Mo-Chica opened at Mercado La Paloma in the summer of 2009. Still, Zarate was working two full-time jobs, getting up at 5 a.m. to pick up his Mo-Chica sous chef and buying ingredients, then heading in the afternoon to Wabi-Sabi, where he often worked until midnight.

It was a brutal schedule but also a smart move, said James Sinclair of OnSite Consulting, a hospitality and restaurant consulting firm based in Los Angeles.

“I always advise newcomers to just do it. Do it on a shoestring budget,” Sinclair said. “Work sleepless night and prove your concept. This puts you in a better position after you’ve proven yourself.”

More than a year later Zarate was able to ditch the second job and focus exclusively on Mo-Chica. As crowds and glowing reviews came, so did those who wanted to invest in his Peruvian vision.

Among those who came knocking were Stephane Bombert and Bill Chait, the latter a partner in Downtown’s acclaimed Latin food restaurant Rivera. They teamed with Zarate to spend $800,000 to open Picca, an upscale version of Peruvian cuisine with a Japanese edge, last August. The reviews were effusive. This year GQ Magazine named Picca one of the Ten Best New Restaurants in America.

Still, Zarate’s true dream was to expand his original location. That finally began to come together when the Seventh Street space became available (it formerly housed a Sandella’s Flatbread Cafe). He and Bombert spent another $800,000 on the project, which food blogs tracked relentlessly. The opening was perhaps the city’s most eagerly awaited restaurant debut of the year.

It’s everything Zarate dreamed of all those years ago.

“This is what it was always meant to be,” he said. “This is the vision I always had for Mo-Chica.”

Mo-Chica is at 514 W. Seventh St., (213) 622-3744 or mo-chica.com.

Contact Richard Guzmán at richard@downtownnews.com.

©Los Angeles Downtown News.

How Will Restaurant Marketing Evolve to Reach Gen Y Consumers?

OnSite Team — Sun, 03 Jun 2012 22:20:29 +0000

How Will Restaurant Marketing Evolve to Reach Gen Y Consumers?

Photo 1: Gen Y consumers are on-the-go mobile; 2: Large chains and tech outfits make Gen Y marketing interactive;

Most retail and restaurant owners and execs outside of the marketing department are starting to get it. This life-changing realization is simple, and being verbalized universally: “If we don’t start paying attention to the changing relationship of Gen Y consumers with our brand, we will be in big trouble.”

Generation (Gen) Y itself has many shifting parameters, but typically refers to those born around 1980 and for 20 years afterwards, giving us a broad age group, with a population cross-section somewhere between their late teens and early thirties.

This is the generation that grew up with personal computers, cell phones, and MySpace, Facebook, YouTube, other social media channels and technological wonders.

A recent Market Force study on consumer attitudes towards social media shows that in rapidly increasing numbers, consumers of all ages are interacting with brands on social media, and that social media is critical to business success:

Among 12,000 consumers polled, 76 percent say they have “liked” a Facebook Page
Of those using Facebook, 30 percent watch vendors through the social media site
Fifty-seven percent of these consumers said they are reading online reviews about restaurants, clothing retailers, etc.

“Gen Y is constantly in touch with multiple social networks, both from home and on the go,” says Bruce Warren, VP of Marketing for Empathica. “Members of Gen Y share their opinions and experiences via Facebook, Twitter, Pinterest, Yelp and other social media sites, unwittingly making them brand advocates and critics.”

Jason Dorsey, The Center for Generational Kinetics’ chief strategy officer, says that Gen Y is the fastest growing consumer market for restaurants and spans 80 million consumers spending $240 billion each year. He says that Gen Y has a penchant for eating out frequently, making it the “ideal” consumer group to attract and win over. Restaurateurs are wise to making Gen Y a priority, engaging these consumers and

building loyalty.

“Many Gen Yers decide whether or not to go to a restaurant strictly based on user generated content, i.e., ratings, reviews, and friends’ postings,” says Dorsey.

Getting There

Dorsey recommends that restaurants engage Gen Y consumers on the channels they are already frequenting. Chains and independents alike should use social media and mobile channels and interactive retail experiences.

“While the in-restaurant experience is important for U.S. consumers, restaurants must not only have an online presence, but engage with their constituents online, in order to create brand advocacy and loyalty,” says Empathica’s Warren. He suggests that restaurant marketers can adapt their marketing to Gen Y by identifying online brand advocates, optimizing online content to be more mobile friendly, and offering online deals and tracking their response rates.

For example, a restaurant marketing group can deploy a marketing team member to engage “tech savvy consumers” who are already writing reviews and posting social comments about experiences. These consumers can be approached and offered incentives to continue sharing their authentic experiences at the restaurants on Facebook and other social media channels.

A good number of Gen Y diners are on the go and reading reviews, sometimes right before making decisions on where to eat out. Warren says, “Assuring all online content, such as location, hours of operation, menus and reviews are easily accessible via mobile devices will help restaurants capture more dollars from Gen Y.”

Another marketing best practice in this area has been offering specials and deals through restaurants’ social media channels. These are easy to track via website traffic and coupon and deal redemption, says Warren, and consequently, so is the success of these types of programs for capturing the Gen Y consumer.

Maximizing the Marketing Effort to Gen Y

“How about letting your product and your restaurant lead the way so the other programming is all an extension of something great, as opposed to the other way around?” is the challenge from James Sinclair, principal of Onsite Consulting. Marketing won’t get you very far unless the basics are first prioritized and handled.

Then, mastering the generational difference, restaurants can fine-tune marketing to create campaigns and an experience that is Gen Y-focused, says Dorsey. He offers up the following 1-2-3′s to restaurant marketers to find success in hooking the younger subset of American consumers, who, by the way, he is part of, and who marketers realize will dominate the consumer landscape in just a few short years:

Show us what you got. We are completely visual. We want to make quick decisions about going somewhere without reading a lot of text—any paragraph longer than 3 lines will immediately turn us off. Give us a play button and candid photos and we’re all yours.
Humanize the experience and atmosphere. We are experience and relationship driven, so show us the people side of the restaurant. We will always respond better to real people and their faces than to logos.
Tell us a story. What is the story of your brand in terms of history, promise, and uniqueness? Those touch points that make your restaurant unique and memorable are what bring us in the first time and keep us coming back (and commenting about how awesome you are on Facebook!).

Wall Street Journal | Dessert in Just Three Bites

OnSite Team — Wed, 09 May 2012 03:18:58 +0000

FOOD & DRINK
May 8, 2012, 7:20 p.m. ET

Dessert in Just Three Bites

Mini Treats Rise on French Menus; Small Size Tempts The Lunch Crowd

By MARION ISSARD

Paris

The end-of-meal treat taking over France is fast, feels like a bargain and is, of course, delicious.

It is called a “café gourmand,” and it’s breaking the long-standing luncheon tradition of separate courses of cheese or dessert, followed by coffee. As the French spend less time at lunch and favor healthier fare, more opt for the sweet shortcut of an espresso served on the same plate with a few bite-size desserts like chocolate cake, madeleine or fruit salad.

Café gourmand—which translates as “gluttonous coffee”—has gone from an experiment at a restaurant chain to a national dish with its own cookbooks and contests.

“I often order café gourmand because it’s smaller than a regular dessert,” said Anne Lataillade, the founder of popular food blog Papilles et Pupilles. “Plus, I like to have the opportunity to try two or three different mini-items.” Her favorite café gourmand component is a moist pastry with a caramelized crust called a cannelé.

Photos

Beatriz Da Costa for The Wall Street JournalA café gourmand at La Fermette Marbeuf includes creme bruleé, a financier, and a profiterole.

Café gourmand is also emerging as a welcome new tool for a French restaurant industry struggling with tepid consumer spending. “Café gourmand is high-margin and allows restaurants to compensate for the limited benefits they get on main dishes,” says Miguel Casanova, the head of marketing at Traiteur de Paris, a wholesale frozen-pastry maker.

Restaurant spending has shrunk in France in recent years. The average restaurant bill slipped 2.5% to €12.61 ($16.39) in 2009 from the year before, according to the most recent data in a February report prepared by Eurogroup Consulting for the hotel-and-restaurant trade association UMIH. It forecasts 74% of restaurant bills will come in below about $16 this year.

The profitable café gourmand typically costs between $6.50 and $13, about the price of a regular dessert.

“It sells pretty well, because customers do not feel as bad as when they order a nice slice of tarte Tatin with cream,” said Micaël Memmi, owner of Zo, a Franco-Japanese restaurant in Paris with a café gourmand for about $12. “Plus, it’s like wine: If someone orders one, then the whole table will follow.”

The café gourmand is tapping into a broader impulse in dessert eaters to go small. In the U.S.—where coffee has traditionally been served with dessert—Seasons 52, a chain of mid-to-upscale restaurants owned by Darden Restaurants Inc., specializes in lower-calorie portions and sells desserts in shot glasses. It calls its dessert offers “mini indulgences.” DineEquity Inc.’s Applebee’s restaurants also offer diminutive “dessert shooters,” a style of treat that’s featured at a growing number of U.S. chains, and has even inspired at least one fan website.

Beatriz Da Costa for The Wall Street JournalLe Procope: This Parisian restaurant was founded in 1686

James Sinclair, principal at OnSite Consulting, a Los Angeles-based restaurant consultant, had trouble thinking of a U.S. restaurant that has tried the café gourmand tactic, but says many offer “dessert flights” as an option. “It’s the concept of being able to have a small taste of a few desserts,” instead of committing to just one, he says.

Twenty years ago, a typical lunch break in France lasted more than an hour and half, according to a 2008 study by Inpes, the national institute for health education. French people spent an average of 22 minutes at lunch in 2008.

The idea of a combo coffee-and-dessert dish was launched in 2003 at the Lyons branch by Pizza Pino, a chain of about a dozen Italian restaurants. It not only allowed the restaurant to serve customers in a hurry, it also allowed it to serve more customers, says chief executive José Paulino. They called it “café plaisir”, or “pleasure coffee,” and it consisted of mini homemade tiramisu, flan and vanilla ice cream. The concept was so successful that within six months they rolled it out across the chain.

It caught on fast. According to a study by food-service consultancy CHD Expert, around 26% of independent restaurants had café gourmand on their menu in 2007. By 2010, it had jumped to almost 38%.

The margins can be richer than for other dishes. On average, a café gourmand costs a restaurant about $2.30, excluding labor, says CHD Expert managing director Nicolas Nouchi. They sold, meanwhile, for about $6.80, on average, according to the 2010 survey of 4,089 restaurants.

Part of the dessert’s success is the notion that a selection of mini desserts isn’t as sinful as a full dessert. But that is an illusion. A mini-size pastry generally weighs 30 to 40 grams whereas a regular dessert is around 100 grams. “As café gourmand generally comes with three items, it is more or less the equivalent of a typical dessert,” says Mr. Casanova.

Beatriz Da Costa for The Wall Street JournalWallpaper at Le Procope celebrates the slogan of the French Revolution, an event the restaurant’s founding predates.

The dish has found its way on to the menus of high-end and mass-market restaurants. Groupe Frères Blanc, which owns places ranging from the historic café Le Procope, to brasserie chain Chez Clément, has introduced café gourmand at nearly all 27 of its restaurants. Each has customized it to the restaurant’s particular style: La Fermette Marbeuf, an Art Nouveau brasserie, features traditional French pastries like cream puffs.

For Groupe Bertrand, which runs a fast-food sandwich chain as well as upscale eateries, offering café gourmand is essential at its trendiest addresses, says spokeswoman Raphaële Marchal. Les Grandes Marches, a contemporary brasserie located on Paris’s Place de la Bastille, offers a raspberry macaroon, hazelnut-chocolate tart, crème brûlée, apricot tart and a chocolate on one plate.

Café gourmand has started to spread to home kitchens. In the past couple of years, about a dozen dedicated cookbooks have been published. Some come with little pots, plates or molds. In October, the cooking school L’atelier des Chefs offered a dedicated café gourmand course.

In April, coffee maker Nespresso set up a café gourmand contest in France. Chefs, trainees and amateur gourmets have until mid-May to send pictures of their own versions, with a maximum of three sweet bites.

The two-in-one concept could soon spread to other dishes. Groupe Frères Blanc is planning to introduce “fromage gourmand”: a couple of cheese bites with a half glass of wine.

—Katy McLaughlin contributed to this article

QSR MAG | Independent Restaurant Closures

OnSite Team — Tue, 22 Nov 2011 23:28:03 +0000

Plight of the Independents

Disproportionate amount of restaurant closures highlight the challenges of an independent operation.

In August, the NPD Group released its annual tally of U.S. restaurant closures, and the study proved a sobering reminder of the challenges independent restaurants face in any climate, let alone one sitting in recession-era shadows.

The NPD Group reported that 9,450 restaurants closed during a 12-month period beginning April 1, 2010. Nearly 92 percent of the closures, or 8,650 units, were independents, the steepest dive in that category since the Chicago-based market research firm began collecting the data in 2001.

Though quick serves can perhaps take comfort in the fact that 63 percent of the NPD-reported closures were full-service establishments, the disproportionate amount of independent closures spotlights the daunting climb such operations face. Quick serves in particular face steep challenges in a sector dominated by deep-pocketed, market-savvy chains.

“So many independents are juggling along, not getting profits, and counting pennies,” says James Sinclair of OnSite Consulting, a distressed restaurant consultancy headquartered in Los Angeles. “They’re using tomorrow’s money to pay yesterday’s bills, and that drives closures.”

While most peg today’s economic climate as the foremost threat to restaurant viability, industry insiders say quick-service independents face persistent and common challenges in any environment.

Off the bat, independents battle for a slim slice of the revenue pie. According to NPD Group data, major chains account for 72 percent of quick-service traffic, while independents only see 17 percent. (Small or regional chains account for the other 11 percent.)

“The quick-service segment is dominated by the major chains who have the wherewithal to develop new products, increase awareness, offer up discounts, and use considerable marketing clout to boost business,” NPD Group restaurant analyst Bonnie Riggs says, noting that dwindling access to capital has further hampered independents.

From daypart trends to flavor profiles, quick-service giants have teams studying consumers’ wants and desires and boast personnel dedicated to market analysis. The national names claim revenue-generating drive-thru operations, marketing pizzazz, and a deeper management bench that supports stumbling units.

In contrast, most independents operate on a shoestring, possessing neither the means nor the know-how to respond to bad business.

But the consistent battle against industry heavyweights isn’t the lone issue driving the staggering closure differential. An independent mindset too often rooted in passion over knowledge, Sinclair says, deserves attention as well.

“Outside of an idea and money, the restaurant industry has no barriers of entry, no certification, accreditation, or advanced business knowledge to get in the game,” he says.

Sinclair says the majority of independents he consults feature poor management driving the business into the red. There’s a widespread lack of knowledge on quick-service economics, such as process streamlining, sales, and quality assurance.

“Independent operators are using tomorrow’s money to pay yesterday’s bills, and that drives closures.”

Even more, the owner-operator model so prevalent in independents often means the leader extinguishes small fires each day at the expense of achieving a big-picture objective view.

“I find too many holding things together on will power and a prayer,” Sinclair says of independents. “They think infrastructure and process are words for the big guys alone, and that’s not so.”

Veteran restaurant consultant Izzy Kharasch says too many independents were willing to cut staffing when economic turmoil hit but not willing to raise prices, alter products, or investigate controllable costs.

“So many get on the defensive and they slash staff or quality rather than looking at productive cost cutting,” says Kharasch, who runs Deerfield, Illinois–based Hospitality Works.

Kharasch suggests independents put their “purveyors’ feet to the fire,” turning to suppliers for better efficiencies, best practices, and value. Ordering cups in bulk or switching to different napkins, for instance, can spark savings without hampering the customer experience, he says

“Quick service is a business of pennies,” Kharasch says. “Operators need to watch every piece of their business, from the ketchup packets to the napkins, to see if there’s a better, more cost-effective way.”

Yet profitability is not based on cost cutting alone. Operators can also pursue raising the average ticket with beverages or side items, Kharasch says. For example, an operator might place high-margin “grab items” at the counter, such as fresh cookies, as a simple enticement.

“How do we get our current customers to spend more money and be happy about it?” Kharasch says.

Sinclair believes independents need to mimic the major chains’ insistence on data. Reviewing numbers on beverage sales, dinner sales, and dayparts can produce valuable insight on opportunities and spur new revenue streams.

“Too many people accept the status quo,” Sinclair says “Sometimes all it takes is a 10 percent conversion on a new offering to be profitable.”

Ultimately, Kharasch says, it’s important that independents embrace their inherent strength: light feet.

“When an independent operator has a good idea, he can implement it tomorrow. That’s something independents need to use to their advantage,” Kharasch says.

CRAINS | Employee Theft – the dark side of the friendly discount

OnSite Team — Tue, 22 Nov 2011 23:10:49 +0000

Thwarting theft: the dark side of the friendly discount

By: Christina Le Beau August 08, 2011

“Friends-and-family discount” has such a nice ring to it. So nice, in fact, that retailers like the Gap use that warm-and-fuzzy phrase for coupon promotions.

But the discount has a dark side.

“One of the key reasons I encourage clients to have a friends-and-family discount is to stop stealing,” says James Sinclair, a principal at OnSite Consulting Inc., a Los Angeles-based firm that works with several Chicago restaurants and hotels.

“When family comes in, they are getting either free food, a free item or a discount — it’s a fact. No employee is having their family come in and not treating them special. No employee is having their roommate come in and not hooking them up in some form,” Mr. Sinclair says. “You cannot fight human nature.”

To be sure, employee theft is a big problem. The Austin, Texas-based Assn. of Certified Fraud Examiners estimates the typical company loses 5% of its annual revenue to theft. The National Retail Federation, in Washington, D.C., pegs 43.7% of theft loss to employees. And small businesses of every kind are disproportionately affected because they lack the security measures of bigger operations.

Then there’s “sweethearting,” a theft subset in which employees give unsanctioned discounts or freebies to friends and family. One Australian study, conducted by Boca Raton, Fla.-based security firm ADT Worldwide, found that 43% of small-business employees say they or co-workers engage in this practice. U.S. estimates are at least that high.

Rather than having to fire or punish employees who do this, Mr. Sinclair says it’s better to expect it and control it by offering a friends-and-family discount that’s generous enough to feel like a deal (if not a steal).

Companies that don’t build in a discount have higher theft, he says. Plus, “the hope, in addition to control, is that friends and family will talk about the brand in a positive light, and the organic customers that come from that are worth money.”

NFIB | Can This Business be Saved?

OnSite Team — Sun, 23 Oct 2011 21:26:59 +0000

Can This Business be Saved?

In this tough economy, many small business owners find themselves on the brink of throwing in the towel. But how do you know when it’s time to shut your doors for good or whether you’ve just hit a rough spot?

Several years ago, Brock Blake, CEO of Lendio (formerly Funding Universe), a Midvale, Utah-based company that connects small businesses to lenders, was wrestling with that question. His company was bleeding money. His business plan to connect companies with venture capital wasn’t working—95 percent of his customers were “Main Street” businesses that venture capitalists had no interest in funding. Things got so bad that two days before it was time to process his payroll, right before the holidays, he had to ask his employees to go without pay for three months, in exchange for equity in the company’s profits.

Here’s how to save your business:

React quickly.

Blake says he could’ve acted more quickly to save his business, but he was in denial. “You don’t want to face that as a business owner because you didn’t ever want to be in the position,” Blake says.

When your business is in jeopardy, you should always react quickly, says James Sinclair, a consultant who focuses on distressed restaurant operations with OnSite Consulting, a nationwide consultancy in Los Angeles. The most common trait of a business on the brink is denial, he says.

“They call us when death is on their doorstep,” Sinclair says. By the time an owner calls him, it’s almost too late. They’re often paralyzed by pride or shame. “Now the solution is going to be twice as difficult,” he says.

Evaluate profitability.

One of the first things Sinclair tries to find out is if the business he is working with is designed to make a profit. He coaches them to reassess their pricing and overhead expenses. “Every [business decision] should be based on profitability,” he says. Sinclair advises owners to go through “every invoice, every service, every vendor, every schedule,” he says, adding that it’s easier for owners to cut 5 percent from their overhead than add 5 percent to their profits.

Create a new business plan.

Blake retooled his business plan, making sure it would add to his bottom line, and increased his income streams. (Businesses can pay a monthly fee to get connected with lenders or get a revamped business plan, and creditors pay to get in front of potential borrowers.) In the last two years, his company has facilitated $240 million in loans to small businesses.

Restaurant Management Mag | Hiring Overqualified Employees Helps Restaurants Prosper

OnSite Team — Mon, 10 Oct 2011 09:18:55 +0000

Published on Restaurant Management (RMGT) (http://www.rmgtmagazine.com)

Hiring Overqualified Employees Helps Restaurants Prosper

Breaking News
//
October 3, 2011

These are trying times for anyone seeking work as unemployment figures hovered around 9.1 percent for August of 2011, according to the U.S. Bureau of Labor Statistics.

To make matters worse for job seekers, managers often have the erroneous belief that overqualified candidates will simply take the job as a placeholder and when something better comes along, they’ll up and quit.

But those same managers would be going against a survey completed by Dr. Anthony Nyberg, assistant professor at the University of South Carolina, and published in 2010 in the ‘Journal of Applied Psychology,’ which found that in positions with lower cognitive demands, employees with higher cognitive ability were less likely than others to voluntarily leave.

In predicting job departure, Nyberg found the most mentally demanding jobs produced job dissatisfaction at three times the rate of the simplest jobs.

“There is a great deal of evidence that says the higher a worker’s cognitive abilities the more successful they’ll be as a waiter, and will have a better memory, better work ethic, show up on time, be more professional, have more useful ideas, and possess better communication skills,” he says.

Norma’s Café, serving Texas home-style comfort food in two locations in Dallas, is a practiced case-in-point.

Bill Ziegler, director of operations for one location, says, “A month ago we hired Mercedes Garcia, as a cashier and front-of-the-restaurant greeter. She handles cash transactions and to-go orders.”

In a former position, Garcia had been a general manager of a quick-service buffet restaurant for five years in the same town.

Ziegler says during the interview he asked why she’d consider a cashier’s job. “She told me she’d recently had a child, that she just wanted to easily back into the restaurant environment, and didn’t want full-time work yet,” he says.

“Now we have someone who has been counted on in the past to lead the entire staff,” Ziegler says. “The biggest benefit is having a successful restaurant general manager at our front door. There is a time to lean and a time to clean, she never leans,” he says. For example, during slow periods at the cash register Garcia will walk the restaurant and talk to diners.

As a testament to her knowledge base, management would like to promote her in the future.

In the food business for 14 years in Cape Cod, Robyn Thibodeau, co-owner and manager of The Sailing Cow Café, says she hired a chef two years ago who’d been a lawyer but didn’t want to continue in private practice.

“He’s great at what he does,” she says. “My experience hiring overqualified people is if they come from a corporate environment, they’re groomed to that environment, with a strong work ethic,” she says.

“The overqualified people I’ve hired don’t talk back, know right from wrong, don’t do drugs or alcohol and don’t have excuses for their absences,” Thibodeau adds. “You ask them to do something and it’s done.”

The lawyer-turned-chef has worked out well. “He is very calm and handles problems diplomatically, doesn’t cross the line and he gets along with the entire team.”

James Sinclair, principal at OnSite Consulting in Los Angeles says the majority of his restaurant clients have hired someone who is overqualified in some respect.

Sinclair feels experience is the thing and without it a restaurant can go down in flames.

“There are no textbooks for this stuff so experience is important,” he says. “The more time spent in a fires, the handier you become with an extinguisher.”

You only have one chance to ruin a patron’s dinner experience. That’s why you bring in someone with experience and skill, an overqualified restaurant worker.

By Judith A. Stock

Photo courtesy of Greene Turtle Sports Bar

Source URL: http://www.rmgtmagazine.com/content/hiring-overqualified-employees-helps-restaurants-prosper
Copyright © 2011 Journalistic Inc. All rights reserved. RMGT and Restaurant Management are trademarks of Journalistic Inc.

Cisco News | How the Cloud Can Make Your Small Business Look Bigger

OnSite Team — Wed, 14 Sep 2011 18:10:51 +0000

How the Cloud Can Make Your Small Business Look Bigger

“On the Internet, no one knows you’re a dog.” It’s much the same thing with cloud technology and small companies. With the cloud, no one knows you’re a small business.

By Anne Field
View All Contributing Writers

September 06 , 2011

You know that cartoon where two pooches are at a computer and one says to the other “On the Internet, no one knows you’re a dog”? Well, it’s much the same thing with cloud technology and small companies. That is, with the cloud, no one knows you’re a small business.

Case in point: Two years ago, the lease was about to expire on the Los Angeles offices of James Sinclair’s restaurant and hotel consulting company OnSite Consulting, so he had to decide whether to renew. After studying the numbers and alternatives, Sinclair had a better idea. He realized he simply didn’t have to be in one location and he didn’t need to sink capital into all those servers and all that software. Instead, he and his 65 employees could work virtually, tapping into applications on a cloud hosting service to do everything from sharing documents to retrieving customer information.

Disqus: Has cloud computing helped or hindered your business?

But a funny thing happened in the process. Sinclair discovered that by using a cloud vendor he could get a higher level of functionality that made OnSite look like a much larger company. Take project management. Customers were now able to log on, see who had performed what, and get insight into due dates, outstanding tasks and a variety of other data–the kind of comprehensive, detailed, up-to-the-minute information you wouldn’t expect from a small enterprise.

And it was highly affordable. In fact, all his cloud applications cost about $400 a month—”significantly” less, he says, than his less-capable in-house IT setup.

Sinclair wasn’t trying to pull the wool over anyone’s eyes, but he’s not sorry that he appears to have the resources of a 500- or 5,000-employee competitor. In fact, one boutique hotel owner confided he’d chosen OnSite thanks, in part, to the company’s project management system and the confidence it gave him in OnSite’s capacity to outperform much bigger competitors. Sean Baird, an IT Consultant in Conshohocken, Pa., who specializes in cloud technology, puts it this way: “If customers have the ability to check on the status of a project 24/7, that’s a big company kind of thing.”

That said, if you want to use the cloud to look bigger, how do you go about it?

Think customer-facing. What Sinclair stumbled upon, other businesses are pursuing strategically—looking at cloud options that will give them the greatest payoff. “Evaluate the interfaces where you interact with your customer and that’s where you would begin to design more professional or advanced types of communication,” says Treff LaPlante, who heads WorkXpress, an IT and cloud technology consulting firm in Harrisburg, Pa. That can include anything from billing and email to project management and telephone systems.

Combine applications. Sean O’Rourke, a principal at Syzygy 3, a New York City IT consultancy, helped a pet shelter expand its customer service abilities without paying for a pricey call center. The company re-assigned 20 of its 110 employees to answer calls from their own homes from 6 p.m. to midnight, using a voice-over IP phone system. Clients would call the shelter and press the option for customer service, without having a clue they actually were reaching someone sitting in, say, his kitchen. Then, the home-based employee would log onto the website of another cloud provider to access the appropriate customer records. The cost: $5 to $10 per user per month.

Don’t fake it. The point isn’t to make yourself appear bigger if you can’t deliver the goods. Says Sinclair: “Ultimately, customers judge us on our performance.”

The contents or opinions in this feature are independent and do not necessarily represent the views of Cisco. They are offered in an effort to encourage continuing conversations on a broad range of innovative, technology subjects. We welcome your comments and engagement.

We welcome the re-use, republication, and distribution of “The Network” content. Please credit us with the following information: Used with the permission of http://thenetwork.cisco.com/.

Downtown Los Angeles | The Restaurant Veterans Bite Back

OnSite Team — Sat, 06 Aug 2011 07:59:12 +0000

The Restaurant Veterans Bite Back

With a Wave of New Eateries Hitting Downtown, the Food Pioneers Work to Stay Relevant

by Richard Guzmán

Published: Friday, August 5, 2011 5:29 PM PDT

DOWNTOWN LOS ANGELES – The crush of new restaurants in Downtown Los Angeles is impossible to miss. In the effort to capitalize on the growing residential population and the eruption of L.A. Live and other attractions, chefs and dining entrepreneurs have debuted dozens of spots in the past several years. In the first six months of 2011 alone, 20 eating and drinking establishments came online.

While the trend is heralded by Downtown boosters, it has posed something of a challenge for another sector: the Downtown restaurant veterans. In particular, a handful of higher-end eateries that have been serving for a decade or longer have been hit with wave after wave of competition.

In the effort to keep drawing crowds, some have reinvented themselves completely. Others have gone through a more subtle evolution, updating menus or getting new talent in the kitchen. Still others have banked on loyal customers and conducted a facelift here and there in the effort to stay relevant among the hot new things.

There is no sure way to stave off the newcomers. In June, the operators of Zucca Ristorante shut down the Figueroa Street establishment. The Italian eatery, part of the Patina Group, had been serving for 10 years.

The Water Grill has fared better. The heralded Financial District seafood purveyor has been in operation since 1994 and recently signed a new 20-year lease for its space at 544 S. Grand Ave. Jeff King, the chairman of the board and co-founder of King’s Seafood Company, the owner of Water Grill, said the restaurant’s longevity is due to factors like filling an early niche, constant tweaks to the menu and loyal customers.

“There was nothing around here back in those days,” he said of the opening 17 years ago. “So we filled a niche Downtown as an upscale seafood restaurant with a wine list.”

King noted that, early on, many of his customers were attorneys and other white-collar employees who worked in the area’s skyscrapers. Being one of the relatively few well-reviewed power lunch spots established a base that still comes in for lunch and dinner.

Still, he noted, the restaurant is not resting on its laurels or reputation. King said the wine list is constantly updated and new items are regularly added to the menu. Additionally, the restaurant will soon get a makeover, although King would not discuss specifics.

“This year we’re going through some major changes,” he said. “We’ll be remodeling to open up the restaurant a little more.”

That’s the attitude a veteran restaurateur should have, said James Sinclair of OnSite Consulting, a hospitality and restaurant consulting firm based in Los Angeles. It is particularly important in a neighborhood with heightened competition.

“They can’t stay stagnant and expect to continue their business,” he said. “They have to tweak the concept consistently, think about how they can be better, listen to customers, respond to customers, recognize competition, because there’s a lot of competition.”

There’s also a new toque in the Water Grill kitchen, though not by design. Last year, longtime chef David LeFevre left to open his own restaurant (M.B. Post in Manhattan Beach). After an extensive search, King picked Amanda Baumgarten, LeFevre’s sous chef, to take over. She made a name as a contestant on Bravo’s popular “Top Chef” show. The publicity was welcomed, King said.

Avoid the Theme

Some Downtown restaurant veterans don’t do much to stay current. Nor should they. Spots like Philippe’s, East Side Market and Deli and The Original Pantry Café are lower-priced joints where the tradition in both decor and cuisine is part of the charm. Changing things too much might drive loyal customers away.

It’s a different game for more upscale establishments like Water Grill, The Palm, Traxx, Pacific Dining Car and Engine Co. 28. Each of those veterans possess something Sinclair notes is vital: the ability to be unique without going overboard.

“Don’t be thematic,” Sinclair warns. “Thematic goes in and out of style.”

Tara Thomas, the owner of Traxx, had that in mind when she opened her restaurant in 1997. Located inside Union Station, the Art Deco style establishment sports dark wood furniture, patio dining and a courtyard with a fountain.

The goal, Thomas noted, was to have a look that was timeless rather than trendy. She knew she was in a space, a 1939 train station, that already has an architectural wow factor.

Still, Thomas notes that she hasn’t survived 14 years because of the look of the building. She satisfies a loyal customer base, including a large City Hall crowd, by changing her menu seasonally. She views the new crop of Downtown restaurants more as help than competition.

“I think the critical mass of new restaurants has done nothing but benefit me because more people are attracted to Downtown,” she said.

Nevertheless, Thomas, like many other people, has embraced social media as a business tool. She has a presence on Facebook and Twitter and launched a chef’s blog on her website, which she admits she needs to update regularly.

Regardless of how many newcomers land in Downtown, she said Traxx will remain a constant classic.

“I will never radically change Traxx,” she said. “It will continue to be a chef-driven seasonal restaurant. I’m not going to turn it into a nightclub.”

Actually, Thomas is changing one thing, which makes her similar to the swell of competition — she is opening a new restaurant in Downtown. She would not reveal any details.

Bigger Changes

Even restaurants with deep traditions make changes to keep up with their neighbors. The Palm in South Park has been a favorite for local business figures and power brokers since it opened in 2002. Restaurant officials want not only to make sure that customers keeps coming back, but that people new to the area can easily spot The Palm.

In April, the restaurant known for its steaks and lobsters opened a 56-seat patio fronting Flower Street. General Manager Bryan Lytle said it was an effort to compete with all of the outdoor dining options at nearby L.A. Live. He said The Palm plans to host regular prix-fixe patio events to attract customers.

“The patio gives us better curb appeal,” he said. “People can see the large canopy, the dining area. You see there’s a restaurant over here.”

Not all of the changes have been cosmetic. Part of the menu has been revamped (something happening in all Palms across the nation) and some Italian dishes have been added. It even offers donuts in a bag for dessert. The restaurant has also upped its advertising, Lytle said.

“With 20 new restaurants opening in the last six months, staying fresh and current is very important to us,” Lytle remarked.

Still, the changes at The Palm seem minor compared to those effected by Mary Sue Milliken and Susan Feniger, who in 1998 launched Ciudad at Fourth and Figueroa streets. The Latin food establishment from the pioneering chefs was a quick hit with the business crowd and later with the Staples Center audience.

However, in October Milliken and Feniger closed Ciudad. It reopened a few days later as a Downtown outpost of Border Grill. The duo also operate Border Grills in Santa Monica and Las Vegas.

The interior is not markedly different from Ciudad and some of the old entrees and appetizers remain. Still, the shift to a more Mexican menu reflects what customers were asking for, Feniger said.

“We definitely made a big change,” she said. “We were looking to grow Border Grill, but in addition we felt that since Downtown has a lot of new competition…. In order to feel like we can be in that game we decided to make the restaurant feel new and fresh and exciting.”

The restaurant also offers lower price points, allowing them to reach a broader audience than before, Feniger pointed out.

As far as the new batch of eateries in Downtown, Feniger sees them as both competition and an asset to the area.

“It’s competition for sure,” she said, “but on the other hand I feel that by having more restaurants in Downtown, more people think about coming Downtown.”

In fact, the change is just one of many for the women who made a name for themselves as the Two Hot Tamales. They’ve authored five cookbooks, have both appeared on Bravo’s “Top Chef Masters” show, and jumped on the mobile food bandwagon with a Border Grill truck.

“We try to stay current and aware of what is out there,” Feniger said. “We’ve stayed very hands-on for 30 years. We know we have to work really hard and we never assume because you’re busy today, you’ll be busy tomorrow.”

Contact Richard Guzman at richard@downtownnews.com.

page 1, 08/08/2011

©Los Angeles Downtown News. Reprinting items retrieved from the archives are for personal use only. They may not be reproduced or retransmitted without permission of the Los Angeles Downtown News. If you would like to re-distribute anything from the Los Angeles Downtown News Archives, please call our permissions department at (213) 481-1448.

All Business | Daily-Deal Secrets: Get the Best Possible Deal for Your Business

OnSite Team — Sat, 30 Jul 2011 06:46:22 +0000

Daily-Deal Secrets: Get the Best Possible Deal for Your Business

Read More! Check out the AllBusiness Guide to Working with Daily-Deal Sites for the latest expert advice and news.

Growing kids, Web-savvy moms, and a daily-deal site promising national exposure with no up-front investment. For ThredUp, an online swapping service for children’s clothes, these three ingredients sounded like a sure recipe for success.

Karen Fein, ThredUp’s marketing director, spent weeks comparing deal publishers before settling on DealPulp, a site that specializes in national online offers rather than local merchants. ThredUp decided to offer a box of “preloved kids’ clothes” for $6 — or a 62 percent discount off the regular price.

Fein said ThredUp was prepared to lose money on the initial deal, calculating that a few hundred happy new customers would pay off in the long run. But when the offer went viral almost immediately, nobody was prepared for the response.

Orders flooded in, and the initial cap of 1,000 deals was hit in no time. Rather than risk thousands of disappointed customers, both sides agreed to lift the cap and adjust the revenue split in order to keep the offer alive. Buyers eventually snapped up nearly 8,500 boxes of clothes, setting a new record for DealPulp and bringing in thousands of new customers for ThredUp.

Of course, not every story has such a happy ending. Many small businesses complain that flash-deal contracts carry restrictive terms that strain their cash flow while offering them little flexibility and few long-term benefits.

The good news is that the standard contracts daily-deal sites offer are almost always a starting point. Savvy business owners can usually obtain more favorable terms — provided they know what to look for and how to negotiate.

If your small business wants to hammer out the best possible agreement with a daily-deal site, you’ll need to pay special attention to some key issues.

The revenue split: Many novices assume that deal sites automatically take 50 percent of the proceeds from coupon sales, but veterans quickly learn that figure isn’t set in stone.

At Victory Auto Service & Glass in Minnesota’s Twin Cities area, Stephanie Gutierrez said four different coupon sites called seeking a deal — a sure sign they were hungry for business. In each case, Gutierrez was able to negotiate better terms than the standard 50/50 split.

With Groupon, however, the process was different. “I sought them out, whereas every other company sought us out,” she said, explaining her weaker bargaining position. “They didn’t need to negotiate, because they are in such high demand as the industry leader.”

Negotiations aside, newer entrants and niche sites in the daily-deal space frequently offer a more favorable split as they seek to gain traction against the dominant players in the field. At DealPulp, for instance, “all the merchants get better than a 50/50 split,” according to a company spokesperson.

No matter which site you’re dealing with, experts say some businesses will have more built-in leverage than others. “If you are a tier 1 restaurant in your city and are just fine without running a deal, you will get whatever you want,” said Chris Leithe, cofounder of Redeemio, a daily-deal metasite that organizes offers from dozens of publishers nationwide.

“Publishers are more willing to negotiate with businesses that are in this tier because it means immediate viral spread of the deal,” Leithe stated. “If I were a business in this category, I wouldn’t accept less than 65 percent to 70 percent of the deal revenue.”

Discounts: Deal publishers love to tout savings of 50 percent to 90 percent off retail, but it’s the merchant who ultimately decides how much of a discount to offer.

In general, this may be the one area where businesses don’t want to drive a hard bargain. “The bigger the discount, the bigger the distribution,” Leithe noted. “In many cases it’s best for the merchant to go along with the typical discount percentage, while manipulating only the actual dollar value.” In other words, if you can’t afford a $25 loss on every $50 sale, then cut back the offer to $10 for $20 worth of goods. Customers and publishers still get the 50 percent discount they like to see, but your bottom line takes less of a hit.

If you can afford it, use the discount percentage as leverage for negotiating other parts of the deal. That tactic has worked for Gutierrez: “If we have been willing to offer a deeper discount on our offer, publishers have been more likely to negotiate a better revenue split for us,” she said.

Exclusivity: At many deal sites, a standard contract stipulates exclusivity for up to six months. “This may be OK for some businesses that enjoy the daily-deal partner they’re working with and are only interested in running one or two deals each year,” Leithe said. But if you discover that daily deals are great for your business and other publishers come calling, “your hands will be tied.”

You can often get the exclusivity clause waived simply by asking — or use it as a bargaining chip to negotiate more favorable terms elsewhere in the contract.

Other terms: Contracts from daily-deal sites sometimes run up to a dozen pages and cover a wide variety of policies and terms. Read the fine print carefully, experts recommend, and make sure you can live with the publisher’s terms on at least four additional items:

Payout schedules
Expiration dates
Coupon caps
Access to customer emails

In many cases, “negotiating” a more favorable contract means nothing more than asking for a change. “Each publisher has given us whatever we asked for, so we haven’t had to barter around, with the exception of the revenue split,” said Gutierrez.”They’ve added on whatever stipulations we need. With some of the smaller companies, I’ve even asked if we could write the subject lines of the emails ourselves, and they’ve let us.”

Now that she’s a veteran of the daily-deal game, Gutierrez finds she can bring some additional leverage to bear, if necessary. “Once we had a few offers under our belt, I’ve also been able to pull something like, ‘This company gave us a 70/30 split; can you give us the same or something more competitive?’ ”

For first-timers determined to get the absolute best deal, James Sinclair of OnSite Consulting says volume is the key. Team up with other business owners in your trade association or chamber of commerce, “then go to Groupon or LivingSocial and say, ‘Look, I have six different businesses that all want to advertise with you. What can you do for us?’ ”

LA TIMES | Restaurant Consultant Assists Concession Stand In Playa Del Rey

OnSite Team — Sat, 02 Jul 2011 20:22:37 +0000

In May 2011, Cyndia Zwahlen of the Los Angeles Times asked us to assist a small business she was speaking with that was having some financial and operational difficulty. Under our pro-bono banner we met and assisted Kevaccino’s On The Beach in Playa Del Rey. Restaurant consulting takes the same principals from multi million dollar units all the way to Concessions Stands on a beach.

Operations menu can help eatery’s sales heat up

Creating a checklist of procedures is among the advice an expert gives the owner of Kevaccino’s on the Beach in Playa del Rey.

May 30, 2011|By Cyndia Zwahlen

Kevin Reynolds is hoping for a long, hot summer.

He’s not chasing a tan. He’s hoping to attract more customers to his beachside concession stand, Kevaccino’s on the Beach, in Playa del Rey.

“When it cools off to 60 and 65, it just kind of blows me out of the water,” said Reynolds, who cooks and staffs the walk-up order window with the help of three employees.

This will be the third summer Reynolds has run the concession, and it has been challenging. Although the business was in the black last year, he used most of the profit toward paying off start-up costs, including credit card bills.

He’s hoping to increase sales, but among the challenges are nearby construction and strict Los Angeles County rules on parking and signage.

Then there’s the fact that his stand is on a relatively remote part of Dockweiler State Beach that gets fewer visitors than other spots along Santa Monica Bay. This was perhaps a prime reason he had no competition when he applied for a five-year lease on the structure that is owned by the county and overseen by its Beaches and Harbors Department.

“I’d like to do well enough that I can just rebid on it” when the lease is up, Reynolds said.

At $7,500 a year, his rent is low. Sales hit $80,000 last year.

Kevaccino’s faces challenges, but so does every business, said James Sinclair, principal at Los Angeles-based OnSite Consulting Inc., which specializes in the hospitality industry.

Sinclair visited the business and made these recommendations:

• Get organized. “You can’t hit critical mass unless you can leave the business” and be confident it will be well run, Sinclair said.

To accomplish that, Reynolds should create a one-page form or checklist that outlines standard operating procedure (SOP) for all major tasks.

“When people hear SOP, they think IBM, but it’s not true,” the consultant said. “The smaller the business, the more it needs it so it is not as reliant on the owner.”

Checklists should cover opening procedures and end-of-day cleaning and closing. Safety checklists are also important, including how to handle and store food, especially if the electricity goes out as it did recently.

• Control inventory and costs. Keep the unit fully stocked; it will save trips to pick up food and supplies. And shop at a restaurant supply warehouse, such as Restaurant Depot, to save money, Sinclair said.

Reynolds should have separate inventory lists for summer and winter. “I’m not asking people to be desk clerks, but administration is part of running a small business,” Sinclair said. “If you go through it once, it will make your life easier forever.”

• Hire a trained cook. “A trained line cook can help him organize and clean his kitchen, and improve the quality and consistency of his food,” Sinclair said. Reynolds doesn’t need a fancy chef, just an experienced restaurant cook who can handle basic fare.

• Develop a concept and a signature item. Figure out what the food concept is and stick to it, Sinclair said. Currently Kevaccino’s has “a little bit of everything, ” he said.

“If the concept is great American food, then he should have the biggest, baddest hamburger around or chili dog or pastrami,” Sinclair said.

• Rework the menu board. “The menu board is everything. It represents your business,” he said. The current, worn menu board doesn’t encourage people to spend, the consultant said. Reynolds could add more preset food combinations, sack lunches and picnic baskets to go.

“There is plenty of opportunity here,” Sinclair said. “But it needs to be run like a business and not like a hobby.”

Food Trucks | Are They Restaurant Extensions?

OnSite Team — Mon, 13 Jun 2011 20:51:25 +0000

Food Trucks Inspire Other Small Businesses to Hit the Road

There’s no denying that food trucks are on a roll, having become the culinary trend and one of the biggest small business success stories of the moment. From Los Angeles to New York, San Francisco to Miami, these restaurants on wheels have made eating lunch curbside hip and spawned their own celebrity chefs, magazine profiles, and even a series on the Food Network. And perhaps the ultimate sign that food trucks are part of the mainstream: Last year, the National Restaurant Association launched the Food Truck Spot at its annual restaurant show, with seminars on how to run a restaurant on wheels.

“One of the first things most businesses cut back on [in tough economic times] is advertising,” writesBrian Sacks, founder of Mobilefoodprofits.com, a company that advises people on how to get started in the food truck business. A food truck, he says, becomes a mobile billboard that reaches new clients each time it moves to a new location.

But the moveable-feast movement holds allure not only for those dishing up fish tacos and red velvet cupcakes, but also for purveyors of everything from pet supplies to home goods.

“Food trucks can show small businesses the importance of lean operation and capitalizing on a strong brand and focused product to service your customers with a very clear offering,” says Ross Resnick, founder of the food truck-centric site Roaming Hunger.

One such small business is VIP Petcare Services of Windsor, Calif., which holds mobile clinics every weekend at various locations throughout Northern California. The company, with 20 trucks, says it can offer services from licensed veterinarians at a much lower price than a full-service vet clinic because it does not have to support a costly brick-and-mortar operation.

Another innovative up-and-coming mobile business is Gamin’ Ride of Jackson, N.J., an indoor-outdoor video game theater that features jumbo high-definition TVs and gaming systems like Xbox 360 and Wii. The company, which sells franchise opportunities, offers small business operators a gaming center on wheels that can accommodate up to 24 players at a time. “Forget about another bowling party or arcade — here is something new!” Gamin’ Ride says on its site. Arcade-type entertainment centers are busy on weekends, but not so much during weekdays — a challenge for anyone who owns a brick-and-mortar location. Having the ability to shut down during off hours is a great cost benefit to having a mobile business.

Then there’s New York’s Monster Savings, which delivers discount office supplies, groceries, and other products from Costco stores to businesses and households throughout the city — and which, as it happens, was started by the owner of a restaurant.

Monster Savings founder Michael Eberstadt explains that his idea grew from the realization that most New Yorkers do not own cars to transport them to big box stores. “I decided to essentially put a Costco warehouse on wheels and drive right up to the doors of my peers in the small business community.” Though he has no official relationship with the retailer, Eberstadt considers Monster Savings as a sort of “app” for Costco. Similar to the FreshDirect model, which delivers groceries, Monster Savings takes orders from businesses and individuals each day, fulfills them at Costco warehouses, and delivers items within 24 hours.

But launching a mobile enterprise is not quite as simple as getting your hands on four wheels and spreading the word on Twitter. In the case of food trucks, for example, there are many practical business issues such as health codes, zoning regulations, and marketing challenges that anyone hoping to jump on this trend needs to be educated about if they expect to break through the street clutter.

“There is a misconception that starting a food truck or mobile business is a guarantee of success — not the case. Starting a mobile business is just as challenging as starting an immobile business,” says Roaming Hunger’s Resnick, whose company enables mobile foodies to search for information on food trucks across multiple markets. Resnick notes that in Los Angeles alone, more than 125 gourmet food trucks hit the streets on any given day.

Business owners who want to start a mobile business can apply many of the lessons veteran food truck operators have learned in this competitive and growing sector. “It is just as important to market a new truck and differentiate it from the others to achieve success as it is with a brick-and-mortar [business],” advises Resnick.

“Starting up a [mobile business] can be easier than a brick-and-mortar business, but it also has its challenges,” explains Claudia Gonzalez, owner of four-year-old Chunk-N-Chip of Los Angeles, which specializes in gourmet ice cream sandwiches and last summer was awarded second place in Yelp’s “Most Popular Food Trucks” in Orange County, Calif.

Buying your own truck, Gonzalez says, can run anywhere from $50,000 to $100,000. Consider leasing a truck, which can be more affordable and is becoming an increasingly popular option, she says. And there are the usual startup costs that apply to any business, such as supplies, equipment, personnel, permits, and so on.

Letting your clientele know where to find you can also be a challenge that brick-and-mortar stores don’t have. Social media certainly has been a major driver of food trucks’ success, enabling business owners to tweet their location every day, and informing consumers of daily menu offerings and special deals. But hitching your star to social media can have a downside, too. “The obvious problem . . . is that customers literally have to chase you, every day,” says James Sinclair of Los Angeles-based OnSite Consulting, which serves the hospitality industry. “Imagine if you had to check Twitter to see where Nobu is today. It’s like hunting lunch with a BlackBerry instead of a gun.”

But social media is, for the most part, free. Used consistently in all its many forms — Twitter, Facebook, Yelp, and Foursquare, to start — along with successful word-of-mouth buzz, you’ll quickly establish a following.

Despite the considerable operating issues involved, for many small business owners the cost of entry of a mobile business makes it a more viable option, especially in tough economic times. No long-term leases, lower utility costs, and fewer employees are just some of the ways that costs are reduced.

It’s also a way for a company to expand its footprint, testing the waters in new communities, and in a cool way that resonates with customers. “Where we have seen great success is a food truck as an extension of a brick-and-mortar store, for catering, events, or even serving the standard food truck customers,” says OnSite Consulting’s Sinclair. “When the truck and the restaurant exist together, it can be both a satellite location and a marketing tool with significant economies of scale.”

As with any small business, running a mobile business may present challenges, but the payoff can be as sweet as one of Chunk-N-Chip’s gourmet ice cream concoctions. As owner Claudia Gonzalez points out, “At the end of the day, if you’ve got great food, great customer service, and start building a following on Twitter and Facebook, word spreads fast.”

Tony Case is a New York-based business writer whose work regularly appears in publications such as AllBusiness.com and Advertising Age.

Morton’s poised to raise the “steaks” in 2011

OnSite Team — Fri, 13 May 2011 18:35:31 +0000

Story Retrieval Date: 5/13/2011 1:30:20 PM CST

Morton’s Restaurant Group Inc. ( NYSE: MRT )

Morton’s Steakhouse, which has 77 locations worldwide, is known for its generous portions.

Morton’s poised to raise the “steaks” in 2011

by ALISON B. KESSLER
May 12, 2011

Morton’s Restaurant Group Inc. is ready to rebound. Business people are traveling and entertaining again.In its 2010 annual report, the Chicago-based steakhouse company reported revenues of $296.1 million, an increase of 5.3 percent from the company’s record low of $281.1 million in 2009, following industry-wide devastation due to the recession. Analysts are predicting 2011 to be the comeback year for Morton’s.

Of five analysts surveyed by Bloomberg LP, three gave Morton’s stock a buy rating, while two gave the stock a hold rating. Nicole Miller Regan, senior research analyst at Piper Jaffray, expects the company’s 2011 stock price to reach $9.00, well outdoing the 52-week high of $8.09. Morton’s shares rose 16 cents to close at $7.56 on May 11.

The company reported earnings of $2.2 million, or 12 cents per diluted share, in the first quarter ended April 3, up 83 percent from $1.2 million, or 7 cents per diluted share a year earlier.

Analysts surveyed by Bloomberg LP estimate earnings per share to reach 45 cents in the current year, and 56 cents in 2012. In 2010, diluted earnings per share were just 15 cents.

The positive predictions couldn’t come sooner for investors. As recently as March, Morton’s announced that it was considering options to boost shareholder value, including a leveraged buyout.

According to data compiled by Bloomberg LP, Morton’s initial public offering gave the company a market capitalization of $274 million. Since its IPO in February 2006, the company’s market cap has slipped an alarming 58 percent, leaving it at just $121 million.

“We had to ask, ‘where can we strip out costs without doing anything to damage the brand?’” recalled Morton’s president and chief executive officer Christopher J. Artinian in a May 6 interview. “We’ve been around for 33 years… We never wanted our guests to feel we reduced service, quality or portion size.”

The steakhouse chain hasn’t seen more than three straight years of profit in over two decades, and took a major hit at the start of the recession following its record $358.8 million in sales in 2007.

The economic downturn instantly hemorrhaged restaurant industry sales, particularly those of fine-dining establishments like Morton’s. According to the National Restaurant Association, upscale restaurants felt the strongest impact because, unlike their less-expensive, quick-serve counterparts, there was little to be done to adjust to the tighter budgets – and fewer visits – of their guests.

Lara Weiss, global director of sales of K Hotels, a company that represents independent luxury hotels, confirmed a direct correlation between the decrease in reduced business travel and empty seats in upscale restaurants.

“If they were there, they were still entertaining in high-end restaurants to make the right impressions on clients,” Weiss pointed out about business travelers. “But the recession cut down the number of business travelers significantly, and if they were dining without clients, they obviously were going much lower end.”

Cuts in businesses’ travel and entertainment budgets during the recession largely influenced Morton’s faltering sales; the company attributes more than two-thirds of its sales to corporate spending. As T&E spending continues to rise through 2011, so will Morton’s value.

“Travel data showed continued improvement in March, which we highlight as a positive update for MRT shares,” Regan said. “Steadily improving, highly-correlated industry metrics…remain in positive territory.”

In March, the luxury hotel sector reported its largest increases since the recession. According to Smith Travel Research, the segment’s occupancy rose 7.8 percentage points to 73.4 percent, average daily rate was up 5.2 percent to $258.83, and revenue per available room (RevPAR) increased 13.5 percent to $189.97.

In fact, the luxury segment has been steadily improving at a faster rate than overall RevPAR. Luxury hotel RevPAR was up 10 percent in March from the year before, and is currently up 26.8 percent since August 2009. Smith Travel Research is forecasting a domestic RevPAR growth of 6.1 percent in 2011 and 8.6 percent in 2012.

Travelforsmallbiz.com, a business travel and hotel website, found that corporate food allowances have been on the rise – an average of 10 percent – over the past two years. Don Mazzella, editorial director of the site, says that although consumers are being more careful when scheduling trips by cutting back on last-minute trips, business travel is climbing steadily.

“There’s no two ways about it,” confirmed Artinian. “Seventy-to-80 percent of the Morton’s business will end up on an expense report. The increase in Monday through Thursday sales has been the most significant change for the positive in the last 15 months.”

The upswing is just in time. According to company filings, the average per-person check has climbed 14 percent since 2006 to $99.19, following recent increased menu prices.

In fiscal year 2010, beef costs made up 43 percent of Morton’s food and beverage expenses. Anticipating the surge in beef prices has been crucial to the recovery of the international steakhouse.

William Blair & Co. analyst Sharon Zackfia noted the restaurant industry lagged behind the broader market for the fourth straight month in March, rising approximately 2.5 percent versus the approximate 5.5 percent gain by the S&P 500. Zackfia credited the delayed progress to elevated product prices.

“Commodity cost pressure remains an issue, with several companies recently increasing estimates for commodity inflation in 2011,” she wrote in an April industry report. “Year-to-date inflationary pressures have been fairly broad-based, with increases in dairy, grains, and beef particularly notable.”

Artinian insists that Morton’s price increases made last winter will keep menu prices from rising again anytime soon.

“We saw this coming, and it’s amazing how fast the spikes came,” Artinian commented. “In the foreseeable future I don’t see any changes… We absolutely benefited from the pricing that we took in December and January.”

Is riding the recovering economy enough to assure Morton’s future?

James Sinclair of OnSite Consulting, a hospitality-and-restaurant consulting firm, believes the company needs to move away from its traditional model in order to regain its footing.

“I think that if Morton’s depends on its name and history to ‘bounce’ back, it’ll never fully recover,” Sinclair said. “It still comes down to great product, service and value…even if it’s expensive. Morton’s has to stay relative outside of just being in great locations and having great steak.”

Morton’s is pursuing alternative opportunities to both expand the brand and increase shareholder value.

“We shut off development in ’08 and ’09 and put the switch back on in September 2010,” Artinian said. “Domestically, we have capacity of up to 30 more restaurants. We’ve been in Asia for almost 13 years, and have real estate brokers to aggressively find sites to expand in that part of the world.”

Another area for growth is the company’s Bar 12-21, named for Morton’s founding date. Though the bars were introduced to restaurant locations six years ago, they became especially popular during the economic downturn. Artinian said the bars became a major “destination point and profit center” for Morton’s regulars and newcomers alike.

“It’s a great avenue to keep the restaurant with our guests, has a broader appeal,” Artinian said. “As the economy rolls back, it’s another growth opportunity.”

Intuit | 5 Tips for Interacting With Customers on Yelp

OnSite Team — Wed, 04 May 2011 17:34:06 +0000

5 Tips for Interacting With Customers on Yelp

(Also see post: How To Respond To A Bad Restaurant Review)

by Susan Johnston on May 4, 2011

Like it or not, there’s a good chance that your customers either found your business through Yelp.com or plan to say something about it there in the future. That’s a scary reality for many business owners, but it also offers an opportunity to engage with customers and improve sales down the road.

James Sinclair, principal at the Los Angeles-based OnSite Consulting, which specializes in the restaurant and hospitality industry, says Yelp is like a public shopper program. “There are some companies that pay thousands of dollars to secret shoppers,” he explains. “When you go to Yelp, it’s done for free and with passion.” Most customers won’t offer such candid feedback in person because they don’t like confrontation, but they’ll more readily open up online.

Here are five tips for small business owners who want to improve their Yelp strategy.

Create a Yelp business account.
With a free business account on Yelp, you can monitor traffic to your Yelp page, upload photos, announce special offers, and communicate with customers. Sinclair recommends that business owners set up a business account for using all of these tools rather than using a personal account.
Take feedback to heart.
Often business owners read negative reviews and get defensive or dismissive, saying “we don’t have a cucumber martini” or “that customer must have gone to a different restaurant.” But as Sinclair points out, there’s often an element of truth in online reviews, even if the customer didn’t get all their facts straight. “There’s something that’s making them unhappy,” he says. “Was it the service, the quality of food, your valet, your hostess?” Take these comments seriously and look for themes across multiple reviews so you can improve in those areas.
Don’t lash out publicly.
If someone leaves a scathing one star review you may be tempted to post a public rebuttal or even demand that the Yelper remove the review. But Sinclair says it’s best to message the Yelper privately, apologize for the bad experience, and invite the customer back so you can get it right. Details will vary depending on your business, adds Sinclair, but “some operators will say ‘come in for a meal on me’ or ‘next time you come in, please email me directly and I’ll send you a dessert.’ If you fail them the second time, shame on you.”
Thank your supporters.
It’s easy to focus on a few negative reviews and lose sight of the positive ones. Hopefully you have more positive than negative reviews, and a quick message thanking the Yelper for their business and the review can help build loyalty. Sinclair says this should also be done privately to show that you’re truly engaging with customers instead of showing off to others.
Let some of the negativity go.
Occasionally, you might have a customer you just can’t satisfy. Fortunately, Yelp ratings are based on averages so a single one star review amidst lots of four and five star reviews isn’t likely to damage your reputation. As Sinclair puts it, customers aren’t “looking at the one one star, they’re looking to see if there are consistent one stars.”

About Susan Johnston

Susan Johnston is a freelance writer and blogger who specializes in writing about business and personal finance. Her articles have appeared in or on The Boston Globe, Dance Retailer News, GetCurrency.com, Mint.com, PARADE Magazine, WomenEntrepreneur.com, and other places.

LA Business Journal | Beny Alagem Takes Beverly Hilton Off The Market

OnSite Team — Tue, 03 May 2011 00:38:35 +0000

Owner of Beverly Hilton Takes Hotel Off the Block

Oasis West to pursue equity partner and restructure debt. By Jacquelyn Ryan Monday, May 2, 2011

If you were thinking about buying the Beverly Hilton, your time is up.

The iconic hotel’s owner, Oasis West Realty LLC, is no longer planning to sell the property, but instead will seek an equity partner while restructuring a $300 million debt that will mature in August, several sources told the Business Journal.

The company has received many offers for the 9-acre property, but none has been amenable to management. After six months on the market, the company has begun negotiations with undisclosed sources that could provide some kind of capital infusion.

Oasis West Chief Executive Beny Alagem, who made his wealth as the co-founder of Packard Bell Electronics, purchased the hotel from Merv Griffin in 2003 for $130 million.

The lot is entitled for an additional 12-story hotel and two condominium buildings near the corner of Santa Monica and Wilshire boulevards, a plan that drew such stringent objections from Beverly Hills locals that they placed a measure on a 2008 ballot to stop it; the measure failed. The five-star luxury Waldorf-Astoria, also a Hilton Hotels Corp. brand, has signed on to place a flag once that hotel is built.

In November, Alagem began exploring selling the Beverly Hills property shortly after a neighboring 9900 Wilshire Blvd. building, the former Robinsons-May, sold for $148 million to a group of Asian investors.

Representatives for Oasis West said that the company had only been testing the waters for a buyer and was always open to alternatives. The property remains on the market officially, but sources said that Oasis West would not be considering any offers.

It’s not clear what type of investor Oasis West is looking for.

“We continue to explore all our options and will be making our decision in the coming months,” said Beverly Hilton spokeswoman Marie Garvey.

Local landmark

Opened in 1955 by Conrad Hilton, the Beverly Hilton was made famous by the rich and famous who wandered its grounds. Pictures of legendary figures such as President Kennedy line the hallways as reminders that they once stayed in the building. The hotel is the site of about 175 red-carpet events each year, including the Golden Globe Awards, and serves as home away from home for heads of state, with President Obama staying there on his recent trip to Los Angeles.

It’s surrounded by other high-profile hotels including the Peninsula, Montage and Beverly Wilshire.

Since purchasing the hotel, Alagem has worked to revitalize it as a stronger competitor with its neighbors. He immediately launched an $80 million renovation as he worked to update the 570-room hotel’s image and amenities.

In 2006, the Beverly Hilton received $300 million in nonrecourse refinancing from Column Financial, a subsidiary of Credit Suisse, a financial services company headquartered in Zurich, Switzerland. It would help to fund the proposed hotel and condo project on the Hilton’s grounds. But the project stalled and that loan will mature in August, leaving Alagem with a decision to make: sell or find a partner.

James Sinclair, principal at OnSite Consulting, an L.A.-based hospitality consultancy, said it won’t be too much of a challenge for Alagem to find a partner, so it’s not a desperation play. The owner has connections to many international financiers.

“Beny’s not going anywhere,” Sinclair said. “It’s not a dire situation. You have to remember who you are dealing with. We’re not dealing with someone who’s just fiddling around in business. He could pick up the phone to anyone in the world.”

The 12-story hotel that Alagem plans will have 170 rooms; the two condo buildings will have 36 and 74 units, respectively, as well as more than 2,000 parking spaces. In order to build the Waldorf-Astoria, which will be four stories taller than the existing Hilton, Alagem will raze more than 200 existing hotel rooms at the Hilton outside the main building.

Peter C. Anderson, founder of Santa Monica-based hospitality consultancy Anderson & Associates, said that a smart hotelier would take a long view on how to finance the property and its proposed expansion.

“Hospitality is cyclical. So in order to play the game for the long haul, you have to be able to appreciate downturns and recovery periods, and you have to look at your behavior and investments over a long time,” he said. “You can’t look at this as if is this is the right decision for today. In the next generation or two, that’s when we’ll decide what the right decisions were.”

Sbarro Failure Not A Pizza Failure

OnSite Team — Fri, 08 Apr 2011 20:11:16 +0000

Some pizza chains feel the heat

Sbarro and a few others are dealing with effects of deep recession and higher ingredient prices, but America still loves pizza.

April 05, 2011|By Gregory Karp, Tribune reporter

It’s almost as if America was losing its taste for pizza.

Sbarro, the seemingly omnipresent pizza joint at mall food courts, filed for bankruptcy protection this week. That follows Round Table Pizza, a West Coast chain that filed in February. And the operator of Uno Chicago Grill emerged from bankruptcy protection last summer.

Ranked among the largest U.S. pizza operators, they are numbers 5, 10 and 11, respectively, with a combined 1,700 locations and $1.6 billion in sales, according to industry publication Pizza Today

Giordano’s, one of the best-known chains for stuffed pizza in Chicago, filed for bankruptcy protection in February. Numerous other regional and local pizzerias also have slipped into financial trouble.

It’s true that pizza chains are dealing with the effects of a deep recession, higher ingredient prices and more competition from nontraditional channels, such as take-and-bake pizza from restaurants and supermarkets.

But America still loves pizza.

Overall, the pizza business is faring OK, with flat sales of about $38 billion over each of the past three years, said Jeremy White, editor of Pizza Today. The pizza business has been treading water while overall restaurant revenue sank.

“The pizza business is really pretty solid right now,” White said. “You can feed a family of four for under $30 or even under $20.”

Many of the high-profile bankruptcy reorganizations of household-name pizza restaurants have individual causes that don’t speak to a larger trend of consumers turning away from pizza, experts say.

“They’re unique on a case-by-case basis,” White said. “There’s not really a common thread among them.”

Sbarro, with more than 1,000 locations in 40 countries, was saddled with crushing debt. And unlike many strip-mall pizza shops or stand-alone restaurants, it was dependent on foot traffic in malls and airports, which saw declines during the recession.

Its financial situation is also a reflection of how Sbarro was run, said restaurant consultant James Sinclair, principal of restaurant consultant OnSite Consulting.

“This is not based on the specific product, pizza, but instead on how Sbarro ran their business, executed leases, created profitable items and managed their labor model,” he said. “Sbarro is a stale and old brand that has not taken any steps to reignite their audiences and have not competed on the same level as their competitors.”

A Sbarro spokesman said the company did not wish to respond to that criticism. However, Nicholas McGrane, interim president and chief executive of Sbarro, said in a news release Monday, “We are a strong company with one of the most recognizable restaurant brands in the world.”

As for other pizza companies, family-run Giordano’s filed for Chapter 11 because of troubled real estate investments.

In fact, real estate has been a problem for a number of pizzeria owners who bought at the top of the real estate market, said Tony Gemignani, who owns four pizza restaurants in the San Francisco area and a school for pizza restaurant operators.

“Fixed costs hurt a lot,” he said.

While some operators, including Sbarro, have cited troubles stemming from higher-cost ingredients, such as cheese and flour, that’s not leading to bankruptcies, White said.

“It’s a big deal, but it’s nothing new,” he said. “Food prices fluctuate truly like a roller coaster. If you’ve operated for any length of time, you’ve come to expect that.”

Still, for those operating on slim margins, price spikes hurt.

“We recently had to let a manager go because our cheese cost rose more than $1,100 per month, which is a huge jump,” said Mark Huebner, managing partner of Denver Pizza Co., who said food costs have become a major hurdle for his Denver pizza shops.

While pizza continues to be popular in America, it’s evolving, Gemignani said.

Many successful pizzerias are getting into artisan pizzas, using wood- or coal-fired ovens, organic and locally sourced ingredients and unusual toppings.

Another big shift in the pizza business isn’t what consumers are buying, but where they’re buying it. The number of channels to buy pizza has increased, said Dennis Lombardi, executive vice president of food-service strategies at WD Partners.

“The pizza segment is made more challenging for traditional restaurants by close substitutions,” he said.

They include supermarkets, which not only sell frozen pizzas but ready-to-bake pizza. Warehouse clubs sell very large pizzas for about $10. Meanwhile, some non-pizza restaurants sell flatbreads, which can be a close substitute for pizza.

“When pizza is your primary product line, you’re starting to sense and feel all the substitute channels that are available,” Lombardi said. “It’s not so much that people are fleeing pizza as a meal option. Their number of eatings is being spread over a growing array of different channels.”

Fierce price discounting and couponing by the top three players, Pizza Hut, Domino’s and Papa John’s, has also squeezed other pizza sellers.

“Some play the coupon game, but it’s hard for people to be able to compete in that market,” Gemignani said. “If you keep lowering prices and discounting prices, you’re going to lose in the end. The volume just isn’t there.”

One way some of the big players are competing on price is by upgrading equipment.

For example, many of the big players have upgraded to speedier ovens that use less energy and cost less to operate, said Mark Sieron, president of Middleby Corp., of Elgin, Ill., which makes such an oven. Its clients include Pizza Hut, Domino’s, Papa John’s and Little Caesars, he said.

Inc. Magazine | How to Pay Employees When You Can’t Make Payroll

OnSite Team — Fri, 01 Apr 2011 09:10:49 +0000

How to Pay Employees When You Can’t Make Payroll

There may come a time when circumstances prevent you from being able to pay your employees. Here’s how to make it though this trying time.

By Lauren Cannon | @laurenthedark | Apr 1, 2011

Only half of new small businesses survive beyond their fifth anniversary. According to research provided by the American Bankruptcy Institute, 43,546 small businesses filed for bankruptcy protection in 2008. When events like this occur, it is not only business owners who are left holding the metaphorical bag.

Employees of said businesses not only lose their jobs, but are often left in the dust when it comes to receiving funds owned to them in bankruptcy court. Short of going belly up, many businesses go through periods when they become short on cash, leaving business owners in the unfortunate position of being unable to make payroll for a given period.

Instances such as this occur for a variety of reasons including low seasons in certain industries, absent receivables, and a down economy. However, one thing is clear – employees and payroll taxes must be paid by any means necessary. When it comes to entrepreneurs in this predicament, “They have to scramble – family, friends, savings – whatever they can do,” says John Seelinger, a management counselor with the Orange County, California branch of SCORE.

Granted, this is one of the more dire situations that a small business can find itself in. But there is hope. When it comes to paying employees in a hurry, there are several options that should be considered, including family, hard money loans, lines of credit, and discounts on receivables. But, more importantly, the business should be restructured in a way that prevents episodes such as this from recurring. If you have ever been unable to pay your employees or desire to understand how to negate the risk of this occurrence in the future, read on to discover ways to prevent or rectify this unfortunate scenario.

How to Pay Employees When You Can’t Make Payroll: Notify Your Employees

Most employers know in advance that they will be unable to make a given payroll. However, it’s usually embarrassment or pride that prevents entrepreneurs from being honest with themselves about the situation, and honest with employees in turn. “What I have found in my consulting business is that, more often than not, small business owners are embarrassed and worried about results, so they typically handle [the situation] emotionally,” says Donald Todrin, founder of the Northhampton, MA-based Second Wind Consultants. “This usually means that they don’t tell anybody until 10 minutes before they’re supposed to get their checks.” The best thing that an employer can do is to notify their employees of the potential problem as soon as they’re aware of it themselves.

Mike Turner founded the luxury real estate firm Front Street Brokers in Boise, ID in 2005. In early 2008 and in late 2009, due to downturns in the real estate market, he was unable to pay his employees with existing revenue. “I tried to be upfront with them about it,” says Turner. “I said, ‘We’re running out of time, running out of money, and here’s what I’m going to do.” This gave his employees the time and freedom to look for new employment in the interim before he resorted to layoffs.

When it comes to informing your employees of impending danger early on, Todrin recommends disseminating the news via a top down approach. “There’s a natural hierarchy of leaders or there are specific leaders depending on the size of your business, whether they’re managers or the people with the longest longevity – the go to men and women that are in your business,” says Todrin. “What I would highly recommend is that you gain their cooperation in advance of dealing with the entire population.” Todin explains that doing this softens the blow for the other employees, and that the news will not be as harsh as if it were to come from upper management.

Dig Deeper: Advise Employees of Possible Changes in Ownership
How to Pay Employees When You Can’t Make Payroll: Find Methods of Financing

Once you are aware that you will be unable to make payroll from the profits of your business, swift, decisive, and possibly desperate action must be taken at once. Not paying your employees may not only result in lawsuits, but also serious federal and state tax liabilities. “The first thing to note is if you haven’t paid your staff it means you probably haven’t paid your payroll taxes or your sales taxes,” says James Sinclair, the principal of the Los Angeles-based OnSite Consulting, a firm that offers business restructuring services to the restaurant industry.

Sinclair says that business owners in this situation have to make an abrupt decision that amounts to three choices – make swift business modifications that result in rapid liquidity, conduct massive layoffs, or close. If none of these options are seen though to fruition, the owner and or controlling parties of the business will be responsible for penalties and fines with regards to payroll taxes to the IRS that can equate to 50 percent of the total that is owed for the year. “[Those fees] will be with you for life until you pay them,” says Sinclair.

How can you attain missing funds to pay employees in a crunch? “Beg, borrow, or sell whatever you need in order to come up with the funds,” says Rod Jorgensen, the director of counseling at the Nevada Small Business Development Center. However, in light of recent restrictions on bank lending, gaining rapid access to cash via traditional bank loans, lines of credit, and mortgages is a thing of the past.

The first time Turner found himself unable to pay employees was in a down economy, causing the loss of many of his expected receivables to fall through. “For example, in that time period, we had 10 real estate transactions scheduled to close, and nine of them fell through for unforeseeable reasons,” says Turner. “And all of a sudden, $100,000 worth of business income that we were dependent upon is gone.” When Turner and his business partner – his wife – realized their predicament, they immediately tapped into their personal savings accounts and credit cards in order to keep the business afloat. When those sources of financing reached their limit, they suspended their own salaries. Finally, the Turners had to execute the layoffs of some of their employees. Still liable for their last couple of paychecks, Turner was forced to obtain funds from what is known as a hard money lender.

Hard money lenders operate with more lenient lending requirements than traditional banks, and the loans are often backed with real estate as collateral. Unfortunately, due to high interest rates and fees, they are also likened to payday loans for businesses. “It’s one of those things you want to look at as a last resort,” says Turner. There still exist companies that, while not defined as hard money lenders, offer quick cash solutions to small businesses. Paramount Merchant Funding based in New York City offers merchant advances and small business loans for businesses that have operated for at least six months and have no less than $10,000 in gross sales. A lump sum payment can be issued to a qualifying business within five days, and the terms of repayment run anywhere from four months to one year. While there is no traditional interest on the loan, Paramount Merchant Funding operates via a “fixed cost to capital.” For instance, a $10,000 loan comes with a flat fee attached that would require the business owner to pay back anywhere from $11,800-$14,500 on the loan.

Dig Deeper: How to Get Financing When Banks Won’t Lend

How to Pay Employees When You Can’t Make Payroll: Utilize Available Resources

Another method of raising capital in a hurry is through the discount of existing receivables and liquidation of existing inventory. Todrin recommends taking as much as a 50 percent hit on your outstanding receivables as long as it means that you’ll be able to cover your payroll. “If I’ve got $25,000 out on the street that I’m owed, I’d slash it down to $10,000 on a promise [that vendors] wire me the money today,” he says. “Pay me half [of what you owe me] and I’ll wipe [the debt] out. And you raise cash instantly and overnight. Now you pay a price for that because that’s your overhead money, but you cover your payroll. You got to play for another day,” he says.

How to Pay Employees When You Can’t Make Payroll: Avoid Staggering the Payroll

Though you may be tempted to pay employees a fraction of their paychecks in lieu of nothing at all, staggering payments is a tricky process and, in general, unadvisable. “Payroll is a state by state issue, and it usually is not legal to do that,” warns Todrin. “Once you start owing your employees payroll, the employee is unsatisfied, will not put in his whole effort typically, and you’re sewing the seeds for further erosion.”

There is a way to broach the process effectively. Todrin recommends asking the highest paid, top-level staff members of your company to electively forgo their paychecks for a few days so that lower level employees can receive on-time payments. “If you’re using the top two or three employees including yourself to not be paid at all and you’re spreading the rest out to everyone else, this is the type of spirit that gains confidence and a following,” explains Todrin.

Dig Deeper: How to Plan for Hiring and Payroll in 2011

How to Pay Employees When You Can’t Make Payroll: Pay Tipped Employees What They’re Owed

Sinclair estimates that the restaurant industry, or the tipped employee industry, experiences this scenario more frequently that any other. This is because, while employees may not be receiving their usual paychecks, they still receive daily payments in the form of cash tips. “If you’re asking your employees to be delayed a week or you’re asking your employees to not deposit your checks today but to deposit them in phases over the next ten days, many employees will buy into it, especially tipped employees who the check is just a percentage of their total income,” says Sinclair.

Not paying employees their earned paycheck will not only land the operator of the business in hot water with the IRS, it can result in action being taken by the Department of Labor as well. The U.S. Department of Labor mandates that an employer must pay covered non-exempt employees the full minimum wage, along with any accrued statutory overtime for a given workweek. Failure to do so is a direct violation of the Fair Labor Standards Act and will result in severe monetary penalties.

Dig Deeper: How to Open a Bar

How to Pay Employees When You Can’t Make Payroll: Restructure Your Business

Once the dust has settled and you’ve found a way to not only pay your employees but to remain in business, your main priority should be to restructure your operations in order to reduce the risk of this happening again. The best way to do this is to lower your overhead expenses. “A lot of times I think businesses wait too long to really see what they can dig and cut from,” says Turner.

If you manage to survive this downturn both personally and professionally, Sinclair stresses that making a change means heavily altering your business model and curbing expenses. It also means showing the staff that you’re in the gutter along with them, bearing the financial burden and helping to get the business back on track. “This is not a matter of us sipping champagne while you’re cleaning the toilets. We are working hand in hand, rolling up our sleeves with you to resolve this,” says Sinclair. He also warns business owners that, while a clear message needs to be sent to employees that the owners are shouldering the burdens right along with them, this does not give employees the right to slack off. “It’s a very tight line to walk and one has to be conscious of that,” he says.

It is the nightmare of employers to be unable to afford their most valuable assets, their employees. However, employers should remain empathetic to the situations of their employees. Before resulting to layoffs or shutting the business down completely, Seelinger suggests attempting the negotiation of a furlough or a reduction in hours for employees.

While you look for a way to pay your employees the remainder of what they’re owed, Todrin recommends giving them whatever you can scrape up – maybe $50 per employee for gas money – as a gesture of good faith. It may be a catastrophe on your end as the proprietor of the business, but it can be a nightmare for employees who rely on their paychecks for their livelihood and sustenance. Be loathe to neglect the fact that your loyal employees are also due to have their hard work and humility reciprocated, even in hard times.

Restaurant Owners Using An iPad For Business

OnSite Team — Fri, 04 Mar 2011 03:19:54 +0000

Restaurant owners thinking of rolling out an iPad to their executives or on a site level to staff or even customers would be wise to evaluate the value proposition.

Using the iPad for Business: 5 Things You Need to Know

Knowing the right tricks, apps and accessories can make your iPad — especially the new and improved iPad 2 — a trusty travel companion both inside and outside the office. How to make Apple’s popular tablet work for you.

With more than 15 million sold, Apple’s iPad has become a favorite among skinny-jean hipsters and suit-and-tie executives alike. With the release of a faster, sleeker iPad 2, expect to see even more of the devices in coffee shops, on airplanes and everywhere in between. But despite its mainstream success, questions have always lingered about whether the popular tablet is a true laptop substitute — especially for the business set.

“We find it’s a good fit when a person needs immediate and mobile access to information,” says James Sinclair, a principal at Los Angeles-based hospitality OnSite Consulting and an iPad user. Sinclair cautions that entrepreneurs need to approach the iPad with clear business intentions. “Remove the cool factor from the equation and instead focus on what function it can serve and whether the ROI is better than cheaper or more available platforms.”

The iPad’s popularity may be traceable to the rise of smartphones. “Eyesight is an issue. Fine motor skills are an issue. The larger iPad puts the smartphone technology into a larger viewing and usage platform, broadening the user base that can fully benefit from the tool and its technology,” says Louis W. Ayoub, owner of IntelliTechs, a Tampa, Fla.-based information-technology services firm. Take an iPad on a plane, prep your presentations, let your customers order from one and customize the device to fit your business.

How can you get the most out of your iPad and help improve the bottom line? Here are five things you need to know.

Make it your mobile companion.

The iPad can take mobile entrepreneurs one step closer to a laptop-free existence. The small size — the iPad 2 is even slimmer than its predecessor — instant-on feature and long battery life make it easier to deal with than a bulky laptop. “It allows me to travel light on one- or two-day trips where I don’t expect to have any text-intensive tasks. Moreover, instant access to my cloud for information and data allows me to walk into meetings paperless, but perfectly prepared,” Sinclair says. He uses the Shareplus app to stay in touch with his Microsoft Sharepoint files. “It gives me access to every client database including all tasks, communications, contacts and, most importantly, all files that relate to the client,” Sinclair says. That makes the iPad a good fit for businesses that have already migrated data online for easy mobile access. The iPad 2′s cameras and FaceTime app make videoconferencing over Wi-Fi a compelling possibility for on-the-go entrepreneurs.

Tackle your business tasks.

Before you spend between hundreds on an iPad, determine what you want to be able to do with it. “For light tasks, it’s perfect, for writing detailed documents or software intensive programs, it makes no sense,” Sinclair says. You might not want to compose a novel on it or crunch a huge database, but you can easily handle jobs such as editing word-processing documents using the very capable Pages app or organizing notes and ideas with Evernote. The costs of the apps themselves are very reasonable. “Show me an expensive Windows application and I’ll show you an inexpensive alternative in the Apple App Store,” Ayoub says.

Hand it off to customers.

Image may not actually be everything, but it means a lot. Businesses that want to project a forward-thinking, cutting-edge persona are adopting iPads as tools for customers. That can range from using the iPad as a wine list in a restaurant to offering branded iPad apps that show off retail wares. “Any company using this latest tool is going to appear current, relevant and clever — all good things in a competitive environment. It helps that Apple has heavily marketed and publicized the iPad. Nearly everyone knows what it is when they see it,” Ayoub says. Sinclair has seen a lot of iPad interest from businesses in the hospitality sector. Restaurants have been quick to pick up on the device as a way to deliver menus, expand ordering capabilities and give customers more information about food and beverages.

Accessorize for your needs.

The Apple-related accessory market is in high gear. (See our story on the iPad boom for accessory makers.) That means you can find all sorts of add-ons to customize your iPad for your business. For those of you who don’t want to give up on the laptop experience, check out an external keyboard like the Apple iPad Keyboard dock or the Apple Wireless Keyboard. Either one costs about $70. Mobile sales professionals can share the love with a dock connector to VGA adapter for making presentations. Along with the iPad 2, Apple unveiled an HDMI video out adapter cable for greater flexibility when presenting.

Of course, apps are still the ultimate business accessories. Enjoy all your iPhone favorites on the comfort of a larger screen or take advantage of iPad optimized apps like PrintCentral for printing and Instapaper for saving and reading Web pages. “If the iPad doesn’t fit your business needs out of the box, either you or someone in your respective industry is sure to create an app that will make it fit,” Ayoub says. (Check out more enticing iPad accessories in our previous article about pimping your iPad.)

Don’t get too distracted.

It may be tempting to take down a few zombies or fight your way through a dungeon in your down time, but beware of getting sidetracked by entertainment apps. “Don’t download Angry Birds,” Sinclair says. “Understand what tasks and purposes the iPad is supposed to solve.” He initially had to concentrate his thinking around the iPad from shiny new toy to serious business tool. He stays focused by exploring business apps and looking for ways to match the iPad with the needs of his clients. Stock up on the apps that help make your business run and keep your productivity intact. Keep the games to a minimum

How to Avoid a Groupon Restaurant Disaster

OnSite Team — Fri, 03 Dec 2010 00:38:34 +0000

How to Avoid a Groupon Disaster

Some retailers have found countless new customers by using Groupon. Others have nearly gone out of business. So what’s the best way to prepare for a “deal of the day”?

By Geoff Williams

(Related Article By OnSite Consulting – Groupon, Opentable : Coupons Can Kill Restaurants – If you are considering a Groupon/OpenTable/Yelp or many of the other coupon providers as a method to increase short term volume, please contact us today to learn how we can provide the same results without the net loss per customer)

While Groupon continues to generate plenty of buzz, especially with rumors swirling about a potential $6 billion acquisition by Google, the popular deal-of-the-day site does occasionally find itself the recipient of bad PR — notably, from small retailers who nearly lost their shirts using the service.

To be sure, many small businesses have had huge sales days and an influx of new customers, thanks to Groupon. “We’ve used a few other sites and no one even compares to the amount of sales we received when using Groupon,” says Morgan Cullen, director of PR and marketing for Esther’s Follies, a magic and comedy troupe in Austin, Texas. “They have every little step of the process laid out and it’s very organized for their clients.”

But not every business owner’s Groupon experience is Utopian. Maybe they lost money. Or they didn’t get as many customers as they thought they would. Or they had too many customers and were overwhelmed. Consider Jessie Burke, the owner of Posies Cafe in Portland, Ore., who in September 2010 shared on her company’s blog that working with Groupon “has been the single worst decision I have ever made as a business owner.”

So how do you effectively navigate the Groupon waters? Here are some tips for structuring your next deal.

Don’t do Groupon when you’re broke. Have cash on hand — and plenty of it. That seems to have been Burke’s problem. She wrote that at one point, after spending $8,000 in inventory on customers who came in with their Groupons, she had to take $8,000 out of her personal savings to cover payroll and rent.

When you’re giving customers products for half off, you may wind up losing money — a fact that’s easy to miss when you fall sway to the Groupon hype. After all, nobody offers a Groupon to the public with the idea of losing money. Every business owner’s hope, of course, is that either patrons wind up spending far more than they planned on that first visit or turn into repeat customers. But losing money in the short term is a very real possibility.

“You must look at Groupon as part of a marketing strategy,” advises James Sinclair, CEO of OnSite Consulting. “If you don’t have money for marketing, then how do you intend to cover the net loss per customer in the short term? Just because you get to delay and space out the loss as customers redeem their coupon, you still need those reserves.”

If you want repeat customers, focus on customer service. You have to know why you’re utilizing Groupon. Do you want to build a business of repeat customers, or are you looking for a lot of exposure and a big sales day? Christian Hahn is a cosmetic dentist in Louisville, Ky., and was one of the first in that market to offer a Groupon. He provided a Groupon for a “new patient exam, cleaning and X-rays” and was, like many business owners, thrilled with all the new customers coming in. But he didn’t just want new one-time-only customers. He was looking to build a base of repeat customers.

“One thing I wish I had known going into this is that [I would] need to create a special schedule for Groupon patients,” Hahn says. “They need to be wowed to want to come back, as they mostly look for a bargain. You don’t want them to get their Groupon and move on. So giving the staff the ability to provide ‘wow service’ is critical.”

Understand that Groupon writes the clever copy — you don’t. Tracy True Dismukes, owner of Consignment Chic and Collage Designer Consignment, both based out of Birmingham, Ala., was frustrated that Groupon “writes the copy and the business owner can’t change anything but the facts.” Moreover, “We didn’t get to see ours until the day before our Groupon hit, and I forbade them to use that copy,” Dismukes says. “For 18 years, we’ve fought against the secondhand and thrift images of our business — we’re high-end ladies’ consignment — and Groupon’s offer used ‘secondhand‘ in the headline and repeated it again five more times in the first three lines, trying to be cute. It wasn’t.” She convinced Groupon to change the copy, but the replacement prose “was pretty lackluster, and we just had to take what we got.”

Still, Dismukes acknowledges that it was a good experience overall. “On the positive side, we definitely have new customers,” she says. “After 18 years of TV, radio, print advertising and lots of PR and local TV appearances, Groupon found us new folks painlessly in just one day with no cash outlay.”

Check your contract. That’s good advice for any contract you sign, but Deb Leopold, owner of First Class Lifelong Learning Center, in Washington, D.C., tried Groupon and would “absolutely” do it again. But she does advise, “Check and re-check your contract. The contract that I was e-mailed varied significantly from the agreed-upon terms during the phone conversation with my sales rep. The good news: It was all corrected efficiently and expediently.”

But one reason to check that contract: Once everything is signed, Groupon won’t renegotiate, reports Tiffany Sellwood, who works at a family-owned-and-operated florist, Cactus Flower, with numerous stores through the Phoenix area. She signed an agreement to be a “side deal” with Groupon back in June and then finally in September, was told the business would be featured in a couple of weeks. After scrambling to ensure that staffing was in place to handle the new orders, Groupon made a last-minute change and decided to feature the business two days later than it initially said. Sellwood asked if she could renegotiate the revenue share “since we had been given the runaround and since we’d now be paying out staff overtime,” she says. “Nope. Groupon does not renegotiate.”

But, after all that and completely expecting her Groupon experience to pretty much destroy her career at Cactus Flower, to Sellwood’s delight, “The day went smoothly. The calls were manageable, we didn’t have any angry or confused customers and the redemptions have not yet overwhelmed us. It ended up working out really well.”

Be ready for an onslaught of customers. As Sinclair puts it, “You cannot fault a company for offering you thousands of targeted, smoking-hot leads through your doors.” Indeed, you might find yourself on the receiving end of thousands of new customers. “It will hit harder than expected,” Sinclair says. “Train your staff to understand the benefits and what is required in serving a coupon customer.”

Leopold agrees. She runs her learning center by herself, and so she stayed at her computer for 36 hours following her Groupon promo, answering all the e-mails that came through, from people either making purchases or asking about various classes. “Normally, I have about 18 to 21 e-mails in the morning,” Leopold says, but on the day of her Groupon, “I woke up to 192 e-mails. As fast as I was making my way through them and knocking off five or six e-mails, 10 more would pop up every five minutes.”

In other words, expect the Groupon experience to go perfectly, and you’ll likely set yourself up for some disappointment. But if you plan for a hectic, crazy day and expect a few bumps in the road, you just may walk away thinking that everything did go perfectly.

Geoff Williams is a frequent contributor to AOL Small Business. He is also the co-author of the book Living Well with Bad Credit.

HedgeFund Strategy | Smart Moves Offer Food For Thought

OnSite Team — Tue, 23 Nov 2010 09:55:37 +0000

Opening A Restaurant In A Down Economy?

Harsh economic times favour people who do their research, especially those opening restaurants, as most start-ups fail.

22 November 2010 | By Vanessa Drucker

Eating lean

Many wannabe entrepreneurs like food, enjoy playing host, and have long nurtured a dream to open a restaurant or bar. When they suddenly lose their job security, why not give it a shot? There are plenty of reasons not to. Failure looms large. Of the 600,000 ventures started in America every year, 500,000 close up shop within 12 months. Restaurants are notoriously iffy.

There are advantages though, to starting out in lean times. New owners can obtain cheaper equipment and less expensive leases, with landlords more inclined to make deals for tenant improvements. The workforce pool is larger to choose from, while managers and chefs (minimum wages for other kitchen and table staff may have less impact) expect less money, according to James Sinclair, the principal of OnSite Consulting, a nationwide firm focused on repositioning in hospitality assets.

One of Sinclair’s clients has forsaken a senior executive job at Disney, to start a mid-level casual dining establishment in Los Angeles. The place is scheduled to open within days. The former executive found friends to back the venture, and was able to hire an architect at half price. His initial model, however, was flawed.

He did not realise he needed to build profitability from the start, rather than sacrificing revenues to lure people in. He has redefined his plan, accepting that his early customers would lose loyalty if he changed his concept midstream. “He will succeed, because he’s done the research,” Sinclair confidently predicts.

Slower times provide a laboratory for designing a business that is streamlined and perfectly efficient, so when the economy picks up again, it will be poised for growth. If you can hunker down and weather a difficult period, it can be the ideal time to give customers perceivable value, which encourages them to keep returning later. Sinclair would rather make adjustments in an economy mired at the bottom. “In boom times, volume hides sins.”

(Featured in the UK edition of HedgeFund Strategy, use of English spelling)

Pizza Operators Would Be Wise To Learn From the Big Boys

OnSite Team — Thu, 04 Nov 2010 22:25:22 +0000

Pizza Operators not willing to learn from the mass market, proven results and the big three are automatically capping their growth opportunities.

Learning From the Big Boys

Operators would be wise to take a few cues from the Big Three

18 Pizza Today
NOVEMBER 2010
Story by Scott Anthony

What is the next level for you? Boosting sales, opening another location, franchising? Each has his own mission; each must take critical steps to bring his operation to that new level. My personal mission is to make my pizzeria the best it can be — the talk of the town. My obstacle: The Big Three and me. How can I make my advertising, and thus the brand image that I present, look world class on my budget? More importantly, what about me and my approach to taking the next step?

I interviewed several expert business consultants for this article, and the one point that stuck out with all of them was best summed up by James Sinclair of OnSite Consulting: “Operators generally tend not to love advice, especially advice that counters their own system or beliefs, and especially if they have to pay for someone to give an opinion they disagree with.” When all the experts are saying, “Here is a way to increase your sales, brand yourself with a customized look and complement that with enticing images by a world-renowned food photographer,” the question becomes this: Will you lean on your own understanding? Get over yourself. Let’s be doers, not forgetful hearers of what experts preach.

Peter F. Drucker, American educator and writer, said “Whenever you see a successful business, someone once made a courageous decision.” As operators, we need to decide to listen, profit from the advice and be courageous.

Sinclair concurs: “Operators can benefit from outsiders who understand the market from a macro perspective and franchisees that have worked closely with a franchisor either for testing or on a model variation. Being a franchisee does not waive your requirement to innovate and be dynamic. Localization is 90 percent.”

Doing so gives you a concise and well crafted message. You are now on the same playing field as the big guys — and you have a home field advantage. Tony Troiano, co-owner of J.B. Alberto’s Pizza, spent 32 years growing his business into a Chicago tradition. Troiano says: “I certainly think, from a food standpoint, we (independents) have a huge advantage over the Big Three, but we can learn a lot from them as far as marketing and operations are concerned.”

Troiano learned to profit in several ways. “I promote online ordering on all of my printed material,” he says. “This is something the Big 3 have promoted for many years — and, thanks to them, it has certainly taken off. Why not piggy back on the millions that they are spending to promote this? Let’s face it, online ordering is here to stay and growing every year.” My pizzeria has seen online sales double in the past year, and Troiano reports similar results.

We can also take a design lesson from the big operations. J.B. Alberto’s Pizza, for example, is a delco unit (offering only delivery or carryout). Since no one spends much time in there or dines inside the unit, how much does the small interior space of the pizzeria matter? “Last year, I remodeled the carryout area to create a warm and inviting feel with cherry wood and granite countertops,” says Troiano. “Our carry out sales increased 6 percent.”

Statistically, most franchise chains either strongly encourage or require their franchisees to remodel or upgrade interior spaces every five years. Troiano’s results show the importance of this.

Scott Anthony is a Fox’s Pizza Den franchisee in Punxsutawney, Pennsylvania.

MSNBC | Some Hotel Chains Ditching The Front Desk

OnSite Team — Fri, 29 Oct 2010 05:50:17 +0000

Some hotel chains ditching the front desk

One-on-one welcomes or check-ins through kiosks or mobile devices catching on

By Bill Briggs

msnbc.com contributor

Two bloggers walk into a hotel …

No, that’s not the opening line to a joke. We’re talking about two travelers who picked the same hotel chain — Andaz, a boutique Hyatt property. One stayed at a Los Angeles Andaz, the other at a New York City Andaz. Neither lobby contained a front desk — a budding hospitality-industry trend that’s equal parts chic and shrewd. The reviews: a wow in the West, and a wince in the East.

When Sherry Richert Bulel entered the Andaz West Hollywood in February, she was greeted by a “host” who offered her wine, a comfy chair and room selection via his laptop. “There was no looming desk between us to indicate that he was the hotel staff and I was the guest,” said Richert Bulel, author and founder of simplycelebrate.net, which creates tribute books for special occasions. “I immediately relaxed.”

But when Alison Green arrived at the Andaz Wall Street in May, she described the same scene as pretentious. “It felt a bit self-consciously hip, like ‘Hey, look at how different and cutting-edge we are,’ ” said Green, who runs the blog, askamanager.org. “There’s something about the solidity of an actual desk, with people behind it, that feels more secure somehow.”

Traditional front desks, however, may be destined for a scrap heap teeming with bygone lobby fixtures like key boxes, desk bells and hat racks. Some mid-market chains already are dumping imposing check-in counters for cozy, one-on-one welcomes or for virtual check-ins through kiosks or mobile devices.

In addition to Andaz, Courtyard by Marriott has renovated 201 of its 800 U.S. lobbies, swapping its standard front desks for smaller “welcome pedestals” that allow clerks to step out to meet patrons, then step back to check them in. Courtyard will finish the makeover by 2013. Meanwhile, Starwood has used one of its urban-style Aloft hotels to test a tech-driven welcome service. Several thousand customers who already carried Starwood Preferred Guest cards were texted their room numbers before arriving at the Aloft Lexington in Massachusetts, allowing them to bypass the front desk and head to their floor. Once there, they simply tapped their preferred guest card on the door lock for room access. That pilot program is being expanded to Alofts in Harlem, Brooklyn, Jacksonville, Fla. and Brussels, Belgium.

Luring tech-savvy travelers

Hotels increasingly want to lure a rising subset of the market — a younger, tech-proficient group of business nomads and vacationers with their own industry acronym: FITs, or Free Independent Travelers. In general, FITs have above-average income, prefer to roam alone, in small groups or as couples, avoid tourist tracks, research their explorations via their mobile devices, and spend freely. They are, Sinclair said, “now the dominant market traveler being sought after by most major brands.”

FITs, experts believe, prefer hotels that offer texted check-in codes or lobby kiosks that spit out room keys.

So how long until old-school front desks vanish from most or maybe all mid-market hotels?

“Within the next 36 months,” forecasts James Sinclair, principal of OnSite Consulting, a national restaurant and hospitality consulting company. His clients include W Hotels and the MGM Grand in Las Vegas.

“The key is removing the barrier between the guest and the hotel — be it for better service, streamlining, experience or profit. The sitting-behind-a-desk days are not what travelers want,” Sinclair said.

“However the hotel chain chooses to roll it out — kiosks, check-in pedestals, tablets or iPads — you walk to the lobby and whoever you speak to can handle your entire needs … You sit on a couch and wait your turn rather than (stand) behind Bob who is arguing that he didn’t have the salt-and-honey peanuts from the minibar.”

Viewed from the bottom line, chopping the front desk also “makes sense for the hotel in terms of profit maximization,” Sinclair said. “As the hotel market has become more competitive with the various online practices and the need to refocus on margins, there are only a few areas that can be looked at.”

Number one: payroll. No front desks, or smaller versions, could allow hotels to operate with fewer employees.

What’s next? No beds?
Then again, that’s the chief reason why some mega-mile travelers — like comedian Dan Nainan — hate the downsizing of check-in counters. Spending huge chunks of their lives on the road, they befriend hotel employees and feel somewhat protective of them.

“If I ever see a hotel without a front desk, I can guarantee you that that is a hotel I would never, ever, ever patronize,” said Nainan, who flew 200,000 miles last year. “I will turn right around on my heel and march out of that place so fast I will actually do a wheelie. What brilliant cost-cutting move will they think of next? How about hotel rooms with no beds? Imagine the savings!”

But hotel chains say de-emphasizing, shrinking or removing the front desk simply gives their guests more options. Further, the tactic is part of a larger shift, they say, to entice patrons to spend more time — working or relaxing — in attractive, compelling lobbies.

Courtyard’s fresh, first-floor face, which costs the chain about $750,000 per makeover, includes free WiFi, “media pods” where patrons can plug in laptops and watch TVs, plus a 57-inch, LCD touch screen — the “GoBoard” — that provides news, weather, and directions to local attractions. An eat-in bistro — “Starbucks meets Panera,” they say — offers breakfast, then later a casual dinner and cocktails.

About three years ago, Courtyard’s lobby designers used Styrofoam cutouts to simulate changes — including the “welcome pedestals.” They rented a San Francisco warehouse to stage the future look and gather consumer opinions.

“What we heard was that the customer wanted to be more engaged with the hotel. They felt that lobbies were kind of boring,” said Janis Milham, vice president and global brand manager of Courtyard.

“Now we’re creating different, interesting spaces for them to get out of their room. We found people want to get their business done but they also want to enjoy some break from the routine that business travel offers,” she said. “You’re not stuck in a room behind a door.”

‘Customer is looking for is choice’
Andaz.com says its desk-less lobbies offer “a kaleidoscope of culture embedded … in the art on our walls, the books on our shelves, the flowers in our vases.”

BEBETO MATTHEWS / AP

A seating area in the lobby of the new Aloft Hotel in Harlem, New York, is shown Oct. 6.

And at the five Aloft hotels — where thousands of card-carrying customers will have the option of strolling right to their rooms or pausing at a circular desk at the center of the lobby — some guests still stop for short visits.

“It’s generally relative to how their travel experience is going,” said Brian McGuinness, senior vice president of specialty select brands for Starwood. “If they’ve landed early, they might pop by the front desk. If their flight’s late and they’re rushing to a meeting, they’re blowing by the desk … What the customer is looking for is choice.”

Does McGuinness foresee the extinction of front desks?

“It’s relative to price point,” he said. “At the luxury side, certainly there will be a front desk and a butler and a doorman and a valet. In the budget segment, I could certainly see where you check yourself in and check yourself out.

“And frankly there’s a population out there at times that wants to be anonymous. So certainly that would work well for that segment. But if it’s cheap and chic and $59, you might buzz right in, put your credit card in the machine, it will (offer) a key, and you go right upstairs. Hey, nothing wrong with it.”

Bill Briggs is a frequent contributor to msnbc.com and author of the forthcoming book, “The Third Miracle.”

Entrepreneur Magazine | Coloring Outside the Lines

OnSite Team — Tue, 26 Oct 2010 03:48:27 +0000

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Coloring Outside the Lines

Creative risks can make the difference between plodding and prosperous.

Geoff Williams | October 26, 2010

URL: http://www.entrepreneur.com/article/217379

When you buy a McDonald’s, you can’t paint the golden arches blue or rename the signature dish the Small Mac. If you own a Supercuts and want to sell tacos to your waiting clientele, you’d better get corporate approval first. And should your Jiffy Lube frequently take three hours to fix a car, well, you’re violating a contract and you’ll soon lose your business.

Yes, franchises come with a lot of well-tested rules and operations geared to providing consumers a uniform experience from one outlet to another. Familiarity, for the most part, breeds content.

“Franchises try to operate with a very pure business system,” says Doug Schadle, CEO of Rhino 7 Franchise Development Corp., based in Apex, N.C., which works with franchisors and prospective franchisors to help mold their business model to be more appealing and profitable. “The customers are following the brand, not the individual unit. It’s a way of assuring that the quality remains high.” Another way to look at it: If you’ve invested, say, several hundred thousand dollars in a Dunkin’ Donuts, and some other franchise owner in a neighboring town is serving stale bagels and weak coffee, you become guilty by association and that contamination will cost you customers.

But it may reassure you to know that owning and operating a franchise still require plenty of creative thinking. Franchisees can push back and go beyond the blueprint to do some customization geared to their local market and to their own tastes. And often such entrepreneurial innovation and adaptation is encouraged–and even applauded–by the front office. It also can make the difference between an exceptionally well-run and profitable enterprise with sizzle and one that merely plods along. So if you’re thinking of buying into a franchise, know that you don’t have to become an entrepreneurial automaton.

In fact, business history is full of examples of creative franchise owners who changed the course of the entire franchise–for the better. One of the most notable instances of coloring outside the lines involved three unrelated McDonald’s franchise owners, who separately invented the Filet-O-Fish (1963), the Big Mac (1967), and the Egg McMuffin (1972).

Fitting In (But Not Too Much)

Okay, you’re interested in a franchise and you like and want a system of rules. But you also need to know that if you’re suddenly struck with a flash of genius, you’ll be given a chance to try out your idea. Here are some tips to finding that perfect blend:

Ask the franchise director how the company accepts new ideas from franchise owners. Listen carefully. Determine if you like what you hear.

Contact current franchise owners directly, letting them know you’re considering buying into the system and asking if they’re happy with how their suggestions are received

Check to see if the company has creative participation built into its system. For instance, La Quinta, the hotel chain, has a Brand Council, which allows franchise owners to have direct strategic input into the future direction of their brand.

Remember that innovation is a two-way street and can have a downside. James Sinclair, who owns Los Angeles-based OnSite Consulting, which provides sales and marketing services for the hospitality industry, observes that sometimes it’s management that wants to push beyond the blueprint, and it’s the franchisee who’d rather not rock the boat. “When a new team comes in, full of ideas for growth,” says Sinclair, “the franchisee is thinking, ‘Why am I taking the risk to see if this works? I have to re-train my staff, buy new products, get new marketing collateral and disrupt my system. Because a new boss in corporate is looking for a bonus?’ ”

Understand that a certain level of disagreement is built into the system. Says Sinclair, the conflict between a franchisor and the franchisee is part of the natural order of things and “it’s up to both to make it work.” –G.W.

While that may seem like ancient fast food history and something that could never happen today, consider Subway and its $5 foot-long sandwich. That was the brainchild of a Miami-based franchise owner who in 2008 decided on his own one weekend to start offering sandwiches for $5. It proved to be such a hit with customers that idea turned into a marketing campaign for the entire corporation. (You’re probably humming their tune right now.)

“All of the good franchisors never stifle innovation from franchise owners,” maintains Schadle. “They get a bad rap in that sense. Why would a franchisor, which is an innovator, try to discourage innovation? They just want you to talk to corporate first.”

But Subway notwithstanding, it is conventional wisdom that the more mature your franchisor is the less innovation potential there is. The reason is simple. The older a franchise operation, the more wrinkles the company already has ironed out. But that shouldn’t deter you because chances are you won’t be able to buy into many established companies anyway; most already have their principal locations set and are only expanding to the farthest corners of the Earth. As Schadle says to potential owners,”Franchising isn’t really about buying a McDonald’s. It’s about finding the next McDonald’s.” And by the same token, franchisors know that they become the next McDonald’s only by accepting and embracing the fresh, bold ideas from their franchise-owner brain trust.

Perhaps that’s one big reason why the top brass at Tossed listen to Lou Palermo. Not long after Palermo, 38, opened a restaurant in Boston for this franchise operation, which specializes in serving salads, he decided to give a breakfast menu a go. “Seeing that we were already making our whole wheat, fat-free crepe wraps for our regular menu, we created breakfast crepe wraps like our Southwest Scramble,” recalls Palermo, who adds that he worked closely with the corporate office to do this three years ago. The breakfast menu is now offered at all six Tossed outlets around the country and has added 10 percent to the bottom line.

Tossed could have easily passed on this idea. After all, says Palermo, “it has 12 years of a proven business model with systems in place, brand recognition, extensive training and support to name a few.” Why mess with a good thing? But Palermo says they’re not the kind of company that tells an ambitious entrepreneur with an intriguing idea, “You can’t do that.”

And even though it might be tougher to innovate when you’re part of a more established powerhouse brand, there’s still room for inspired tinkering, says George Ebinger, who on his own added specials, like Steak Diane and chicken parmesan, to the menu at his three International House of Pancakes franchises in New Jersey. He concedes that 25 years ago, when he first started working at IHOP, “It was run differently than it is today, and then you could truly be even innovative.”

In large part, says Ebinger, that’s because after breakfast, IHOP wasn’t really concentrating about lunches and dinners in the early days, and “no one knew what you were doing then.” Now, he says, there’s greater monitoring from the front office and “being a franchise owner, you’re not allowed to bring new elements into the restaurant unless you get an okay beforehand. It all has to do with stuff like food safety and lines of supply.” But as long as Ebinger uses approved ingredients, he can have his chef come up with their own unique recipes to use as specials, even if they’re not on the regular IHOP menus. While these additions have not yet significantly affected revenue, they obviously give customers another choice and allow Ebinger a small but creative outlet. Looking at the bigger picture, though, he quickly adds that when it comes to marketing his restaurants, “The sky is the limit.” And that’s good business.

NPR | Frozen Yogurt Trend Far From Cold

OnSite Team — Thu, 21 Oct 2010 06:18:04 +0000

Frozen yogurt trend far from cold

Despite retail stores and restaurants closing all over the country, there’s one kind of shop that’s booming: self-serve frozen yogurt. What makes the chilly dessert so successful? Stacey Vanek Smith reports.

Kai Ryssdal: Since the economy first started going backward three years ago, clothing boutiques, restaurants, electronics stores, retailers of every kind have closed up and moved out.

But if you take a chilly real estate market, top it with recession cravings and a self-serve obsession, and you’ve got a business.

Marketplace’s Stacey Vanek Smith reports on the surprising rise of frozen yogurt.

Stacey Vanek Smith: At a Froyo Life yogurt shop in Los Angeles, 27-year-old Jessica Robinson is making her ritual late afternoon visit.

Jessica Robinson: I got pumpkin and cake batter frozen yogurt with Cinammon Toast Crunch on top, and it’s a definite good choice.

And, when it comes to frozen yogurt, Robinson is all about choice.

Robinson: I love Froyo Life, I come here a lot. I do love 21 Choices, but I haven’t been in a while, ’cause it’s kind of far away. I go to a place called Menchies also, which is in Santa Clarita, I go to a place called Yogurtlicious. I guess I’m pretty passionate about it!

And, the way the industry’s been growing, it’s going to need all of the Jessica Robinsons it can get. There are now around 22,000 frozen yogurt stores in the U.S. Pinkberry touched off a craze in 2005 — then things slowed down — but yogurt’s getting a second wind.

Commercial hospitality consultant James Sinclair says entrepreneurs are flocking to froyo because, unlike most businesses…

James Sinclair: The cost of entry is very quick, the build-out is quick and cheap. The lack of skill set you need to become a frozen yogurt operator, again, ties into the ease of entry into this market.

Sinclair says it can cost less than $10,000 to open a frozen yogurt shop, and with so many vacant storefronts, landlords are eager for the business.

Sinclair: You can throw in a frozen yogurt store, they’ll sign a one year lease. For a landlord, they’re able to have a tenant while they ride out this market.

Sinclair’s business partner Jim Hustead says that has spawned a frozen yogurt bubble.

Jim Hustead: If you’re a successful location, that means three others are coming. It doesn’t mean that you’ve taken over the market, everyone’s scared because you’re going to beat them. It’s ‘Oh my god, they’re doing great, lets open up three more right next to them.’

One of the fastest growing chains is Red Mango. Dan Kim is the founder and CEO.

Dan Kim: We have a lot of interest from franchisees and developers who want to get into the business. And it’s been a lot stronger this year than it was in 2008, 2009.

After closing stores during the recession, Red Mango is launching new locations all over the country. But Kim says they’re tweaking the model for today’s yogurt enthusiast, like at the original Red Mango near UCLA in West Los Angeles.

Kim: This actually started as a full-serve store back in 2007, and earlier this year, we converted it to a self-serve store.

Customers get their own yogurt, top it…

Frozen yogurt attendant: You know what’s good with the pumpkin spice is graham cracker crumbs and dark chocolate chips.

…and weigh it.

Attendant: Fourteen ounces of yogurt.

Self serve is a down economy dream, says Darren Tristano, with food industry research firm Technomic.

Darren Tristano: You get greater control in the consumer’s hands, which is something that we all want because we have a lot of anxiety about reduced spending and what’s going on in the economy.

And we like to feed our anxiety dessert. Tristano says people eat sweets more often when the economy is bad. He thinks the frozen yogurt craze is far from over.

Tristano: We think this trend it going to continue, because it’s very high demand. We believe it’s going to start to integrate more into full service restaurants. One of the big fears is what if McDonald’s starts to serve frozen yogurt?

Tristano says that could put a lot of smaller shops out of business, but not if Jessica Robinson has anything to do with it.

Robinson: There’s never going to be too many frozen yogurt places in my opinion.

In Los Angeles, I’m Stacey Vanek Smith for Marketplace.

October 20 2010

Newsweek | Seven Decisions to Make Before You Open Your Restaurant

OnSite Team — Wed, 22 Sep 2010 19:32:23 +0000

Seven Decisions to Make Before You Open Your Restaurant

Restaurant-industry sales average about $1.6 billion on a typical day in 2010. For those aspiring to get into the big-money game, much must be done before the doors even open.

by Nayeli Rodriguez September 22, 2010 Alex Brandon / AP

Photos: 10 Things That Changed the Way We Eat

10 Things That Changed the Way We Eat

According to the National Restaurant Association, industry sales are projected to reach a record $580 billion in 2010, a 2.5 percent increase over 2009. So while a postrecession economy may mean consumers watch their pennies more than they used to, enough of them still enjoy going out for a good meal. For those who are set on getting into the multibillion-dollar restaurant game, James Sinclair, principal at OnSite Consulting, a national hospitality consulting firm, says it’s going to take more than passion to succeed. He spoke to NEWSWEEK’s Nayeli Rodriguez about what every new restaurant owner must consider before opening the doors. His advice:

AS THE OWNER, KNOW EVERYTHING

The best types of owners are the ones who know how to run their restaurant back to front. That means you know your way around the kitchen as well as you do around the register. The reason this is critical is because you’re essentially giving up your life, as you know it, to make this restaurant succeed. A large part of that success is based on your staff. You can’t hold your staff accountable if you don’t understand what’s going on. How do you even begin to evaluate them? Plus, having this kind of knowledge goes a long way in terms of respect from your employees. You also need to know how all parts of your business work so that when you have to make important decisions, you can do so without hesitation.

Small Biz: Running Your Restaurant

HAVE A SOLID BUSINESS PLAN

If you’re thinking about jumping into this business, you’ve got to think about your location, what you’re selling, the number of customers you need in order to make a profit, and what you’ll charge for food. [That said,] anyone can create a business plan that “works” in theory. That’s why when someone comes to me with a concept, I break success down as money made per weekend, because that’s when you tend to do the best. One weekend should pay your rent, one should go to payroll, one to pay fixed costs like utilities, and one weekend should be straight profits. We ask that first-time restrauteurs look at this [as a measure for real-world success], and if it cannot be met, then they should reevaluate their idea. To drive the point home, restaurants can survive from bad midweek days; they cannot survive from bad weekends. This weekend strategy is gritty and never the model reflected in a business plan, but this is the reality for most restaurateurs, especially for individual operators.

HAVE AN EVEN BETTER MARKETING PLAN

According to the National Restaurant Association, word of mouth is still the best form of marketing for restaurants. So, when you’re thinking about marketing, it’s got to be based around giving the customers what they want. For restaurant owners, it’s important to stop looking at things like half-price discounts. That’s not where you’re going to make money, and that’s not necessarily what customers want. From the moment you open your doors, it’s about branding. The focus should be on creating a dining experience that fits the location and the customers in your area. Also, it’s a given that customers are going to order an entree, so put as much focus on everything around the entree, which can double or triple your transaction.

SCOUT YOUR LOCATION

Pick a location based on demographics and economics, not because you “love” the neighborhood. It’s got to be a location that works with your food concept and that is not surrounded by several similar competitors. You also have to think about how location affects things like alcohol, which tends to be great for your bottom line. For example, if you’re in a corporate area and your primary market is lunch, you’re probably not going to sell a lot of beer because people will be going back to work. And don’t waste your time on obscure locations either. They tend to only work for name-brand destinations. And equally as important, pick a place you can afford, and factor in any construction the place needs to accommodate what you are trying to do. This is why you have to lay out the financials long before you pick a place, then work backwards. This way you know how much money you have to spend.

BE CLEAR ON CUISINE

Your cuisine type should be based, in part, on how much money you need to make per customer. In a lot of cases, your local competition has done this research for you. If they’re doing it well, look at how you can do it better. Once you decide on cuisine, make sure you take the time to look at market prices for ingredients. As you put your menu together, try to keep it clean and simple, and stick to options that are going to increase your per-head revenue.

PLAN FOR INVENTORY CONTROL

Do inventory of every product you have and look at it on a weekly basis. You do this so that you know how many steaks are being ordered, how many are being sold, and where the difference is coming from—like they’re being wasted because they got old. You have to order food based on what works for you. I tend to prefer that owners order food two or three times a week rather than do one big load and have to throw away a lot. You should also pay inventory expenses weekly, so should you have an issue at some point, you’re only a week behind.

SELECT STAFF WHO CAN SELL

You can teach someone how to smile, how to sequence their service, but you can’t teach someone to sell. To do really well, you need someone who’s good at service and selling. Keep in mind that everyone in the restaurant is an extension of you. You’ve got to know they can fill the shoes you want them to fill. So don’t be afraid of removing someone for underperforming. Remember, this is your livelihood.

For more Small Business INC., click here.

Franchise Consulting | Buying a Franchise with a Family Member

OnSite Team — Sat, 04 Sep 2010 03:04:07 +0000

Buying a Franchise with a Family Member

Siblings Tim and Deb Jones spent most of their careers in the ad world — Deb in media planning and buying, and Tim in account services. But they were looking for a change and found it in a 2006 New York Times profile of 1-800-GOT-JUNK, a waste removal service franchise. Just a few months later, the sibling duo found themselves in business.

Buying a franchise with a family member can seem as natural as buying one with a spouse, but it can be fraught with even more potential problems. “I think the major pitfall is an obvious one: You can’t fire a family member, and business problems can quickly erode lifelong relationships,” says Andrew A. Caffey, a franchise legal specialist who has served as the general counsel for the International Franchise Association.

Untangling yourself from a toxic business experience with a family member — in a franchise, no less — isn’t just a logistical, financial, and legal nightmare; it could wreak havoc on your entire extended family, especially if they like to take sides.

So how can you make sure your relationship with your future franchise partner and family member is strong enough to withstand the pressure of entrepreneurship and create a successful partnership?

Plan ahead. Knowing your business partner your whole life just isn’t enough. It can be tempting to do handshake deals with loved ones, but not only is this a bad idea, it’s also impossible in the tightly regulated land of franchise ownership. But beyond the legal and financial due diligence you must complete when buying a franchise, you should also make sure you and your partner’s visions align and that you enter into this business partnership with clear expectations.

“We all know that family members may tend to let too much go unsaid or, without thinking, fall into unhealthy relationship practices, and the business will be the first to suffer,” says Caffey. “Family members have more reasons than most to hire a good advisor who can help them see around these corners.”

Define your roles. “We thought the best way to run the business was to divide and conquer,” says Tim Jones. He manages the business’s truck teams, commercial sales and marketing, guerrilla marketing, training, and on-site supervision. Deb develops the business plan, oversees paid marketing campaigns, and manages finances. Together, they make purchasing decisions and plan their paid marketing goals. “We don’t micromanage each other,” says Tim. “We may disagree on some issues, but we have been able to come to a decision after talking about the issue.”

Brothers Jim and Bob Slattery, who own several Valpak franchises together in Ohio, Pennsylvania, Indiana, and Kentucky, actually do the same job: sales. With so many franchises and the ability to work in different offices, it works.

“Bob and I are the two oldest in a very large family of 10 kids,” says Jim. “Early on, we learned you have to just get along and figure it out. Of course there are times when we have our own opinions about how things should be done, especially when it has to do with the sales world. We both have sales backgrounds and run that aspect together, so figuring out how to co-manage sales operations has probably been our biggest challenge.”

Delegate wisely. While it’s important to define what you and your partner do best and therefore what your roles should be, it’s also crucial to make sure neither of you are wasting your valuable time and efforts on tasks that could be handled by an employee.

“In most family environments, each person takes on a set of jobs or responsibilities, but in almost all examples, most of those jobs would be better served being performed by lower-wage employees,” says consultant James Sinclair, whose company, OnSite Consulting, specializes in turnaround, insolvency, and repositioning in the hospitality industry. “The issue with families is lack of trust for non-family members. They tend to do all the work instead of delegating, which places their earnings per hour quite low. They also are so involved in the micro that they forget the macro.”

Keep in mind, it’s not just minor tasks that should be delegated; you also need to hire experts when you need them. “We have left administrative responsibilities to others who have more expertise in them, such as [delegating] accounting to the CPAs,” says Jim Slattery.

Fight the urge to engage in nepotism. “I am continually surprised at how many family-owned franchises there are where the family unit is quite dysfunctional,” says David Mahmood, whose firm, Allegiance Capital works with small and mid-sized businesses, including fast-food franchises. He particularly sees this problem with parents and children.

“It is difficult for parents to look at their children dispassionately when it comes to judging their management competency and capability,” says Mahmood. “Every parent wants their child or children to succeed. But it can be soul-killing for good workers who are employees of a family-owned company to see themselves passed over and a promotion given to a family member who is not as competent or as capable.”

However, if your family members are qualified, you can make “keeping it in the family” work. “Our parents were instrumental in raising us to believe in the importance of family,” says Deb Jones. “We know that our sisters, brother-in-law, and nephews [who we’ve hired for our business] all care about our business as much as we do. They genuinely want us to succeed. We trust them all implicitly. We have always had fun as a family and that has carried over to the business.”

Don’t take work home. The last thing you want the extended family to discuss around the Thanksgiving dinner table is an argument you’re having with your franchise partner about a business matter.

“An important lesson we learned from the beginning was to keep personal business separate from our work business, which isn’t always easy since we share families,” says Jim Slattery. “Living in separate cities has also helped in keeping things running smoothly [Jim lives in Toledo and Bob lives in Cincinnati]. We also chose to not have our immediate families directly involved — it makes things less complicated and family parties more fun.”

By planning your business thoroughly and separating your family relationship from business issues, it is possible to create a lasting and strong franchise with your family. Just ask the Slattery brothers: They’ve been business partners for 27 years.

“When family operators can divide up roles and responsibilities correctly,” says Sinclair, “it works like no other management team could.”

Laura Tiffany is a writer from Southern California who specializes in small-business issues.

LA Business Journal | Crowded Hollywood club scene turns bearish

OnSite Team — Fri, 20 Aug 2010 06:43:54 +0000

‘BAR’ MARKET

Crowded Hollywood club scene turns bearish

By Alexa Hyland

Monday, August 9, 2010

When Tony Daly staged a New Year’s Eve party for 150 wealthy L.A. business types on the last night of 1999, the Casablanca-themed affair was held at one of the very few nightclubs in Hollywood, a place called Garden of Eden. The main attraction: a vintage airplane that Daly rented and parked on La Brea Avenue – which was closed for the occasion. The stunt helped make the nightspot hot for years.

But now, Daly and business partner David Judaken are competing against a slew of clubs for the ever-shifting attention of L.A.’s nighttime revelers. These days, not even a parked airplane will guarantee a lingering buzz and packed dance floors for enough time to pay back the surprising expense of outfitting and opening a nightspot. Such is the new and brutal economics for hot Hollywood.

“It’s become a market where you have your core group of people who like to go out in Hollywood,” Daly said. “They’ll go out to a club religiously every weekend for a year and then get tired of it and they want to move on to the next place.”

Judaken and Daly, who run Syndicate Hospitality Group in Hollywood, own the most party spots of anyone in Hollywood.

They’re currently operating hot spots MyHouse and MyStudio, frequented by the likes of Leonardo DiCaprio, Paris Hilton and 20-something trust-funders ready to drop $10,000 for the chance to party with such celebs. A third club, formerly named Opera, is set to reopen in October. A fourth club, formerly known as Crimson, is closed. Their fifth site, East Restaurant and Lounge, was a white-tablecloth eatery and is now a private event facility.

However, other night life impresarios, including entrepreneur Sam Nazarian, and Las Vegas nightclub king Victor Drai and his partners, identical twins Jesse and Cy Waits, are quickly moving in on their territory. (See box.)

Judaken, 40, and Daly, early 30s (he won’t specify), said they welcome the competition from such big names, insisting that it forces them to develop better nightclubs.

“Friendly competition is great, it makes me excel, it makes our promoters excel and probably pushes the level of entertainment for the customer to a better place,” said Daly, who’s known Nazarian and the Waitses for years. “I have no problem with healthy competitiveness with those entities. Bring it on.”

Hot Hollywood

Still, there are at least 20 nightclubs and lounges, which often serve food and cocktails, and feature DJs in a more relaxed environment, open for business within Hollywood’s 3.5-mile radius. The area’s hot spot proliferation, which Daly said began about eight months ago, isn’t expected to end soon.

Amsterdam, the Netherlands-based Supperclub, for example, is set to open a dining and nightlife venue in September at the old Vogue Theater, while brothers Johnny and Mark Houston are renovating the short-lived nightclub Jane’s House.

With more venues to choose from, clubbers won’t be dancing at one place for long.

“Hollywood is fickle,” said James Sinclair, principal at L.A. hospitality consultancy OnSite Consulting LLC. “If you put up some wallpaper in a 7-Eleven and grab some promoters, it turns out that the 7-Eleven is the new hot spot.”

As a result, Daly and Judaken, who’ve spent about $15 million renovating their clubs during the last five years, are finding it more difficult to turn a profit.

“In 2009, we opened up MyHouse, a renovated Garden of Eden, and we had a record year,” Judaken said. “And what happens when you get to year two is that normally you have another tier of promoters and guests. But we’ve had a monumental decline in revenue. Garden of Eden lasted 13 years. If we hit three years with MyHouse, it will be a small miracle.”

Judaken said revenue at the 700-person club, designed by Dodd Mitchell to look like a chic Hollywood Hills home, is down about 65 percent from the same time last year. He estimated that revenue from Syndicate’s operations will hit between $17 million to $20 million this year. But those numbers could move down under the pressure of the battle for bodies with Nazarian and Drai.

“I could have a $5 million swing just like that because a competitor opened up next door,” he said, “and not a better one, just a new one.”

Club owners often spend millions on decorating a new nightspot before opening. But that kind of expense is justifiable only if the club stays open and profitable for several years. Hedging their bets, Daly and Judaken plan to cut preopening investment significantly.

“We are trying to scale back more and hope that if we go further back, the design will follow the budget,” said Daly, who added that he’s not willing to cut spending to the point where it’s no fun to be a nightclub owner. “Maybe we will go a little over when it comes to that nice light fixture that we want.”

Judaken, a South African native who moved to Los Angeles as a child, made his first mark on L.A.’s nightlife scene when he opened Garden of Eden in 1996 on the western edge of Hollywood at La Brea Avenue and Hollywood Boulevard. At the time, there were only a few nightclubs operating in the then-gritty area.

“He was definitely an early adopter, a visionary,” Sinclair said. “Don’t get me wrong, he took a gamble. But he prospered there for many years without competitors and that’s the biggest compliment there is.”

About 10 years ago, Daly was a struggling actor (he’s since had success in show business, including a recurring role last year on “General Hospital”). Based on his staging of that spectacular New Year’s Eve party, Judaken hired him as a promoter for Garden of Eden, and they soon became business partners, with Judaken as Syndicate’s chief executive and Daly as chief operating officer.

Since then, Hollywood has filled with glitzy nightclubs, bars, restaurants and hotels, and Syndicate has expanded along with it.

Dining debacle

Now, however, Judaken and Daly find themselves looking at new business strategies in an effort to keep their nightclub domain profitable. It hasn’t been easy.

After their success with nightclubs Garden of Eden (now MyHouse), Mood (now MyStudio), Opera and Crimson, Judaken and Daly decided to enter the restaurant business. They spent $3.2 million on high-end restaurant East, also designed by Mitchell, which opened in September 2009.

But East couldn’t draw enough diners willing to drop a hefty sum for slow-steamed black cod and lobster brioche, and so its public business closed in June. East now stages private affairs, including events such as the season premiere party for the cable hit “The Closer.”

Judaken and Daly said they couldn’t operate a profitable white-tablecloth restaurant in the heart of Hollywood due to problems with traffic, parking and the neighborhood’s lingering grittiness.

“East has been the only thing that I’ve done that I haven’t had huge success with,” Judaken said. “And I closed my doors because I realized that I was fighting a battle that could not be won. I couldn’t convince my demographic that Hollywood was the place to eat.”

Daly has a rosier outlook.

“It was a difficult challenge for us because there was a learning curve with the recession and opening on Hollywood Boulevard with a fine-dining experience,” Daly said. “But I’d rather try and fail than never try at all.”

Judaken and Daly are using East as a base to launch a Syndicate division called Velvet Rope Productions. The private-event production department will allow them to stage more corporate and private parties, either at their nightclubs or offsite locations, and generate additional revenue.

Hospitality consultant Sinclair said it’s a smart move to target the corporate world.

“If you were to look at it correctly,” Sinclair said. “The nightclub, and the service of goods to your customers at night, is there primarily to get out the word for day events and corporate parties because the margins are larger and the business is easier to operate. You don’t have the problems associated with running a nightclub.”

Daly’s even been toying with the idea of entering the hotel business, perhaps inspired by Nazarian. Nazarian is expanding his presence in the neighborhood. In addition to the SLS, he’s taking over what was to be Palihouse Hollywood. He is scheduled to open the hotel under the name Redbury on Sept. 1. (See the Retail and Apparel column, Page 6.)

But Daly will only follow Nazarian into hotels after Syndicate’s nightclub and corporate events businesses grow.

“If a hotel were to come to us and say, ‘We would like you to do our nightlife operations,’ and David wants to be Ian Schrager and I can be Rande Gerber, it would be fine by me,” Daly said. “That would be the ideal upward mobility for us.”

Crain’s New York | Hard to spin turnaround tales lately

OnSite Team — Wed, 04 Aug 2010 06:42:32 +0000

Hard to spin turnaround tales lately

Gurus to today’s struggling firms find value in the small victories

By Elaine Pofeldt
Published: August 1, 2010 – 5:59 am

When Jeffrey Kaiserman sold his window and related vinyl manufacturing businesses to an investment group 11 years ago for $23 million, they were raking in a profitable $17 million in annual sales. But by 2007, NorthEast Windows, which supplied many contractors in the Bronx and Queens, and its sister company, Quality Lineals, which made components used in window frames, suffered financial woes exacerbated by the building industry slowdown.

As a result, the two companies filed for Chapter 11 bankruptcy protection in December 2008. In February 2009, Mr. Kaiserman bought them out of bankruptcy for $1.5 million, plus about $500,000 in legal costs and other expenses. He was confident he could revive the businesses and knew that the machinery and other assets were worth more than that.

In preparation for the purchase, Mr. Kaiserman used some of the $1.5 million to buy out a $965,000 note from a bank that had loaned it to the companies. Owning the debt gave him the legal standing to approve spending decisions at the troubled companies. The decisions were being made by court-approved Chief Restructuring Officer Nat Wasserstein, a crisis manager at NS Wasserstein & Co. in Manhattan. Mr. Wasserstein was hired to run and stabilize the companies during a period of about two months before they were put up for auction.

Taking action

Before the sale, cash flow at NorthEast Windows and Quality Lineals was extremely tight. Some vendors required C.O.D. payments or, in certain cases, cash in advance before shipping supplies. Mr. Wasserstein stabilized sales at the equivalent of $8 million a year, down from a run rate of $11 million, so the two companies could keep up with the payroll and supplies needed to fill orders. He discontinued low-profit-margin product lines and those that were labor-intensive or required expensive resources—and eliminated slow-paying customers.

This year, Mr. Kaiserman is thrilled that, after establishing credit for both companies—now renamed NorthEast Windows USA and Quality Lineals USA—and expanding his sales team, they are on track for combined 2010 revenue of $10 million to $11 million. “It was worth every penny I paid [for them],” he says. “We’re profitable.”

Excited about the increase in year-over-year sales, he encouraged his 21-year-old son, Steven, to help him run NorthEast. “There’s business out there,” Mr. Kaiserman says. “You have to be really aggressive about getting it.”

Welcome to the world of turnarounds in 2010, where few of those involved expect miracles, and victories that might have been considered unimpressive in boom times can seem monumental. It is so hard to boost sales that many companies are happy with simply staying alive, says Mr. Wasserstein.

To be sure, it’s always difficult to resuscitate a troubled company, thanks in part to the tendency of managers and owners to delay seeking help until it’s almost too late. “They see it as a reflection of their own failure,” says turnaround specialist James Sinclair. Some, he adds, are in denial. Mr. Sinclair began advising struggling hospitality companies in cities including New York and Las Vegas through his firm, OnSite Consulting, after buying and reviving a few of his own.

Even if lenders force a company to work with a turnaround consultant because bankruptcy seems likely, the owners tend to resist it—requiring tough measures, such as their complete removal from the scene, says Mr. Sinclair. “Our contract is quite serious,” he says. “It expresses, to a certain extent, that martial law is about to happen.”

New obstacles

Many turnaround specialists who work in and around New York City say their jobs are more difficult today than after the post-Sept. 11 slowdown for several reasons. First, it’s nearly impossible to secure cash infusions for many distressed firms. “A lot of troubled businesses lack adequate financing options because of the banking situation,” says Fred Gunzel, an independent turnaround consultant.

If a struggling business is able to boost sales, reinvesting the resulting funds in the company may be tough because incoming checks may be owed to factors or asset-based lenders. “[Checks] go to a lockbox,” says Mr. Wasserstein. “You’ve got to basically beg the bank to release your funds so you can meet payroll, buy materials and expedite whatever you need to expedite.”

On top of this, even mismanaged firms have usually cut general, administrative or sales costs by now to survive the recession, says Mr. Wasserstein. “There was a lot more fat in companies that needed turnarounds 10 years ago,” he says.

Nationwide, turnaround conditions have become so difficult that professionals in the field are now debating exactly how to define a turnaround, says Turnaround Management Association Chairman Patrick Lagrange. “The nature of a turnaround has changed dramatically,” says Mr. Lagrange, who is based in Manhattan as managing director of merchant bank Carl Marks Advisory Group. “You’re not seeing as many classic turnarounds where you go in and cut costs and fix operations. Instead, you’re seeing companies that will do what they can to survive.”

In some cases, he says, that means a turnaround specialist will focus on completing a transaction like a loan modification, which will buy time but not necessarily solve core problems as a traditional turnaround would. “That’s hoping the economy improves and raises all boats,” he says.

Turnarounds tough in NYC

Against this dreary backdrop, the high cost of doing business in New York City can make turnarounds tougher than they are elsewhere. That means a brutally realistic approach is the only effective one. After sales of apartments stalled at Battery Park City’s Riverhouse in early 2010, the majority partner sought help in March from Centurion Real Estate Partners, which had experience selling condominiums in New York City and California. At the time, rumors flew as existing apartment owners worried that the bank or owner would unload the remaining units in a bulk sale, says John Tashjian, a founder of Centurion.

To determine how to move the high-end condos, Mr. Tashjian says he personally comparison-shopped every potentially competitive unit he could find in other buildings. He discovered that most rival condominiums were advertised at 2006 prices, but that salespeople immediately offered big discounts. “I would see a very nice unit with water views and three bedrooms and the asking price was $3.6 million,” he says. “They’d say, ‘I can give it to you for $3 million.’ ”

Realizing that this approach might raise doubts about pricing accuracy in buyers’ minds—as it did in his own—he based the advertised selling prices at Riverhouse on the units’ current value. Acknowledging that the market was far from its peak did the trick. Since Centurion Real Estate Partners became involved, the building has sold or closed more than 25 units, which currently go for around $1.2 million to $8.5 million; units in the $3 million range are most popular.

“We’re negotiating by a couple of percentage points, as opposed to by 20% to 25%,” Mr. Tashjian says. “Our contracts are sticking.”

While Mr. Tashjian acknowledges that the Riverhouse turnaround has a way to go, he does point out that the building is now 80% sold. “We’re getting there,” he says.

These days, that’s saying a lot.

BIGGEST THREATS

IN A POLL of corporate renewal professionals in December, the Turnaround Management Association found that 92% of respondents cited economic conditions as the greatest threat to distressed industries for 2010.

78% OF RESPONDENTS said too much debt is one of the top two internal reasons that companies in these sectors will face problems.

52% CITED LACK of access to capital as one of the top two reasons.

THE INDUSTRIES expected to have the greatest operational difficulty were:

REAL ESTATE 75%

RETAIL 35%

AUTOMOTIVE 31%

LA Business Journal | Thanks for Waiting to Be Seated

OnSite Team — Mon, 12 Jul 2010 06:05:54 +0000

Thanks for Waiting to Be Seated

Beverly Center signs restaurant tenant to fill spot vacated in 2006.

By Alexa Hyland

Monday, July 12, 2010

It took a long time for Beverly Center to fill a sprawling vacancy that Hard Rock Cafe left. How long? Almost four years.

But the mall believes it found the type of tenant the space wants: Capital Grille, which caters to people who drop $96 for a platter of shellfish and rent a personal wine locker for $350 a year.

“It was more challenging in this market than it would have normally been,” said Jefferson Brown, general manager at the Beverly Center, which is owned by Bloomfield Hills, Mich., mall owner and operator Taubman Centers Inc. “But our persistence and patience paid off and ultimately we struck a deal that’s the right thing for the center.”

Capital Grille, operated by Orlando, Fla.-based Darden Restaurants Inc., (NYSE:DRI) began scouting sites for its first L.A.-area restaurant a few years ago. Restaurant executives ultimately chose the Beverly Center location because the huge mall draws local shoppers and tourists.

“It’s a highly visible location right there on San Vicente Boulevard and the mall itself is such a destination,” said Mike Bernstein, a spokesman for Capital Grille. Gina Doyle is general manager for the location.

The mall’s Capital Grille has been under construction since winter 2009, when the two-level, 13,000-square-foot space once filled with rock ’n’ roll memorabilia was gutted to make way for two bars and four private dining rooms outfitted with satellite video broadcasting for business meetings. The restaurant added a 100-seat patio area to the second level overlooking San Vicente.

However, the restaurant’s main entrance is on the street level, where valet service will be offered, and isn’t accessible from inside the mall. One industry expert said that could make it challenging for the restaurant to drive traffic.

“They have to make sure the day they open that everything is easy, streamlined and simplified,” said James Sinclair, founder of L.A. hospitality consultancy OnSite Consulting. “People won’t give it a second chance otherwise.”

Update: Despite the name perhaps bringing expectant visitors on a “grille” price point when it is more fine-dining pricing, the food and service of The Capital Grille is absolutely impeccable.

Forbes | Why Companies Don’t Need Headquarters

OnSite Team — Thu, 03 Jun 2010 09:27:08 +0000

Why Companies Don’t Need Headquarters

David F. Carr, 06.03.10, 6:00 AM ET

James Sinclair, head of the hospitality industry turnaround firm OnSite Consulting, says one of the biggest challenges his employees have had adapting to the way he runs his business is answering the question, “But where is your company based?”

The answer: Wherever the work needs to be done. “We have 65 people, and we have no office,” Sinclair explains. Headquarters is a post office box; he also has an Internet-based phone and unified communications system.

Sinclair used to have an office. “Sure, we picked out a nice office with a conference room and people working away. But our clients don’t want to see our office, don’t want to see the conference room. They want us to come to them,” he says.

OnSite is in the business of reviving restaurants, hotels and casinos that are in trouble, sometimes on the verge of bankruptcy. In past years the company has bought and rehabilitated some facilities, but today it focuses on working with current owners on overhauling management and operations. Sinclair himself has long been a road warrior, and was rarely in the office anyway. When he did come in, he believed employees felt obliged to pepper him with issues they had been managing just fine while he was away. Or he saw them doing busywork solely to impress him with their industriousness.

About 18 months ago Sinclair decided to send all his employees into the field, where they could be more productive. That made a lot of sense for consultants and salespeople. But Sinclair went further, also dispersing his administrative workers. The person who handles billing, for example, now has a desk at the site of a longtime client.

“At first a couple of clients did say something like, ‘Let me get this straight: You gave up your office so you can use our office for free?’” Sinclair concedes. But he convinced them that any employee he parked at their location could at least serve as a point of contact, helping ensure a smoother working relationship.

Although employees found the “Where is your headquarters?” question awkward at first, Sinclair likes to turn it around, telling potential clients the OnSite consultants will be, well, on site 90% of the time, precisely because they don’t have an office to retreat back to.

The technologies Sinclair uses include Microsoft’s Office Communications Server for Internet call-routing and integration with other communication modes, such as e-mail and instant messaging. He also relies on Microsoft SharePoint for collaboration and BlackBerry Enterprise Server for mobility. OnSite has no IT staff of its own, so the technology is all managed and hosted under contract with 123together.com.

I heard a similar story from Doane Hadley, president of BizTech Solutions. I’m never quite as impressed when technology companies turn out to be showcase users of the technologies they promote, and BizTech had been a longtime beta tester for Microsoft SharePoint before adopting Office Communications Server.

Still, when Hadley decided to get rid of the firm’s office in New Jersey, he did it for his own reasons. Once his company had adopted unified communications, it became easier to tell people it was OK to work at home more–especially as gas prices spiked or the weather was bad. When his office manager announced she was moving to North Carolina, Hadley decided she could work from home.

“It got to the point where there weren’t a lot of people in the office anyway, and there didn’t need to be,” Hadley says. So he did away with it, and now all his employees work from home or from client sites.

Hadley has an agreement with a shared office facility in New Jersey, where he has one person stationed more or less full-time, and where he can have the use of a conference room if he needs it. But instead of running servers in his own data center, he now rents space in a commercial data center. “At the end of the day it’s better, because we have guaranteed uptime and higher connectivity,” he says.

OnSite’s Sinclair believes the decision to do away with his office has been worth more than $1 million in savings, supplemented by the increased business he has netted from a more productive workforce.

One of the side benefits is that people who were formerly confined to back-room tasks are now in contact with customers, giving them the opportunity to prove their worth. And employees are happier as a result, Sinclair says. “Some of them are earning double what they were a couple of years ago–because they’ve proven that they should be.”

David F. Carr is Forbes’ columnist on technology for small to midsize businesses. Contact him at david@carrcommunications.com.

LA Business Journal | Hollywood Cues Up Food Fight

OnSite Team — Mon, 24 May 2010 06:15:57 +0000

Hollywood Cues Up Food Fight

Rolling Stone to launch eatery near Hard Rock.

Photo by Ringo Chiu

Rolling Stone’s space at Hollywood & Highland.

By Alexa Hyland

Monday, May 24, 2010

Rolling Stone is making its red carpet premiere this summer at the Hollywood & Highland Center with the opening of its first restaurant and lounge, but it won’t be the only rock star on that mall’s stage.

That’s because Rolling Stone is set to open its doors just as Hard Rock Café is scheduled to launch a restaurant and live event venue in the same center – in a first-ever competition between the two iconic names.

Entrepreneurs Niall Donnelly and Joe Altounian licensed the Rolling Stone brand to develop the multilevel, 10,000-square-foot space, which sits on the back side of the entertainment complex along Highland Avenue. They’re using the venue’s Hollywood debut as a test case: If it’s a hit, the partners plan to turn it into a national chain.

“We are bringing the magazine and the culture and what it represents to life,” said Altounian, a real estate developer.

“The plan is to absolutely open more,” said Donnelly, an Irishman who moved to Los Angeles a year and half ago after a successful run of operating bars and nightclubs in the United Kingdom.

Meanwhile, Hard Rock, which operates a restaurant at Universal City Walk, has spent the last few years looking to strengthen its presence in the L.A. area. Company executives view the opening of a 20,000-square-foot Hard Rock Café along Hollywood Boulevard – complete with a retail store, restaurant and live event stage – as a way to make a splash.

“We’ve been looking into the Los Angeles area for quite a time for a second location,” said John Galloway, vice president and chief marketing officer at Orlando, Fla.-based Hard Rock Café International Inc. “An opportunity opened up on Hollywood Boulevard and we jumped at it. The opportunity to be in such a vibrant area as Hollywood is one that we couldn’t pass by.”

While executives from Rolling Stone and Hard Rock said the Hollywood & Highland complex is the ideal location for their establishments, they insist that any similarities between the two stop there.

“We are a different concept,” said Rolling Stone’s Donnelly. “They are a memorabilia restaurant and we are slightly different. Our design is vintage chic. It’s a very cool, modern design.”

But some industry observers said a sort of battle of the bands between the music-inspired venues seems inevitable. That’s because Rolling Stone and Hard Rock will be vying for the dollars spent by the 15 million people estimated to visit the Hollywood & Highland complex each year – the majority of them tourists passing through just once.

“Rolling Stone might be a little bit more upscale than Hard Rock and they might have a different menu choice,” said Gary Levy, a hospitality consultant at Roseland, N.J.-based J.H. Cohn LLP. “But it seems to me that they are going to be competing for the same diner.”

Slow start

The Hollywood & Highland open-air mall is anchored by the Kodak Theater – site of the Academy Awards and the future home of a Cirque du Soleil show. Lining the walkways of the multilevel mall are more than 60 stores and nine restaurants. When the complex first opened in 2001 it struggled to draw a steady crowd. The $10 parking fee kept people away, and critics said the layout made it difficult to easily access the restaurants and stores.

Parking charges were lowered, and Hollywood real estate investment company CIM Group Inc. purchased the center in 2004 and spent millions on improvements designed to boost foot traffic.

It worked. Tourists and locals can now be found walking through Hollywood & Highland late into the night.

What’s more, the center’s popularity as also been boosted by the ongoing redevelopment of the area. Hollywood backers said the opening of Rolling Stone and Hard Rock are a testament to the renaissance there.

“To come to this point where we have two iconic brands coming to Hollywood and locating at Hollywood & Highland is a reaffirmation that Hollywood is back,” said Leron Gubler, chief executive of the Hollywood Chamber of Commerce.

The high-profile Hollywood premieres of Rolling Stone and Hard Rock are likely to become an additional draw.

“They are going to be battling,” said B. Biggs, who works as a security guard in the L.A. area and who spends his free time relaxing at the Starbucks near the future site of Rolling Stone. “It’s going to be a tough run, but I think Rolling Stone will be for the old schoolers and Hard Rock for the young ballers.”

Rocking out

Rolling Stone magazine was founded in 1976 by Jann Wenner and music critic Ralph Gleason. The publication became a force in politics, rock and pop culture with the gonzo-style journalism of Hunter S. Thompson and memorable covers – among the best known is a posthumous naked John Lennon wrapped around Yoko Ono.

The magazine has continued to leave its mark on society with provocative photos of stars such as Britney Spears posing with a Teletubby and Lady Gaga covered in bubbles. But Rolling Stone has also been faced with a decline in advertising revenue, which dropped 15 percent from 2008 to 2009, according to Publishers Information Bureau. The decline is blamed on a weak economy and overall slowdown in magazine advertising.

Donnelly and Altounian approached Rolling Stone with the concept of opening an establishment inspired by the magazine about a year ago, around the same time as Hard Rock announced it was coming to Hollywood & Highland.

Donnelly and Altounian are working with Brodin Design in Beverly Hills to turn the space into something that fits with the Rolling Stone concept. The selected motifs are black brick, tufted leather and vaulted ceilings, and there will also be an antique iron staircase connecting the second-floor restaurant with the first-floor lounge.

The pair hasn’t finalized the menu offerings, but Donnelly said the restaurant will serve American fare “with a twist.”

“It will be good quality food at a good price,” he said.

The restaurant will be accessible from inside the Hollywood & Highland complex and cater to the tourist crowd during the day. There won’t be a Rolling Stone retail store comparable to what Hard Rock offers, but tourists will be able to pick up a Rolling Stone T-shirt and other merchandise emblazoned with the magazine’s time-tested logo.

The bar and lounge area will be accessible from the street along Highland, and Donnelly and Altounian are hoping to turn the spot into a hangout for locals by offering pricey bottle service, access to two VIP entrances and celebrity deejays.

“It will be a higher-end lounge where people come to enjoy, relax and get bottle service, and listen to good music and get taken care of,” Altounian said.

The pair also plans to host private corporate events there, and Donnelly said the Rolling Stone name has already helped them book several groups.

Some industry insiders said they’ve got a few hurdles to overcome.

Jim Hustead, an executive with hospitality consultancy OnSite Consulting LLC, said Rolling Stone is less visible to passers-by since it faces the back of the complex. What’s more, Hustead said Donnelly and Altounian will likely have a challenge making a lounge at Hollywood & Highland a draw for locals.

“A nightclub doesn’t work for Hollywood & Highland,” he said. “You are never going to have the cool kids from Sunset Boulevard and West Hollywood. It’s the tourist mecca of Los Angeles.”

But Donnelly and Altounian swear by the site. They note that it’s visible from Highland, and they’ll attract people from the crowds who go to the mall’s second floor for views of the Hollywood sign.

“I prefer that it’s slightly off of Hollywood Boulevard because it’s not an obvious space,” Altounian said. “We are creating our own area there, and a lot of eyebrows are being raised as people drive by there.”

L.A. roots

They’ll be vying for dollars with a formidable competitor. The new Hard Rock Café will be sitting just around the corner on the more traveled Hollywood Boulevard.

Hard Rock, founded by L.A. businessman Peter Morton, opened its first U.S. location in 1982 at the Beverly Center and then opened a second L.A. restaurant in 1996 at Universal City Walk. Hard Rock now operates 150 venues in 52 countries, including 125 cafes, and nine hotels and casinos.

But the Beverly Center Hard Rock closed in late 2006 and the chain spent years looking for a higher-profile L.A. location that would draw both locals and tourists, many of whom frequent the establishment to sneak a peek at its rock memorabilia collection and snag some Hard Rock T-shirts, collectible pins and even golf balls. So when Virgin Megastore shuttered its Hollywood & Highland location last year, Hard Rock jumped at the opportunity to move in.

Hard Rock is turning the space into a 500-seat restaurant with a concert area and adjoining retail space. The store opened in November and sells limited-edition Hard Rock merchandise.

Hard Rock’s Galloway said the décor of the Hollywood & Highland location will reflect the flavor of Los Angeles by displaying memorabilia from local musicians, including rocks bands Guns N’ Roses and Motley Crue, composer and electric guitarist Frank Zappa, and pop singer Fergie of Black Eyed Peas.

“First and foremost, it will tell an L.A. story once you walk inside,” Galloway said. “The memorabilia will be focused and dedicated to Los Angeles and California music.”

While Hard Rock is known as a tourist-friendly brand, executives are hoping to attract Angelenos with the live music venue, which will feature performances by L.A. bands.

But industry insiders said Hard Rock will take center stage after it opens its doors to diners.

“This is a big splash to put yourself on the map,” said James Sinclair, a principle at OnSite Consulting. “I think this is one of their better moves – going back to what they do best.”

Indeed, entertainment-themed chains such as Planet Hollywood, which has filed for bankruptcy twice but has since made efforts to rebound with fewer locations and a Planet Hollywood Hotel and Resort on the Las Vegas strip, have struggled to turn a profit.

But if Rolling Stone and Hard Rock executives have it their way, both establishments will bring even larger crowds to Hollywood & Highland.

“I think it’s great for the center,” Donnelly said. “Cirque du Soleil, Rolling Stone and Hard Rock will draw in a crowd and feed off each other.”

Las Vegas Sun | Resort fees catch guests by surprise

OnSite Team — Sun, 09 May 2010 03:35:28 +0000

Resort fees catch guests by surprise

Justin M. Bowen / File photo

A view of the Las Vegas Strip.

By Liz Benston (contact)

Saturday, May 8, 2010 | 2:01 a.m.

Cost of business

Hotels are adding and raising room surcharges to boost profit. It’s a risky strategy, as room rates are the No. 1 or No. 2 determining factor for leisure travelers who book rooms. Most Strip hotels now charge resort fees. Some started charging them a few months ago; others have had them for a few years.

Sun archives

Report: Las Vegas hotel rooms are nation’s most affordable (3-10-2010)
Harrah’s uses resort fees to take swing at competitors (1-5-2010)

Sun Coverage

Headlines from the Vegas gaming industry

Chicago resident Tim Murtaugh keeps close tabs on his trip expenses, so when the Excalibur tacked a $4.50 “resort fee” on top of his $39 room rate for each night of his stay, the retired librarian sent a complaint letter to the resort’s management.

“I just didn’t think it was right,” Murtaugh says.

Neither do many others who have been surprised by resort fees charged for their stays in Las Vegas. The tide of complaints about the fees is rising in online forums, travel blogs and just about everywhere else that frequent travelers swap stories and post reviews.

Murtaugh had previously stayed at Las Vegas hotels that didn’t charge resort fees, so the added charge caught him off-guard. Resorts say the fees cover amenities such as high-speed Internet, gym and pool access and newspaper delivery.

They are relatively new in Las Vegas, but the fees are part of a growing trend in the hotel industry that’s expected to spread as tourism rebounds.

A 10 percent increase in hotel add-on fees this year is the prediction of New York University’s Preston Robert Tisch Center for Hospitality, Tourism and Sports Management.

Hotels are adding and raising room surcharges to boost profit, says the study’s author Bjorn Hanson, an associate professor of hospitality and tourism management at NYU.

It’s a risky strategy, as room rates are the No. 1 or No. 2 determining factor for leisure travelers who book rooms, rivaling the hotel’s brand name and what that represents, Hanson says.

“This is a period of grand experimentation to see what fees and surcharges guests will tolerate,” Hanson says.

The fees can vary by hotel, even hotels owned by the same company in the same city. That’s especially true in Las Vegas, where resort fees vary by property, though many are owned by a handful of companies. Most Strip hotels now charge resort fees. Some started charging them a few months ago; others have had them for a few years.

What’s more, Las Vegas hotels that formerly charged taxes only on the room cost are increasingly taxing the added fees as well, which can inflate the total bill.

Many consumers have complained that the fees are sometimes buried in fine print, so hotels and travel booking sites have improved disclosure in recent years.

Hotels in Las Vegas and elsewhere have trained employees to discuss such fees with customers if they are booking rooms by phone or as they are checking in.

They also have trained employees how to handle customer complaints from angry guests who don’t notice the fees until they check out and see their final bills, Hanson says.

These hotels graciously refuse to refund such charges, saying they were adequately disclosed beforehand.

Customers such as Cindy Weldon of San Francisco say they are fighting back by boycotting hotels that charge mandatory fees not included in the advertised rate. Weldon says some resort fees in Las Vegas can double the cost of a room. Weldon said some hotels still charge the fees even if they “comp” gamblers the room.

“It’s a sneaky, mandatory charge,” she says. “We used to only have to worry about taxes. Now we have to hunt to find out what these resort fees are.”

Station Casinos, which began charging resort fees ranging from about $15 to $25 per night in 2004, calls such customers a “vocal minority” because the fees are disclosed upfront, before customers book their rooms online or over the phone. On the company’s website, the amount of the “hotel amenity fee” is included as the fifth line item in a terms and conditions section that appears after customers select a date and room type at a particular hotel.

A small number of complaints about the fees crop up in guest surveys, but the vast majority accept the fees as a fair deal, says Michael Grisar, vice president of hotel operations for Station Casinos.

Previous to bundled fees, he says, customers were paying several times those amounts for services and amenities such spa access and shuttles to and from the Strip.

“Every time we added a new item it started costing more for the guest … you might be talking about an extra $60 to $70. We offer one low clean price for a package of amenities that guests have always wanted. We didn’t want to see them nickel and dimed for various things.”

Gordon Absher, a spokesman for MGM Mirage, which began introducing bundled resort fees two years ago, says the fees have spread at MGM hotels because “our guests see it as a convenience to have a single charge added to their overall bill” rather than a series of charges for things customers might not have expected needing, such as Internet access.

Likewise, guests like the convenience of sipping in-room bottled water and would end up paying more for water had they purchased it separately, he added.

Hospitality industry consultant James Sinclair of OnSite Consulting in Los Angeles advises his clients against charging mandatory fees in favor of a la carte fees or optional, bundled charges. Hotels that insist on charging mandatory fees shouldn’t make customers pay extra for basics like housekeeping, but rather, should include more tangible offerings such as access to the spa, he says.

“It’s not worth risking the angry customer who wasn’t looking for these fees or the customer who begins looking for resorts that don’t charge them.”

Sinclair calls mandatory fees “a deceitful way of making money,” given that hotels are reluctant to include them in advertised online rates so as not to get knocked out of a search for the lowest-priced hotels.

And yet, hotels feel pressured to implement them given that some competitors are tacking them on the back end of discounted rates, Sinclair adds. Many hotels — knowing that most people won’t dispute charges even if they don’t like them — are no longer removing charges for disgruntled customers now that business is picking up, he says.

Harrah’s Entertainment in Las Vegas is among a few companies resisting the resort fee trend. At a meeting this year, Harrah’s executives decided to charge for things the old fashioned way so as not to risk turning off customers.

At Harrah’s-owned properties in Las Vegas, customers can go down to the lobby to buy a bottle of water or a newspaper. They also pay for long distance calls and amenities such as the spa.

“If you want these extra things, we’re happy to sell them. But customers don’t necessarily want all these things,” says Marilyn Winn, regional president of three Harrah’s Strip resorts — Bally’s, Paris and Planet Hollywood.

The spread of resort fees is inevitable, much like the higher prices Las Vegas tourists now pay for improved amenities, says Mehmet Erdem, an assistant professor in hotel management at UNLV. People will grow accustomed to paying the fees, especially if they get a good deal on a room, he says.

“There’s a learning curve. When I first came to Las Vegas, there was no $20 buffet. Now that’s the norm. And you don’t see people getting sticker shock over it.”

Resistance to hotel fees isn’t so different from cruise ship customers who dispute mandatory tips and other previously disclosed add-ons when they receive their final bills, Erdem adds.

“On the day of debarkation, you will see this huge line of people at the front desk.”

And yet, such fees have become standard for the cruise industry, which attracts many repeat customers.

And resorts in Hawaii have long charged bundled resort fees, which have become a necessary and largely accepted cost of a Hawaii vacation, he said.

In fact, Murtaugh will be back at the Excalibur next month.

Based on his gambling activity, he’s getting three of his four nights for free, paying a resort fee for one night. Including taxes, the fee will cost him about $16.

“That was hard to turn down,” he says.

Pizza Today | Frequent Dining Programs Hold All The Incentives

OnSite Team — Sat, 01 May 2010 05:46:56 +0000

Pizza Today | Frequent Dining Programs Hold All The Incentives

By Pamela Mills-Senn

PizzaToday.com

The Bakersfield Californian | Yogurt shops taste sweet success in current economy

OnSite Team — Thu, 29 Apr 2010 03:09:01 +0000

Yogurt shops taste sweet success in current economy

BY COURTENAY EDELHART, Californian staff writer
cedelhart@bakersfield.com | Wednesday, Apr 28 2010 12:29 PM

Frozen yogurt shops are back.

In the 1980s, they were as ubiquitous as big hair and ripped up sweatshirts.

Now it seems they are enjoying a renaissance. Bakersfield has two new ones so far this year, and a third is set to open downtown next month.

“The yogurt craze happened in the ’80s, again in the ’90s and again now,” said James Sinclair, a principal at Los Angeles hospitality consultant OnSite Consulting. “It’s almost every 10 years like clockwork.

“The key reason for this explosive growth and what seems like a yogurt brand in every available corner, strip mall and random location is actually purely economics,” he said.

The barriers to entry to this industry are so low that any time there is a depressed real estate market, yogurt stores spring up in all the newly affordable commercial real estate space, Sinclair said.

A yogurt store doesn’t require a lot of upfront expenses, he said. Inventory and equipment are fairly cheap, and it doesn’t take much time to train management and staff.

“An operator can open in almost no time at incredibly low cost,” Sinclair said.

With so many eateries going under in the soft economy, there also are good deals to be had on restaurant equipment, said Peter Siegel, founder of BizBen.com, a Web site for buyers and sellers of small businesses.

Then, too, it’s a simple matter of timing.

“Yogurt, ice cream and other cold food places tend to open just before summer, just like you see more coffee shops opening up right before winter,” Siegel said.

The frozen yogurt industry has done a really good job of marketing itself in franchise networks, too, Siegel added. Chains are attracting people interested in franchises by stressing strong profit margins and the low cost of the product at a time when consumers are watching their spending, he said.

That was one of the draws to the business for Churros and Yogurt, an independent frozen yogurt shop that opened March 25 at Valley Plaza mall.

“It’s a good, healthy treat and it’s affordable,” said Raoul Biteng, who started the store with business partner Logan Bui.

Churros and Yogurt offers eight flavors of yogurt and 27 toppings, including fresh fruit and candy, as well as, of course, churros.

Biteng said he chose to start out in the mall because of the built in foot-traffic there, but would like to expand to other areas and eventually sell franchises.

Another newcomer, Love Yogurt, opened in a strip mall this month at 6077 Coffee Road north of Olive Drive. The owner did not respond to repeated requests for an interview.

BurrBerry Frozen Yogurt is scheduled to open in a week or two in the Moronet Professional Building, 1514 18th St.

Attorney Bruce South is opening BurrBerry Frozen Yogurt downtown with wife and business partner Pam Boucher.

They thought downtown would be a good location for a yogurt shop.

“We sat out there for an hour one day and just counted the people walking by, and there were 130 pedestrians,” South said. “That’s a lot of potential foot traffic.”

Along with yogurt, the 1,300-square-foot store will sell low-fat pastries and a full line of gourmet coffees.

BurrBerry Frozen Yogurt is trying to differentiate itself from the competition by attracting the health conscious, South said.

“We want to provide a nutritious alternative to the Snickers bar in the afternoon,” he said.

So no high-fat yogurt flavors such as chocolate, and candy toppings will be gone in favor of such offerings as granola, fresh fruit and coconut.

The yogurt selection will be burrberry tart and a rotating flavor of the month. Or consumers can buy a swirled blend of the two.

Ice cream shop Cold Stone Creamery, which has three locations in Bakersfield, discontinued frozen yogurt at one point only to bring it back.

Frozen yogurt is not a fad, said general manager Violet Garcia.

“Customers are much more health conscious now, wanting the low-calorie or low-fat selections,” she said. “So many people are watching what they eat.

“I think we’re going to keep it around for a while.”

Wall Street Journal | Six Ways to Manage a Virtual Work Force

OnSite Team — Wed, 21 Apr 2010 05:38:58 +0000

APRIL 21, 2010, 10:16 A.M. ET

Six Ways to Manage a Virtual Work Force

By DIANA RANSOM

With Earth Day just days away, consider greening your office. Or better yet, get rid of it altogether.

Thanks to improved technology and the high price of gasoline, working remotely has become an increasingly popular—and less expensive —option for both large and small work forces. Since 2006, the number of U.S. employees who worked remotely at least one day per month increased 39% to 17.2 million in 2008, according to the latest survey available from WorldatWork, global human resources association in Washington, D.C.

Employers that go this route typically like the reduced rents and technology savings telecommuting affords, while employees appreciate spending less time commuting and lower transportation costs. Despite these benefits, however, many employers remain concerned about whether they’re getting the most from employees, says Rieva Lesonsky, the founder and president of GrowBiz Media, a small business consultancy in Costa Mesa, Calif. “It’s a loss of control thing for them,” she says.

How to tackle the challenges of managing a remote work force? Here are six strategies.

Start off slow

Inevitably, there will be systemic kinks and bugs that will accompany a transition to a remote office. Instead of dispatching all of your workers simultaneously, transition gradually, suggests Ms. Lesonsky. “Until you get more comfortable with having a disparate work force, offer the ability to work from home one day a week or three days a month,” she says. Then, be sure to check on those workers at the end of the month. “See if there are any glitches,” says Ms. Lesonsky.

Probation periods

Unless you have a 100% virtual company, don’t let new employees work from home right away, says Ms. Lesonsky. Having a remote work force is built mostly on trust. “You have to be sure you can trust your new workers with the responsibility of working from home,” she says. Ms. Lesonsky suggests giving new workers a 60- to 90-day probationary period before giving them the OK. For fully virtual companies, hire workers who don’t require much managing and can thrive in an autonomous setting, she says.

Set expectations

Although working at home lends itself to more flexible hours and working in one’s PJs, it should be clear to employees what’s expected of them, says James Sinclair, the CEO of OnSite Consulting, a hospitality management and consulting firm in Los Angeles. Mr. Sinclair delegates the day-to-day management of his 65 employees to team leaders, each of whom heads groups of five or six workers. The leaders are responsible for defining project goals and making sure workers adhere to both daily and weekly tasks. “We don’t have people on our staff walking around looking for something to do,” says Mr. Sinclair. “But we do have to monitor and track them nonetheless.”

Use technology

Technology can also be vital for keeping up with virtual employees, says Andy Miller, the CEO of CardStar, a smartphone application provider that stores loyalty, rewards and club membership card information. His team is located in three different U.S. cities, and each employee has a laptop, cellphone and USB modem “so that they can connect anywhere,” says Mr. Miller. Texting and email, along with meeting via video Skype, provide something akin to face time. “When I was in corporate America, I realized that it was highly inefficient: There were so many meetings you didn’t have to be at but were required anyway,” says Mr. Miller. “You end up working harder and doing less.”

Don’t stalk employees

It’s perfectly acceptable to check in on workers and make sure they’re doing their jobs appropriately. However, there’s a fine line between just checking in and watching them, says Ms. Lesonsky. “The danger is if the employee goes home and you are constantly questioning them, they’ll feel like they are more under your eye,” she says, adding that retaining employees in such a situation will likely become difficult.

Establish performance measurements

Of course, it’s perfectly reasonable to want to know how remote workers spend their time, which after all you’re paying for. When Ken Clark, the CEO of 1-800-Translate, a translation and language management service in New York, started moving his work force home last year, he found it challenging to manage a 12-person staff, plus thousands of contractors around the world. To keep employees on track, Clark turned to performance reviews. Each time a job is completed, the company sends out quality assurance emails to customers. This practice helps signal early on which employees are doing well and which aren’t, he says. “For small businesses, especially, one bad apple can put you out of business,” Mr. Clark says. “Even a marginal employee is a tremendous strain on an organization. Our aim is to identify with them quickly.”

Write to Diana Ransom at dransom@smartmoney.com

Sacramento Bee | Celebrity theme isn’t always a meal ticket

OnSite Team — Mon, 29 Mar 2010 05:07:43 +0000

Celebrity theme isn’t always a meal ticket

menkoji@sacbee.com

Published Sunday, Mar. 28, 2010

Here’s some sage advice for Sacramento Kings star Tyreke Evans: Think twice before you open a restaurant with your name stamped on it.

Restaurants with themes – particularly those with celebrity names – face particular challenges, which makes them vulnerable and often short-lived, say restaurant experts.

“Before you’ve even opened, all these odds are stacked against you,” said James Sinclair, a principal with OnSite Consulting in Los Angeles, which specializes in advising insolvent and underperforming restaurants.

“It’s a natural for sports celebrities to open a sports bar because, by extension, they are sports fans,” Sinclair said. “The name is not enough. The brand name brings in the customer for the first time; the quality of the product keeps them coming back. While it’s a simple concept in theory – serve food, get money, pay bills – it’s not.”

Celebrity names inflate expectations about a restaurant for consumers, he said. Diners often drop in just because they expect to see the namesake, and themed restaurants have to remain relevant and fresh on top of all the other requirements that keep people coming in the door, experts say.

In Sacramento, former Sacramento King Chris Webber’s restaurant closed recently after a few years. The rock ‘n’ roll-themed Hard Rock Cafe closed its downtown Sacramento location on Saturday after a 13-year run.

“Do themes get old? Can you go to the Hard Rock three times a week? I still think it’s a very strong brand, but it’s time to relook at the concept and redefine their model because there’s a lot of competition in the market right now,” Sinclair said.

There’s no shortage of theme restaurants nudging into the region.

Dave & Buster’s, a restaurant and gaming arcade combination, opens its first area site – its 57th nationally – on May 3 at the Fountains at Roseville, offering 65 percent of 17,000 square feet to games, from Skee-Ball to Guitar Hero.

“It’s interesting because they are looking for that competitive edge. That’s the Holy Grail,” Sinclair said of the Dallas-based chain.

Statistics on speciality restaurants and how they fare are scarce, but experts like Sinclair can name a slew of celebrities – athletes, actors and, now, celebrity chefs – who struggle to bring their star power to the table.

Scandal scrubbed Clemens

At headlinerdiners.com, Matt Bridgeford has gathered details – such as photos and recollections – on celebrity restaurants in 500 locations. He estimates that just under half were opened by sports celebrities.

Bridgeford, a Seattle assisted-care worker, figures he’s visited 50 of them. He’s seen the best and the worst of the concept, he said. Major-league pitcher Roger Clemens, scandal-ridden and disgraced over links to steroid use, had to scrap plans for a Houston restaurant before it even opened, he said.

He’s also marveled at New York Yankee Mickey Mantle’s restaurant that is going strong in the city that loved him, a legend that can draw in tourists and fans years after his death. He’s also sampled Danny DeVito’s steak house in Miami, an upscale menu that the rotund actor personally developed: try an 8-ounce rib-eye steak for $60.

“It was the best shrimp I ever had,” he said.

“I think there has to be a chance you are going to walk in and see the celebrity there, having fun, and you might take your picture with them or something,” he said of the ideal, successful celebrity restaurant.

If a celebrity or athlete doesn’t frequent the business, then those $20 hamburgers will be a hard sell, he said.

He had hoped to make it to Webber’s Center Court With C-Webb in Natomas, but after about three years it closed in November as the recession weeded out underperformers.

“It’s hard to expect that these places are going to last for 20 years,” Bridgeford said.

The food has to be good

The primary pitfall when celebs become entrepreneurs is they bank too heavily on their persona, said a Riverside restaurant consultant.

“I’ve seen a lot of celebrity restaurants in different parts of the country,” said Ron Santibanez. “The inherent problem I see is that they have focused more on the name than on the food and service. It’s still a restaurant. There is a still a level of service that needs to be met.”

After the initial hype, the aura could fade if execution falls short, he said: “Then you’re just left with a restaurant. If customers don’t leave a restaurant talking about the food, you’ve got a problem.”

Former NBA great Karl Malone had partnered in a short-lived restaurant that opened in Riverside County, more than an hour from the Los Angeles area where he played briefly late in his career, he said. After the Laker Girls and other teammates opened the place, the fanfare fizzled.

“Once everything was said and done, it wasn’t one of his hangouts and the food and service was mediocre,” he said.

De Niro doesn’t use name

On the other end, a popular concept could get overextended, Santibanez said.

He suggested that Wolfgang Puck, the Los Angeles celebrity chef, might be spreading himself too thin these days, with a couple dozen locations of varying concepts from fine to takeout dining, a line of frozen food and appliances. “No matter how famous a person is, it comes down to the execution,” he said.

Some celebrities are less interested in putting their name out there on a restaurant marquee, Sinclair said. Actor Robert De Niro has invested in two dozen fine-dining restaurants around the world – such as Nobu, his sushi restaurants – but none carry his name, Sinclair said.

“That’s a great example of a great product. It just so happens Robert De Niro is part owner.”

Owners and operators of themed restaurants realize the odds are stacked against them.

At the Fountains at Roseville, Tres Agaves opened in 2009 with a seemingly narrow theme: tequila.

“There’s definitely challenges in it,” said Ashley Miller, executive beverage director for the restaurant. “How do we keep it a hot place?”

The first restaurant opened nearly five years ago in San Francisco and tequila aficionado and rocker Sammy Hagar was originally involved but is no longer. The restaurant offers 130 kinds of tequila and cuisine from the Mexican state of Jalisco, the home of tequila.

With two locations, the owners have no intention of going beyond a handful, which narrows the focus, Miller said. “We don’t want to be a huge chain.”

Tequila is the fastest growing spirit in the country and the restaurant capitalizes on that trend with parties for Mexican holidays, a “passport” program for those who want to track their way through all 130 labels and food that remains true to the region.

“They come for the tequila, stay for the food and come back for the service,” Miller said.

Former Sun shines

Almost in the shadow of Phoenix’s downtown NBA arena, former Phoenix Sun star Dan Majerle opened Majerle’s Sports Grill in 1992 and remains a majority owner of that and two newer suburban locations.

A year after the downtown restaurant opened, A.J. Sulka, the managing partner, realized the restaurant needed a focus besides the bar and bar food.

“If we want to be here for the long term, we need a good lunch,” Sulka recalled thinking at the time. The restaurant caters to a business lunch crowd with a consistent and rapidly served menu, Sulka said.

Majerle, a born crowd-pleaser on the court, carried the same personality to the business, Sulka said. At least four or five days a week, Majerle, who left the NBA in 2002, is behind the bar or serving a Cotton Club sandwich, named for the late Suns’ coach Cotton Fitzsimmons.

The restaurant has always fulfilled a fan’s fantasy with Suns players past and present dropping by, Sulka said. Sacramento Mayor Kevin Johnson, a former Sun, used to lunch at Majerle’s. Suns sensation Steve Nash comes by. And so does Suns center Amar’e Stoudemire – who lent his name to a downtown Phoenix restaurant that filed for bankruptcy protection recently.

Majerle’s survived recent lean summers in a downtown that saw more than a handful or restaurants come and go, Sulka said.

“If we run Majerle’s the way Dan played basketball, loyalty to the team, coaches and fans, and his hard work, determination and the consummate professional he was, no way could we fail,” he said.

Monster.com | Harnessing New Semantic Search

OnSite Team — Sat, 27 Mar 2010 05:24:21 +0000

Harnessing New Semantic Search
By: John Rossheim, Monster Senior Contributing Writer

Many have called semantic search the future of resume search technology. But what exactly is semantic search?

Imagine search engines that don’t get hung up on the particular words that you and your perfect candidates use to describe a given profession. Instead, semantic search interprets the meaning behind the words and concepts.

If that simple concept still sounds murky, there’s good news: to reap the benefits of semantic search, you don’t need to know how it works.

Here’s a glimpse behind the curtain of semantic search that will help inform your use of it.

The Power of More Accurate Search
Basically, semantic search gets down to the meaning of words — the terms of your query and the prose in the resume database — to separate the wheat from the chaff much more effectively than conventional search.

“Semantic search creates strong job searches for the employer so it doesn’t take hundreds of clicks to sift through the results,” says James Sinclair, principal at OnSite Consulting, a hospitality consultancy in Los Angeles that performs executive searches for clients.

Maybe the most surprising aspect of semantic search is that it lets you describe who you’re looking for, almost as if you were speaking with a networking contact who knew all the top candidates out there.

“Our semantic search incorporates an engine that looks at context and addresses a lot of language pitfalls in resumes,” says Earl Rennison, vice president of architecture at Monster. For example, Monster’s Power Resume Search resolves misspellings, abbreviations (standard and otherwise) and synonyms and variations in terms. For example, SOX, Sarbanes-Oxley and Sarbox are all understood to refer to the Sarbanes-Oxley Act of 2002.

Recruiters find that it’s more effective to search on specific, hard skills, like C# programming, than on soft skills like team player. Those all-important soft skills are best evaluated by hiring managers and HR professionals in personal interactions.

Finds Candidates on their own Terms
Semantic search is necessary precisely because human language is so full of variations. “Candidates don’t create resumes thinking about how you will search for them,” Kforce vice president of recruiting Glen Cathey told attendees of SourceCon 2010.

Semantic search uses webs of related terms and their meanings to uncover resumes that use words closely related to your search terms. So, for example, when a recruiter or hiring manager runs a search on programmer, the results may also include jobs titled software engineer and developer, since they are potential synonyms.

Skills and traits are then weighted in semantic search to produce optimal ranking of results. Monster’s Power Resume Search gives more weight to a candidate’s experience that’s more recent, for example.

Even in the current buyer’s labor market, perfect candidates are often elusive. Thus Power Resume Search lets recruiters designate each desired skill as either required or nice to have.

Using Technology to Meld Information
To match your search query with the best candidates, semantic search combines advanced analytics with real-world knowledge of occupations in many industries.

“For each resume, the technology extracts concepts and tags sections,” says Rennison. “Then we analyze and summarize all the information in the resume,” to produce a conceptual portrait of the candidate.

Monster’s subject-matter experts encode knowledge from many professional fields, Rennison adds. They define a concept, find all the ways of referring to that concept, and determine where the concept fits in the “semantic space” of industries and occupations.

Here’s one such example: because advertising is a form of marketing communications, a resume with advertising copywriter in its Job Experience section can be presumed to belong to a candidate who has some marketing experience.

“Unless you have the right technology, making all of this come together is exceptionally difficult and fraught with problems,” says Rennison.

For instance, parsing errors can cause some words to be misinterpreted because their context is misconstrued. If a CPA’s resume states that she is marketing herself as a forensic accountant, the resume search engine should not classify her as a marketing professional. Sophisticated semantic search will analyze where in the resume marketing appears and interpret the word in that context.

Will Semantic Search Reshape Recruiting?
Who needs professional recruiters when semantic search is available? Most employers who have been using recruiters will find that these human experts will remain essential to the sourcing, recruiting and hiring cycles.

“Recruiting for top management still requires the personal touch,” says Sinclair. Additionally, concludes Cathey, “Intelligent search and match applications are not a replacement for creative, curious and investigative recruiters.”

Armed with semantic search in their tool belts, “recruiters can focus on developing relationships with clients and candidates,” says Rennison. Since semantic search streamlines the discovery of candidates, he adds, “recruiters can devote more time to determining whether candidates meet the promise of their resumes.”

MSN – Business On Main | When an Employee Stock Ownership Plan Makes Sense

OnSite Team — Tue, 16 Mar 2010 17:17:22 +0000

When an Employee Stock Ownership Plan Makes Sense

By Toddi Gutner

Even though the employment market is flooded with unemployed top talent, smart companies need to always be thinking about the most effective ways to retain their best employees.

Perhaps one of the most powerful employee engagement tools is an employee stock ownership plan (ESOP). “What greater way to motivate each and every [employee] than by giving them all a little piece of the pie,” says James Sinclair, the principal of OnSite Consulting, a nationwide consultant to the hospitality industry. An ESOP “motivates employees, improves firm performance, fosters innovation, and promotes sound financial health,” says Sinclair. Indeed, studies show that employee motivation and productivity increase in companies with ESOPs.

By definition, an ESOP is a qualified defined-contribution employee benefit plan that invests primarily in the stock of the employer company and allows employees to become partial owners of the business. In the United States, more than 11,000 companies — from Fortune 500 firms to small, private types — have implemented an ESOP. That translates to an estimated 8 million employees who own stock in their companies through an ESOP. And according to Gary Young, a corporate attorney and advisor to small businesses on ESOP issues, the appeal of ESOPs for employees goes beyond participation in company ownership. “Like a pilot in a plane, passengers take some comfort in the fact that the pilot will share in the same fate as they will,” he says.

But using ESOPs as an employee engagement tool is often not the primary motivator for most business owners. The real motivation? Tax advantages. “ESOPs give [business owners] the most tax-favored option that the tax code provides anyone,” says Young. An ESOP provides a tax-advantaged vehicle to create liquidity, and a ready market for company shares so that the owner can take some cash out of the business. One of the potential tax advantages is that an entrepreneur who sells company stock with favorable capital gains treatment can possibly defer recognition of that gain indefinitely or altogether, says Young.

There are two types of ESOPs: leveraged and non-leveraged. Companies can make tax-deductible cash contributions to the ESOP to purchase stock or have the ESOP borrow money to buy the shares. Under a leveraged ESOP, an ESOP obtains a loan from a bank, usually with a company guarantee. The ESOP then uses the loan proceeds to buy stock from the company and/or existing shareholders, says David Johnson, an attorney with Turner Padget Graham & Laney in Florence, South Carolina. The company makes annual tax-deductible contributions of cash to the ESOP, which in turn repays the bank. With a non-leveraged ESOP, the company makes annual contributions to the trust either in the form of stock or in cash that is then used to buy shareholder stock.

But ESOPs aren’t for every company. The company must be either an S or C corporation — LLCs, partnerships and sole proprietorships can’t implement them. Expert opinion varies on the minimum size of a company — in terms of number of employees and valuation — that can benefit from an ESOP. Estimates for a minimum value range from $5 million to $10 million, while at least 30 employees are recommended as a minimum workforce. Because companies can make an annual tax-deductible contribution of up to 25 percent of compensation of covered employees in ESOPs, such plans don’t make sense for companies with a low number of employees or low payroll. “If you put the necessary contributions on the back of too few people, then the obligation to cover the debt service becomes too onerous for those in the plans,” says Young.

Also, due to the regular and ongoing contributions that must be made to the plans, ESOPs are best for companies that are producing a lot of steady income. “Such an obligation could be an extra burden in lean years as an increase to expenses,” says Johnson. However, he adds that if a company needs to ease the burden on its cash flow, ESOP contributions can also be made in stock.

Another pitfall: the ESOP repurchase obligation. Closely held companies with an ESOP have a legal obligation to offer to repurchase shares that are distributed to plan participants, says Johnson. The company must also offer to allow those participants who are 55 or older and have 10 years of participation in the plan to diversify out of the company stock. Finally, there can be concern from current shareholders about the dilution of their ownership through continuing stock contributions to an ESOP.

Business owners also need to think in terms of startup and ongoing costs. The process isn’t cheap. Startup costs can run between $60,000 and $100,000, and there will be ongoing legal and consulting fees, annual stock appraisal fees, and record-keeping costs.

To be sure, the advantages of an ESOP are many, but it’s imperative to seek expert advice to find out if the opportunity is right for your company.

Toddi Gutner is an award-winning journalist, writer and editor and currently is a contributing writer covering career and management issues for The Wall Street Journal.

Entrepreneur Magazine | Waiter, Bring Me a Fresh Idea

OnSite Team — Tue, 23 Feb 2010 06:12:45 +0000

Waiter, Bring Me a Fresh Idea
10 strategies that are working in the tough restaurant economy
By Jason Daley | Entrepreneur Magazine – March 2010

URL: http://www.entrepreneur.com/magazine/entrepreneur/2010/march/204986.html

It was about 20 years ago that the casual dining boom got started in the United States. It was a golden, batter-dipped age: We were lured in by the novelty of mozzarella sticks and artichoke dip, marveled at the cluttered walls and uniform flair and gulped down two-liter mango margaritas like every night was Friday.

But the bloom is off the bloomin’ onion when it comes to casual dining. The recession has customers trading down to fast food and the growing “fast-casual” segment of takeout specialists (think Chipotle (CMG), Noodles or Panera (PNRA)). Over the last couple decades, while drive-thru burger joints have kept their prices flat, the typical bill at casual dining chains has multiplied three or four times. And the quality of the food has remained pretty much the same while fast food has become better and more diverse. Add to that grumbles about predictable, high-fat menus and stale décor and it’s understandable why in 2009 the category was down 5 percent to 8 percent with a 3 percent to 5 percent drop forecast for 2010.

But some chains are figuring out ways to keep customers coming through their doors. Red Lobster (RT), for one, has designed a quick-turnaround lunch service designed to draw the time-strapped crowd, and its new wood-fired entrees are appealing to the health-conscious. Ruby Tuesday (DRI) redesigned its menu, retrained staff, modernized its décor–and brought in almost 2 percent more customers in late 2009 than in late 2008.

There are plenty of steps to take in a down market, and it’s important to remember that even individual franchisees are not powerless. We spoke with some of the leading thinkers in the casual dining field to find out what you can do to put a little flair back into your business.

1. Think locally
Casual dining chains are some of the most aggressive national advertisers out there. (Remember the “I want my baby back” jingle?) The problem is, plenty of franchisees think that’s enough, especially after a splashy grand opening with big media buys. “Local franchisees are advised to put 1 to 5 percent of their money into local advertising by their franchisors, but they think the national TV commercials are enough to drive customers,” says James Sinclair of OnSite Consulting, a Los Angeles firm that helps rescue flailing restaurants. “We often suggest local marketing like sponsoring soccer teams, participating in fundraisers, things like that. There’s no better advertising than getting buzz in the community.” Casual dining mom-and-pops haven’t been hurt as much by the recession, mainly because people feel a strong connection to the businesses. Becoming a local leader and integral part of the community, versus a faceless chain, can go a long way to developing customer loyalty.

2. Speed up lunch
Lunch is when the fast-food joints and casual restaurants go head to head–and where casual dining loses out. “Business users want to get in and out quickly, and most don’t have a full hour for lunch,” says Darren Tristano, executive vice president of Technomic, a Chicago-based food-industry consulting and research firm. Shaving 10 to 15 minutes off a visit can mean the difference between drawing a lunch crowd or sitting idle for the afternoon. Cracker Barrel (CBRL) and Chili’s have invested in system-wide redesigns of their kitchens and service procedures to help cut big chunks off their service time, but franchisees can help keep things moving by investing in more lunchtime staff, making sure servers are trained and efficient and streamlining the lunch menu to keep the kitchen on track. Tristano also suggests keeping prices competitive. Having lunch entrees in the $5-to-$8 range makes it less likely that budget customers will shift to the burger shack if times get tougher.

3. Push the bottle
Booze is always a high-margin item for casual restaurants, but more importantly it’s a gateway to gaining customers for dinner. According to Technomic’s research, only 14 percent of customers find occasion to drink in the afternoon, which is why national chains have started placing a new emphasis on earlier happy hours. Ruby Tuesday recently revamped its bar lineup, retrained its bartenders and introduced $5 signature premium drinks. T.G.I. Friday’s offered free appetizers at the bar last year in an attempt to draw people in during the dead afternoon hours. Starting drink specials at 2 or 3 p.m. is a great way to attract shift workers, business people scheduling casual meetings or retirees looking for afternoon deals. “You have to remember,” says Jeff Davis, president of Sandelman & Associates, a food-service research firm in Irving, Texas, “when times are tough alcohol is the one thing people don’t cut back on.”

4. Push the plate
Besides offering an extended happy hour on booze, create a happy hour on menu items, suggests Tristano, who points out that Steak ‘n Shake’s afternoon half-price milkshake promotion can easily lead to an order of burger and fries, and Braxton Seafood Grill’s happy hour, when it sells lobsters at cost, often gets orders for a few beers and all the fixings. One innovative strategy to woo the late-afternoon crowd is offering items at ascending prices–$3 appetizers at 3 p.m., $4 at 4 p.m. and so on. “The only way to maximize opportunities is to trade up,” Davis says. “The main goal when you get someone through the door is to trade up.”

5. Focus on the quality
“If you’re at a Mexican restaurant, people are going to notice if you’re scraping broken tortilla chips from the bottom of the barrel and not filling their glasses to the top,” Tristano says. Many chains also make the mistake of charging for soft drink refills or reducing the number of servers to save money. This sends a clear message to the customer that you’re struggling. If it is necessary to reduce costs, he suggests making cuts across the board instead of pulling savings in the areas of servers and food costs. Instead of switching from a good cheddar to a block of “cheese product,” try to renegotiate prices with vendors. “Be careful to negotiate pricing and to take cost savings out of other areas,” he says, “not from areas where customers will feel it most.”

6. Don’t chase Subway
One of the big temptations in casual dining is to simply slash prices until hordes of $5 deal-seekers start filling the tables. But Sinclair says that’s exactly the wrong tactic. “All that does is draw in deal hunters, and when the promotion is over, they won’t return,” he says. “You can’t focus on the short term. You have to be focused on what is going to make the customer return. If you’re going to discount, rebuild the menu so the price of the dish doesn’t lose you money.” The same thing goes for cutting portions. For the most part, consumers see smaller portions as a loss of value–and the savings to the restaurant are small. In the end, Sinclair says, “you’re not saving money per dish, you’re losing customer satisfaction.” Some portion-cutting campaigns have been successful: T.G.I. Friday’s Right Portion, Right Price campaign hit a sweet spot and The Cheesecake Factory scored when it brought its lunch portions down to human scale. But the strategy was about “right-sizing” ridiculous portions. “Some places serve way too much,” Davis says. “Why pay $15 for a salad that I can only eat a third of?”

7. Give them something special
It might seem obvious: People go to a specific restaurant to get food they can’t get anywhere else. But that idea has become murky in casual dining, where fried appetizers and flatiron steaks have all melded into culinary clichés. Tristano says there are two ways to give your menu an edge: Offer items that are a healthful alternative for those looking to adopt a “better-for-you lifestyle” or dishes that most diners can’t cook at home. “Quality Mexican entrees are difficult for people to make at home, or Asian appetizers like pot stickers. For crème brûlée you need to have that little flamethrower,” he says. “People are drawn to items that require culinary expertise or ingredients that are difficult to purchase.”

8. Reward loyalty
The best way to earn loyalty–and repeat visits–is to provide quality food and service. But Americans are suckers for deals, and loyalty programs are one of the things that keep diners coming back to their favorite booth. Sinclair suggests implementing programs that don’t necessarily hand out freebies but still provide something meaningful to diners. Rewards can include priority seating, discounts or rebates on gift cards or–one of Sinclair’s favorites–the chance to sign up and win prize money. “The idea,” he says, “is to get customers involved in the brand and get them to feel a natural partnership with you.”

9. Get it out the door
Fast-casual establishments are striking a chord with Americans–the food is better than a drive-thru burger joint, but it doesn’t require an hour of time and a 20-percent tip. Full-service casual restaurants, however, can easily mimic fast casual. System-wide, Denny’s and IHOP are experimenting with fast-casual annexes attached to their restaurants, and Buffalo Wild Wings, which has dedicated takeout ordering stations, is successfully bridging the fast- and full-service divide. Tristano says providing alternatives to sit-down dining–whether call-ahead, drive-thrus or catering–is a great way to create new revenue streams. “The more you drive off-premises growth, the greater opportunity you’ll have to weather the economic storm,” he says. “You have to understand what the customer wants and adapt to this environment and this economy.”

10. Take time to train
In the constant rush of the restaurant business, sometimes it’s hard to stop and take a good hard look at the big picture. “We don’t always have time to train employees or go through a full menu evaluation,” Davis says. “Maybe, with the recession, we have that time now.” Don’t be scared off by the extra investment involved in training–when restaurants are fighting tooth and nail to earn repeat customers, exceptional service is a huge factor in their deciding where to go, and good training often leads to less staff turnover. “It will cost money,” he says, “but in the longer term, people who continue to invest in their businesses will succeed. Excellence always wins, top to bottom.”

Jason Daley is a freelance writer based in Madison, Wis.

www.jasondaley.com

LA Business Journal | Is W Hollywood A Scene Stealer?

OnSite Team — Sun, 14 Feb 2010 07:04:52 +0000

Is W Hollywood A Scene Stealer?
By DAVID HALDANE – 2/15/2010
Los Angeles Business Journal Staff

Will the posh new 305-room W Hollywood Hotel & Residences supplant the nearby Hollywood Roosevelt Hotel as the hangout for hipsters?

Several of those who know the market believe that the two establishments may go head to head at first, but in the long run the competition will help them both.

Nonetheless, the historic Roosevelt on Hollywood Boulevard, as well as the more middle-of-the-road Renaissance Hollywood Hotel on North Highland Avenue, have wasted no time in making improvements to keep themselves in the game.

Among other things, the Renaissance has been adding musical events, and will soon remodel its restaurant and corridors, even though it just opened in 2001.

The Spanish colonial Roosevelt, extensively remodeled just five years ago, will feature “new nightlife venues” this year, said Jason Pomeranc, who is co-owner of Thompson Hotels of New York, which owns the Roosevelt. And next year will see some room renovations.

“People choose to stay at the Roosevelt not only because of its location, but because of multiple layers of physical beauty,” he said.

And while there’s nothing wrong with a little healthy competition from down the street, Pomeranc added, “people will continue to go to the Roosevelt because of its intellectual soul.”

Yet the splashy debut of the $360 million W last month featuring just about every power player in town and a host of celebrities – including Los Angeles Mayor Antonio Villaraigosa, TV host Jimmy Kimmel and Robin Thicke – put its hospitality competitors on notice.

And the arrival doesn’t come at a time when tourists are exactly swarming over Los Angeles. Last year, hotel occupancy rates dropped nearly 11 percentage points – to 66 percent – while the average cost of a room fell from $170.50 to $151.50.

With occupancy rates not predicted to improve this year even as room rates continue to drop, some analysts believe that, at least initially, the W’s two main competitors will take a hit.

“I think initially the Roosevelt will see a decline,” predicted James Sinclair, the principal at OnSite Consulting LLC, a nationwide L.A.-based hospitality consulting service. “The new kid on the block always creates that for the competition. As long as the Roosevelt rises to the occasion and understands that competition forces innovation, however, then its business will ultimately increase because of the buzz created by the W.”

Hollywood institution

In fact, as far as glamorous and hip Hollywood haunts go, the Roosevelt has long had the town to itself.

Opened in 1927, the 12-story hotel was at the center of the excitement and elegance of early Hollywood, hosting the first Academy Awards in 1929. Marilyn Monroe is said to have lived in Room 246 and her first photo shoot was taken on the diving board at the pool. But as happened to Hollywood in general, the hotel eventually experienced a decline.

Then, in 2005, amid the neighborhood’s resurgence, the 83-year-old institution underwent a $46 million head-to-toe makeover aimed at restoring its glory for a new generation. Led by hot designer Dodd Mitchell, workers stripped the lobby’s ceiling to expose wood beams and stuffed its interior with oversized leather chairs to give it a smoking lounge feel.

Several new watering holes were added to attract the young.

The effort was a definite success with the hotel attracting A-list actors and celebrities such as Kirsten Dunst, Cameron Diaz and the late Heath Ledger. Actress Lindsay Lohan had a birthday bash there in 2008. Robert Ritchie – known more popularly as Kid Rock – reportedly had an altercation there in 2006 that was breathlessly reported by the Web site TMZ.com.

The room rates run the gamut from $199 to $239 for a standard room, up to $1,500 for a two-bedroom suite and more than $6,000 for a penthouse. The 300 units include a heavy mix of 58 suites and 60 poolside cabana rooms with private terraces. All of which has led some to conclude that the hotel attracts a different enough crowd from the W to sidestep a hard blow.

“People who go to the Roosevelt wouldn’t necessarily go to the W,” said Kristofer Keith, the owner of Spacecraft Design which does hospitality design and construction in Hollywood. “The Roosevelt has more of a boutique-type vibe, while the W reeks of corporate. I don’t really see a conflict.”

On the other hand, the 632-room Renaissance Hollywood Hotel and Spa, owned by L.A. real estate developer CIM Group, has largely targeted the tourist and convention crowd. Rooms start at about $239 a night (though the hotel has 33 suites, including a 3,500-square-foot penthouse that rents for $7,500).

To make itself more competitive in the new Hollywood market, Dan Shaughnessy, sales and marketing director, said the hotel in the last year has added such attractions as Indy Thursdays, during which independent music artists showcase their talent in the hotel’s lobby, and Sunday Standards, a Sinatra-style show. In addition, the hotel is in the process of remodeling its guest rooms as well as two major suites. This fall it will begin remodeling the lobby, corridors, restaurant and meeting space.

“Where they’re pushing the edgier side,” Shaughnessy said of the Roosevelt, “we’re more in the middle. We’re just edgy enough to attract some of the hip crowd, but not too edgy to drive away the more conservative customers.”

Power operator

However, there is no doubt that the W will pose a threat. The brand was founded a decade ago by hospitality giant Starwood Hotels & Resorts Worldwide Inc., the operator of the Sheraton, Westin and other hotels, to respond to the fast growth of independent boutique hotels that attracted younger crowds.

The first hotel in New York was a smash hit and since then Starwood has opened 54 W hotels. The Hollywood property is part of a complex that includes 143 condos and an adjacent apartment building. It has a spectacular, cavernous lobby designed for hanging out, with rooms ranging from about $219 to $850 a night. It includes 40 suites ranging from $3,000 to $10,000 per night. Next month, a swank $12 million Las Vegas-style rooftop nightclub called Drai’s Hollywood is scheduled to open.

“The response so far has been wow,” said General Manager Jim McPartlin, who said occupancy has hit 50 percent and is growing, “It’s been a thrill ride for the last two weeks. We’re about double where we thought we would be.”

Still, Seth Horowitz, vice president of operations for L.A.-based Luxe Hotels, which operates several establishments on the Westside, is another who believes that that W in the end will be good for business.

“Our position is that the more hotels there are in a particular area, the more visitors they can draw,” he said. “There is a desperate need for quality rooms in Hollywood. The Roosevelt and the Renaissance pretty much owned that neck of the woods; bringing in the W creates a triangle that will benefit the economy.”

Inc. Magazine | Will Your Texting Policy Stand Up in Court?

OnSite Team — Fri, 05 Feb 2010 03:06:10 +0000

Inc. Magazine Logo

Will Your Texting Policy Stand Up in Court?

By Minda Zetlin

A new Supreme Court case casts a shadow on employee text messaging rules. The case involves an employer sued for reading an employee’s (highly sexual) text messages, even though he sent and received them using company-owned equipment.

You have a mobile workforce, so you issue mobile devices to your employees. You pay for their mobile service and make sure their equipment is working. Since it’s intended for business, you have the right to read employees’ text messages. What’s more, you have a policy that says so, in so many words. All employees must acknowledge this policy when receiving their Blackberry devices or other smartphones.

Legally, you might think you’re well covered — and you might be wrong. In Ontario, Calif., police officials reviewed an unusually large number of texts sent by a police sergeant named Jeff Quon. They found hundreds of sexually explicit texts. Quon sued, arguing that his bosses had no right to read the texts. The case made its way up the food chain to the Ninth Circuit Court of Appeals, which ruled in favor of the cop. Recently, the U.S. Supreme Court agreed to hear the case, with a final ruling expected this summer.

Whatever the court eventually rules, this is unlikely to be the last employment case involving text messages, and employers find themselves setting text and other communications policies in an increasingly confusing world. “Technology is changing fast and the courts are left to catch up,” notes Jason C. Gavejian, an associate at Jackson Lewis LLP. “The biggest challenge is the interplay between federal law, and state and local law,” he adds. “In one New Jersey case, the courts ruled that employers have an obligation to make sure employees are not viewing child pornography. That requires monitoring. Now the Supreme Court may rule that monitoring is illegal.” If it does, the two rulings will be in direct conflict, and employers in New Jersey will have to choose between disobeying state and federal courts.

It should be clear by now that setting an appropriate policy governing the use of mobile devices is a very serious business. But many small companies don’t take it seriously enough, says Michael McAuliffe Miller, partner in the labor and employment group at Eckert Seamans Cherin & Mellott, LLC. “The biggest mistake companies make is that they have no policy on texting and mobile communications,” he says. “Or else, they have an off-the-shelf policy that they’ve downloaded from the Internet. Then they’re inconsistent about enforcing the policy, especially with employees everybody likes.”

Develop a policy on texting

If the above is a good description of how not to handle texting policy, what’s the right way to do it, especially in light of the Quon case? Unfortunately, there’s no one right way, but here are some steps that may help:

Have the right people create policy. “In many companies we consult, these policies are set by an IT person,” notes James Sinclair, principal of OnSite Consulting, a hospitality industry consulting firm that specializes in helping financially troubled companies regain profitability. “I’m a big believer that these should be management decisions.” Top management should set mobile communications policy, with input from legal counsel.

Update the policy often. Especially any time you provide employees with new types of devices. “One of the issues in the Quon case is that the police force’s policy had been written to apply to e-mail, not texts.”

Reduce expectation of privacy. “Employers should have a policy that says employees have ‘no reasonable expectation of privacy.’ That’s the key phrase,” Miller says. The policy should be distributed to employees at regular intervals, and they should be asked to acknowledge their agreement. “Some employers make that consent interactive,” he adds. “It could be part of the employee’s log-in process.”

Specify who can change policy — and who can’t. In the Quon case, the police force had a formal policy that said texts weren’t private. But a lieutenant told Quon informally that if he paid for any texts beyond the 25,000 characters a month on his pager plan, no one would read his texts. “You should have in your policy that no one but a designated senior official of the company can change the policy,” Miller says.

Train managers about the policy. “You want to make sure managers get proper training so that when they inform employees about the policy they’re doing it in a uniform fashion, consistent with what the company wants to accomplish,” Gavejian says.

Specify how equipment is to be used. This is a tricky question. You can’t define unauthorized use too narrowly, Gavejian says. For instance, if you write a rule against sexually explicit text messages, it won’t apply to sexually explicit images. Instead he suggests a rule that company equipment be used only for business communications. At the same time, he acknowledges, such a rule may not be realistic. “You can’t stop someone from sending a message home saying ‘I’ll be late for dinner,’” he notes. “I don’t think there’s one universal policy everyone can apply. It has to be analyzed on a case-by-case basis, and depending what technology you’re using.”

Keep messages on your own servers. This is a potentially costly solution that isn’t right for every small company. But, because its clients’ data is always highly confidential, OnSite Consulting chose to route all e-mails and Blackberry messages through its own servers. “We worked with our general counsel and did a lot of research,” Sinclair explains. “By default, if you’re going through our server, you’re accepting our terms and conditions, and the messages are automatically copied and audited.”

This solution may become more popular in the wake of the Quon case: One of the questions at issue is whether his employer had the right to demand his text messages from their pager company, and whether the pager company was right in acceding to that demand. OnSite’s server is hosted and maintained by a hosting provider, but it does physically belong to OnSite. “We made it a priority and spent a significant sum for a technology we can’t see or directly use and that does not contribute to our return on investment,” Sinclair says. “But it provides another layer of protection for our clients.” It also provides a real-world model of how to most safely handle employee communications. “We have to do it,” Sinclair says. “We can’t walk in there as a consulting company and have a less-than-perfect system ourselves.”

LA Times | West Hollywood reaches out to gay and lesbian tourists

OnSite Team — Mon, 02 Nov 2009 08:25:37 +0000

West Hollywood reaches out to gay and lesbian tourists

The city is trying to shore up revenues by wooing a ‘very lucrative segment.’

By Hugo Martín, November 2, 2009

If you plan on protesting a ban on same-sex marriage, what better place than West Hollywood, a town known nationwide as a center for gay activism and politics?

But go there on vacation?

West Hollywood — where more than a third of the population identify themselves as gay, lesbian, bisexual or transgender — is well-known to locals and draws many visitors from around the state. But it’s not a major national or international destination.

Now the city, eager to shore up revenues, wants to expand its reach. And it’s with good reason: Even in a slumping economy, gay and lesbian tourists tend to wield more disposable income and are more likely to spend on travel and leisure than heterosexual tourists, studies have shown.

Over the last few years, cities such as Philadelphia, Fort Lauderdale, Fla., Chicago and Bloomington, Ind., have launched campaigns to attract gay tourists.

The gay travel segment is so hot that American Airlines, among other large corporations, has a marketing manager whose job is to reach out to that demographic.

West Hollywood’s latest effort is spearheaded by a redesigned travel website (GoGayWestHollywood.com) that includes lists of hotels, clubs, bars and nighttime happenings that the visitors’ bureau believes would appeal to gay and lesbian tourists.

The site also includes a photo gallery and a list of weekly events, including several nightclub parties with sexually suggestive titles, and a section on the city’s raucous Halloween celebrations. The photos include shots of shirtless men in leather as well as scenes from recent rallies in opposition to a proposed ban on same-sex marriage.

The website’s content may raise a few eyebrows among outsiders, concedes Bradley M. Burlingame, president of the West Hollywood Marketing & Visitors Bureau.

But he pointed out that travel bureaus for exotic vacation spots that cater to heterosexual tourists often feature attractive women in bikinis.

“It’s not our purpose to be a vehicle for people to hook up,” he said. “But in reality, people sometimes go on vacation in hopes of meeting someone they might like.”

The city even has staff members in London and Berlin to arrange junkets for European journalists to come check out the scene.

The West Hollywood Marketing & Visitors Bureau does not have a separate budget for its campaign to attract gay and lesbian tourists, but last year’s annual budget was about $1.5 million, according to public records.

Several West Hollywood business owners applaud the visitors bureau’s strategy, saying gay and lesbian travelers are helping to keep the city’s tourism industry relatively healthy in the worst recession in decades.

“It’s a terrific market,” John Douponce, general manager of Le Parc Suites Hotel, a 154-room boutique hotel, said of gay and lesbian tourists. “They are very upscale travelers.”

James Sinclair, operator of the O-Bar Restaurant & Lounge on bustling Santa Monica Boulevard, said that marketing to gay and lesbian tourists made sense.

“This gives us a competitive advantage against our neighbors in L.A.,” Sinclair said.

Not only that, he said, but the campaign offers gay and lesbian tourists a destination where they can feel welcome.

“Why wouldn’t they come to see what it is like to be in a city of equal opportunity?”

But the main goal of the city’s campaign is to draw visitors who will spend.

A survey this year by Harris Interactive, a global market research firm, found that gay and lesbian tourists were expected to spend on average $2,300 for vacations during the spring and summer whereas heterosexual travelers planned to spend on average $1,500 for the same period.

West Hollywood commissioned a study in 2007 that reached the same conclusion. The marketing study found that 17% of all visitors to the city identified themselves as gay or lesbian. Those same tourists said they planned to spend $349 a day in the city, compared with $269 a day by heterosexual visitors, according to the study by Los Angeles-based Lauren Schlau Consulting.

Nationwide, gay and lesbian buying power has been estimated at $690 billion and is expected to reach as much as $835 billion in 2011, according to a Witeck-Combs/Packaged Facts survey released two years ago.

“That market segment is a very lucrative segment,” Burlingame said.

Like West Hollywood, tourism bureaus and travel companies across the country are making it clear that they welcome gay tourists.

“All travel marketers today are working harder than ever in this tough economy,” said George Carrancho, American Airlines’ marketing manager for outreach to gay and lesbian customers. “From my experience, however, the very smartest ones also express their welcome and reputation for inclusion to gay and lesbian travelers.”

In Southern California, West Hollywood may be entering into direct competition with Palm Springs, a desert resort town that has long billed itself as “America’s gay oasis.”

But Palm Springs doesn’t feel threatened by West Hollywood’s new campaign.

“I think the two can work together,” said Jim Dunn, executive director of the Palm Springs Convention Center.

Palm Springs has an outdoor appeal with hiking, golfing and Jeep tours of the mountains and deserts around the city, whereas West Hollywood has a more urban vibe and a wealth of nightclubs and bars along Santa Monica Boulevard.

John Tanzella, president of the International Gay & Lesbian Travel Assn., said more tourism bureaus from around the globe have joined his association and are launching campaigns to target gay travelers.

“The bureaus are looking for new revenue streams and the strength of the [lesbian, gay, bisexual and transgender] travel market is well documented,” he said. “The LGBT community is passionate about traveling.”

hugo.martin@latimes.com

Arizona Republic | Newest hot spot for a $78 steak: A shopping mall

OnSite Team — Mon, 26 Oct 2009 06:37:55 +0000

Newest hot spot for a $78 steak: A shopping mall

by Megan Finnerty – Oct. 26, 2009 12:00 AM
The Arizona Republic

Malls are destinations for spending on new shoes, jeans and purses.

But now Valley residents are asking themselves if they’re ready to go to the mall for a $78 steak and a fancy cocktail.

Modern Steak opens today at Scottsdale Fashion Square with all the opulence of a high-end steakhouse – mirrored ceilings, glittering chandeliers and even a concierge desk. There are cozy leather booths for canoodling couples and an airy patio for those who prefer to be more conspicuously observed.

But the patio is topped with a white-metal awning that blocks the view of the parking lot. And, while diners at interior tables hear a trendy music mix, those who sit overlooking the mall get Muzak.

Yes, it’s a glamorous steakhouse, and it’s across from Banana Republic. But several signs say this might be just the right fit.

Dozens of high-end shopping centers across the country have added elegant dining during the past few years, and it’s worked when the restaurants are as swanky as the stores, says hospitality consultant James Sinclair. Malls want the new customers, and restaurateurs want the critical mass of prospective diners.

“More retail outlets are pursuing destination dining, name restaurants and name chefs, opening up the market for diners, tourists, dates, not just people going to the mall,” said Sinclair, president of Los Angeles-based OnSite Consulting.

Shopping at Scottsdale Fashion Square is decidedly luxurious: Shoppers might spend $975 on a sleek trench at Burberry or drop $395 on a Comme des Garçons dress shirt at the new Barneys New York.

The mall is one of America’s 10 most profitable, with $618 in sales per square foot vs. the national average of $420, according to a study by U.S. News and World Report and Green Street Advisors, a Newport Beach, Calif., investment-research firm.

Similar upscale dining-shopping mixes can be found at other top malls such as the Forum Shops at Caesars Palace in Las Vegas, with a Sushi Roku and a Spago, or the Ala Moana Center in Honolulu, with a Morton’s the Steakhouse.

So, when rebuilding the east wing as part of the Barneys expansion, mall-owner Westcor invited longtime Valley restaurateur Sam Fox to develop something to “wow customers,” said Greg Cochran, Westcor’s vice president of leasing.

“We want it to be one-stop shopping . . . the movies, bookstore, department stores and a unique dining experience. It keeps them in the mall longer,” he said.

Fox says it’s the perfect location. He has already been successful with Olive & Ivy (the destination for the trendy over-35 set) at the Scottsdale Waterfront, and the fast-casual pizza chain Sauce (six locations Valley-wide).

The corner of Scottsdale and Camelback roads is close to luxury resorts, expensive homes and similarly style-conscious restaurants. And that’s a mix that’s already proven successful for restaurant-and-retail pairings at less traditional Valley malls. Phoenix’s Biltmore Fashion Park has always been as much about dining as shopping, anchored by foodie favorites like Christopher’s Fermier Brasserie, now updated as Christopher’s & Crush Lounge. Kierland Commons is home to upscale eateries including Mastro’s Ocean Club, NoRTH and the Greene House. The latter two are also Fox’s.

But those are both outdoor shopping spots, not traditional malls, and neither has a restaurant with two “Conspicuous Consumption” wines at $140 per bottle.

So, at the 9,420-square-foot Modern Steak, Fox has tweaked some steakhouse conventions to speak to the mall crowd. During the day, it’s ladies-who-lunch friendly, with an $11 Cobb salad, a $10 Margherita pizza and a $15 maple-bacon-glazed salmon, placing it just a few dollars above the food court’s Pita Jungle.

Dinner is pricier but familiar, with an $18 warm Maine lobster salad, a $95 seafood tower, and that $78 HeartBrand Akaushi 8-ounce filet.

It’s the decor that makes this place as fancy as the sequined camisoles at the nearby J. Crew – and as appealing.

“It has to be used by all kinds of people . . . so it has to be gorgeous, welcoming, lush, vibrant and gracious,” Fox said.

Fox worked on the designs with Phoenix architect and interior designer Catherine Hayes, creating a space for everyone.

Older customers will like that many of the chairs have arms. Men will appreciate the extra-big stools at the bar. Moms will enjoy the stroller-friendly wide aisles and the airy brightness of a room finished in shimmering drapery, blue lacquer walls and a custom, white latticework ceiling. And fashionistas will swoon over the breathtakingly pink women’s restroom.

Eric Schaefer, writer of the Valley food blog Eric Eats Out, said he’s impressed with Modern Steak’s distinctive vibe.

“The common perception is that we don’t need another steakhouse,” said Schaefer, 36. “But (Fox is) making it a little more friendly, a little less stuffy, a little hipper and better for a wider range of price points.

“Bottom line, I would pay $70 to eat a steak anywhere if the food was good.”

QSR Magazine | The Up Side of Down Sizing – Restaurants can take a tip from retail brands that offer smaller portions and charge a premium.

OnSite Team — Thu, 24 Sep 2009 18:51:28 +0000

24-Sep-09

The Up Side of Down Sizing

Restaurants can take a tip from retail brands that offer smaller portions and charge a premium. By Dale Buss

Like the slew of retail companies that offer 100-calorie, portion-controlled products to consumers, a handful of quick-serve operators are also jumping on the trend. Boloco, a regional burrito chain based in Boston, drove check averages up about 5 percent in the two outlets where it is testing a mini-size dinner-menu option.

But so far most chains have restrained from such a “better for you” marketing gambit and, in fact, show little inclination to back away from a recession-proof emphasis on volume as value.

“I see no evidence of chains using portion control for positioning, and I’ve traveled all over the country looking at quick serves,” says Elizabeth Howlett, a University of Arkansas marketing professor. Howlett recently co-authored a study in which the main conclusion was that many consumers have a poor understanding of the calorie, fat, and sodium content of quick-serve meals.

Even some chains who could tout new options as health-oriented are refraining from doing so. Burger King is mainly marketing its new Burger Shots, for example, as great for sharing with fellow diners. The Miami-based chain isn’t even mentioning the dietary benefits of consuming fewer calories than in its traditional meals.

Portion-control positioning is rare so far for a few reasons. First, the primary middle- and low-income market for most chains still largely equates ample food with value

“In the quick-serve environment, where quality is not as much of an issue, it costs next to nothing for [chains] to satisfy that criterion,” says James Sinclair, president of OnSite Consulting, a Los Angeles–based firm that serves the hospitality and foodservice industries.

Second, any pioneering chain that promotes a different value equation may have to “do a lot of consumer education,” according to Howlett, to get consumers to think otherwise.

New York City diners may appreciate the mandatory nutrition information on menuboards, but it only provides extra information to influence their decisions—the presence of the data itself doesn’t restrict their options.

Third, the potential margin and cost implications of portion-control initiatives are murkier than it might seem. Brands could arguably boost margins by offering smaller portions and pricing them at a per-ounce premium to regular and large sizes.

“You’re giving customers more choices,” says Darren Tristano, executive vice president of Technomic, the Chicago-based foodservice consulting firm.

“But the payoff might not be there because, after all, most consumers say they want salads but they still eat fries. And meanwhile, it’s more difficult for the operator because they have to prepare and deal with more items and more sizes and promote them all.”

But Boloco, with 16 outlets, has been offering mini breakfast burritos for a year and a half with great success. As a result, CEO and co-founder John Pepper is trying mini burritos in other dayparts as well.

“All these minis are higher-margin items,” he says. “People are paying a premium for them, but it’s allowing people not to have to think so hard about whether they really want to go get a Boloco.”

Los Angeles Times | Hot New Hollywood Nightclub : Sam Nazarian's Mi-6

OnSite Team — Fri, 18 Sep 2009 07:46:07 +0000

September 18, 2009

Sam Nazarian’s Mi-6

The club maestro is back on the L.A. scene with Mi-6 in West

Hollywood, a sleek space with visions of James Bond.

By Scott T. Sterling

Just call it the Sam Nazarian experience.

After three years cultivating hotels and restaurants as the head of famed hospitality firm SBE, Nazarian has returned to the Los Angeles club scene this week with his new West Hollywood club Mi-6 — named after the British Secret Intelligence Service (a.k.a. MI6) and meant to conjure the sleek luxury of the James Bond movies.

“It’s good to be back,” Nazarian laughs inside of a black custom Mercedes-Benz Sprinter minibus, which SBE uses to shuttle VIPs from the SLS Hotel of Beverly Hills to any of his growing stable of area properties, which includes clubs Area and Hyde, as well as the restaurants Katsuya and XVI, both of which are partnerships with designer Philippe Starck.

The scene that trailed Nazarian from the club to the minibus was worthy of HBO’s “Entourage”: A phalanx of publicists, handlers, a videographer and even a waitress with a tray of sushi paraded through the crowd straining to get inside. Many called out Nazarian’s name, and he stopped to greet some guests before hopping inside for the interview.

“It was very important for me to focus on the SLS and Katsuya, because I wanted them to be world-class establishments,” he says. “So I stepped away from night life for three years. Now I’m ready to take the L.A. club scene to yet another level of sophistication.”

It’s hard to see anyone other than Nazarian pulling off something as ambitious as Mi-6. It’s in the old Foxtail space, wedged in between two institutions: music venue the Troubadour and restaurant/lounge Dan Tana’s. The klieg light-saturated red carpet crush of willowy models, discreet celebrities and swarming paparazzi is exceedingly conspicuous on this generally low-key corner of Santa Monica Boulevard.

“We’ve developed a really good relationship with the city of West Hollywood, which is the only way we were able to pull this off,” says Bill Tremper, SBE’s vice president of sales and marketing. “They already know us through our partnership with the Abbey Food & Bar right down the street.”

“I realize it’s especially competitive in L.A. night life right now, with fantastic new clubs like Playhouse, H.wood and MyHouse,” Nazarian says. “But I believe I have something special to offer the scene. I’m working with the company MomentFactory, who produce unique multimedia environments. They did the visuals for the Nine Inch Nails tour last year, which was outstanding. What they did inside Mi-6 is really impressive.”

The fruits of MomentFactory’s labor aren’t easy to see: massive (and hidden) mirrors that double as video screens and switch between the two at intervals. The dark, three-story club was so packed that just moving around was akin to a high-fashion rugby match with the entire roster of actors on the CW network. DJs pumped a mix of Top 40 hits while tattooed waitresses brought huge bottles of alcohol festooned with sparklers to tables on the first floor. The lighting system has the ability to emit a wide array of color schemes at the push of a button.

“Competition is always a good thing. It forces innovation, better pricing and more amenities,” says James Sinclair, former club owner and now the president of night life specialists OnSite Consulting, commenting on Nazarian’s new club. “In the end, it benefits the consumer.”

Where Nazarian has a real advantage, says Sinclair, is his solid portfolio.

“Unlike someone whose entire life is invested in one location,” Sinclair explains, “Nazarian has enough profitable ventures that he can close a place for a few months while he decides what to do with it. His is a hugely mitigated risk.”

Back in the minibus, Nazarian rattled off a slew of upcoming projects, including renovating La Cienega club Halo, SBE’s recent acquisition of stalwart Malibu restaurant Gladstone’s and the impending launch of a club Hyde space inside Staples Center.

“It’s all about creating world-class establishments,” Nazarian reiterates before wading through the crowd outside of Mi-6. “I brought a level of sophistication to the Sunset Strip with XIV, which people said couldn’t be done. The SLS Hotel won best achievement in design from Virtuoso magazine, putting us next to establishments in China, Dubai and Italy. Being responsible for helping make Los Angeles part of that conversation is extremely gratifying.”

Mi-6

Where: 9077 Santa Monica Blvd., West Hollywood

When: 9 p.m. to 2 a.m. Tuesdays and Saturdays

Price: Varies according to night; call ahead

Contact: (323) 655-8000, www.sbe.com

Metro News | Top Chefs Show Off City's Feminine Side

OnSite Team — Mon, 17 Aug 2009 19:18:12 +0000

INTERNATIONAL

PHILADELPHIA. Two of the 17 chefs on the sixth season of Bravo’s “Top Chef” hail from Philadelphia. Even more surprisingly — or, perhaps not — both are women.

Jennifer Carroll, the chef de cuisine at Eric Ripert’s 10 Arts inside the Ritz-Carlton, and Jennifer Zavala, who left Northern Liberties’ El Camino Real this month and is now working at Xochitl, will battle it out on the popular reality show.

Meanwhile, Alison Barshak (Alison at Bluebell), Luciana Spurio (Le Virtu) and Marcie Turney (Lolita and Bindi) are among the other female chefs putting great dishes together around the region. Philadelphia, it seems, hosts a growing hotbed of respected female chefs.

“Most of the time, delivery people still go right to one of the male line chefs, assuming that he’s the head chef,” says Sheri Waide, the chef at Southwark, in-between prepping for a dinner shift. “So I think anything in the media, like ‘Top Chef,’ helps make people more aware of women in these jobs.”

Running the kitchen of a fine dining establishment has it’s own unique challenges for women. Many see it as one of the firmest glass ceilings out there.

“A female executive chef is probably 10 times stronger than any male based on what she has probably had to endure to get to this point,” says James Sinclair, the Los Angeles-based author of “How to Save Your Restaurant in Ten Days.” “Young women who see female contestants on ‘Top Chef’ in fierce kitchen environments, which are traditionally a bastion of testosterone, have new role models.”

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Nationwide Restaurant Consultant » Press

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﻿Eating lean

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cedelhart@bakersfield.com | Wednesday, Apr 28 2010 12:29 PM