Some practical tips on assessing your restaurant’s performance

Restaurant revenues are based on science, numbers and economic modeling. Achieving the maximum yield per square foot and perfecting labor efficiencies per minute takes time and attention as opposed to a mere visual glimpse of a restaurant.

There is a key performance indicator for every restaurant function but sometimes it can be difficult for a new operator to extract, digest and indeed navigate the data and understand the results. From years of restaurant turnarounds, we have our own list of layman’s tips from the trenches not based on science or theory but based on experience and actions. These are practical pieces of advice that we share with our clients based on our longstanding experience of the dynamics of the sector. Items we pick up by walking around venues day in day out which you can apply to your venue too.

(1)    BUSINESS MODEL

The financial statements are an instant insight into a business model but at times, they do not tell us everything we need to know. Many restaurants with cash flow issues are forced to juggle bills, delay terms and are always ‘waiting for the weekend’ to catch up and cover payroll or rent. Perhaps a lease signed five years ago was perfect at the time but with a 3% CPI increase annually, the value proposition no longer exists during these challenging times.

We use a very simple metric to determine a concept’s viability either pre-opening or during operations. Can you pay each of your critical, large expenses each month based on one weekend of sales? If you can cover rent in one weekend then you are not forced into saving for rent throughout the month or trying to build a reserve.This also means that whatever occurs during the course of the month, you can be certain your rental obligations can be met as opposed to the worry towards the end of every month. Similarly, if you can cover your net payroll in one weekend you are not floating the checks or using the week day cash flow normally reserved for operational costs. If you cannot pay either of these in a single (but different) weekend then we believe your business model is flawed and needs to be tweaked.

There are obviously variations for different models but the weekend concept is a good rule of thumb.

Restaurants generally cannot afford to pay more than 5% to 8% of gross sales in rent and still have net operating income left over to provide a return on investment in the business.

I have observed over the years, as a restaurant owner, consultant, and appraiser that full-service restaurants grossing less than $1,000,000 to $1,500,000 per year in revenue have a difficult time operating profitably after paying rent and all expenses incurred in the operation of the business. High-grossing restaurants can show a profit of 10% to 20%, after occupancy costs, because the cost of labor decreases as a percentage of sales as the existing staff becomes more productive with each incremental customer served over the break-even point. When a restaurant operates with a full staff at a high sales volume, labor becomes a fixed cost, although it is usually considered a variable cost because management can control it to some degree by scheduling dining room and kitchen staff to meet the expected demand, i.e., more employees are scheduled for a Friday and Saturday night than on a Monday night when fewer covers are expected to be served.

(2)    LABOR MODEL

We recognize that the perfect schedule is hard to anticipate however for an owner/operator who works in the restaurant, there are a few ways to measure whether your staffing rotation is reasonable. In some instances, an additional server could bring greater revenues whilst other times the restaurant could run just as well with one less employee. How do you know when this is the case without ploughing through the data?

You know you are overstaffed when you walk through your restaurant and don’t have anything to pick up, don’t notice anything that needs doing nor is there any customer or function to attend to. Whether it be seating a group of people, grabbing a spoon for a customer or picking up a napkin on the floor, if there is nothing to do, what are the staff doing? Do you need them all there at that time?

Despite toilets being one the most important reflections of your venue, if every time you walk in the restaurant you do not have a piece of paper to pick up or a sink to wipe down you are likely overstaffed, or truly do have a perfect customer! One can clean the bathrooms every fifteen minutes but they are still minutes away from being turned upside down.

You know you are understaffed when you walk through your restaurant with your head down because you are conscious that the moment you make eye contact with an employee or customer, they will need you for something. You are understaffed when you look through your restaurant and see tables constantly looking up for a waiter or drinks empty on a majority of tables. Usually I look for an indicator such as an empty soda glass because in many situations, the venue’s staff should have replaced it before it was empty.

“Restaurant food & beverage purchases plus labor expenses (wages plus employer paid taxes and benefits) should account for 62 to 68 cents of every dollar in restaurant sales. The combined total of these two cost categories, referred to as your restaurant’s “Prime Cost”, are where the battle for restaurant profitability is truly waged.”

(3)    CLEANING

You can walk through the restaurant, run your hands under the bar and use a flashlight to look behind a fridge and above a door ledge but the one indication that your staff are wiping not cleaning are dirty floor drains. It’s that simple: Clean floor drains usually mean a clean restaurant.

(4)    SERVER SALES AND EFFECTIVENESS

This is very much a laymans method and does require the availability of some data but you can pull what you need from the terminal of your POS rather than digging into the back of house spreadsheets. Print a quick PMIX or item sales report for the night to see how many entrees you sold? 100? How many appetizers, desserts and or cocktails did you sell?

Look at the ratios the information provides you with and use this easy to access information in a number of different ways. If you sold 100 entrees and only 15 desserts then you have a number of questions you need to be asking. Firstly, are your servers offering customers desserts? Secondly, are some servers upselling significantly better than others? Thirdly, if the numbers suggest that some servers are not providing value add and encouraging customers to try desserts, can they be retrained, are they merely lacking in customer facing skills which can be rectified or are they not right for their job? Also, are some desserts of significantly higher margin than others? If so, are those desserts being suggested to customers?

These sorts of statistics require limited work by management but are exceptionally telling when paid attention to. Customer facing staff need to be continuously monitored as they are critical to the success of the business. Equally, don’t forget other customer facing staff such as the host or hostess. Ask him or her twenty questions and see what answers you get. Are they confident under pressure whilst maintaining excellent customer service policies?

(5)    CUSTOMER SERVICE

Go on YELP. I understand and have been subjected to terrible Yelpers who claim our cucumber martinis are overpriced when we do not even sell them. However the fluff is normally just anger about something that probably did happen. Somewhere in the Yelp commentary are some truths – some truths that prompted a customer or two to write the review which contained some criticism. A manager’s excuses don’t change the fact that people read Yelp and make decisions based on what they read and what they hear, whether it is from friends, acquaintances or a website.

Learn from the comments you receive, where appropriate respond to them and certainly, attempt to rectify them. It is often said that it takes a lifetime to build a reputation and a moment to lose it. These are wise words so make sure people are saying good things about your venue and if they are not, assess why not. Arguably they will have good reason to have complained.

(6) PAR / YEILD INVENTORY

So many operators read about the value of restaurant inventory and how it can spot stealing, measure cost of goods and is the backbone to profit. In reality, this once a week or once a month process serves only the accountant and perhaps provides a macro glimpse of your restaurant. Par/Yield Inventory is based on an acceptable loss percentage which is far more valuable to your bottom line and much easier to implement, act on and improve.

Take your top 10 best selling individual items and track these daily against sales. If you start the day with 50 beers and end the day with 20 then you sold 30, if you sold less than 30 you have a problem – there is no acceptable reason for a missing beer. This same technique can be used for your major proteins and other items which do not require selling pieces of but rather are purchased and sold as one unit. These items would have a 0% acceptable loss because you either sold the beer or you didn’t, there is no margin of error.

It is often said that 10% of your restaurant inventory is 90% which is why these ticket items are so critical to track daily.

You can take this one step further and on a weekly basis have inventory of items that you allocate an acceptable loss to. A good example may be French Fries or Ground Burger which may have a slight variation in portion size and therefore a 10% acceptable loss on the purchased vs sold volume.

This can get even more technical as you have monthly items such as bar napkins of which you know how many cocktails you sell and you may have a running average of your purchasings per month therefore any major variation of your napkin use to liquor sales requires further analysis.

A chef steals a case of steaks on a given night and you can immediately see a problem, check your video cameras or investigate. The key to this process is providing you information that you can react to immediately. I track, judge and reward staff based on meeting or beating my acceptable loss ratios and I have my daily par/yield emailed nightly in the closing reports.

These are all quick and immediate ways to evaluate monitor and effectuate change within your restaurant without depending on data from an accountant or months worth of POS data. This is certainly not the “how to run a restaurant model” but rather a quick glimpse into items you can be looking at right now. Profit is made from customer to customer, but losses occur by the second if not monitored continuously.

Do you have a simple, easy and standard tip to run a better restaurant? Please leave a comment.

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

• Bobby Flay’s Tips for Restaurant Owners
• How to Succeed As a Top Chef
• Opening a Restaurant? Seven Tough Decisions
• 10 Things that Changed the Way We Eat

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.

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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.

© Copyright The Sacramento Bee. All rights reserved.

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

Onsite Consulting’s restaurant consulting division address areas of technology owners and managers should be looking at as a direct way to drive sales

In a restaurant market full of competition, what separates you from your neighbor? Service, ambiance, price, parking and décor can all be strong factors in swaying a potential customer’s decision. However one fact always seems to get lost somewhere and that is the ability for your customers to get in contact with you either to make a reservation, discuss special needs or even book their company holiday party. As restaurant consultants, we know that restaurant customer service is the critical and often overlooked as an area than can directly drive improved business when given appropriate attention.

People like good food at reasonable prices but every operator and owner knows that. We therefore advise clients to be one step ahead and engage with customers the moment they make contact in a manner that separates them from their peers.

When someone is looking for a restaurant and has specific needs (group of 12 for example) they start their day at home or the office visiting a few websites of restaurants they are interested in and attempt to make contact. Unlike the rest of the world, the dinner restaurant staff are not early risers and very often the potential customer is met with an answering phone message or an email to an inbox that resembles a black hole.

One of the first recommendations we make to our restaurant customers is to make yourselves more accessible via the web and website. Provide every opportunity for your venue to capture a potential client and most importantly, respond first. On the reservations page, contact page and events page there should be a quick and easy form for your potential customer to fill out spelling out their exact needs.

Now you have a HOT LEAD – someone that has come to you and expressed genuine interest and simply wants clarification on whether you can meet their needs. They have chosen to give you their name, phone and email address. You may or may not be the only person they have attempted to contact so the decision of where they visit now mainly comes down to whether you respond first – coherently and professionally. Of course you need to meet their requirements but the promise of good service and a restaurant that wants your business is a very compelling reason to chose your site. Grab that lead before anyone else and as well as focusing on inventory levels or special promotions that month, you have another very tangible opportunity to increase restaurant traffic and the health of your profit and loss.

Aside from the value of the potential sale you now have what is considered ‘promotions gold’; a live email address of a potential customer to use in your email marketing or other promotions. (It would be wise to ensure your privacy policy on the website expresses your intention to take any users form submission data for opt-in marketing programs).

In this economic climate you may not have an office manager or early office or restaurant staff who can go through and respond to these communications, nor may that person be the most qualified to answer your potential customers questions. It is critical that the person your potential customers are talking to can answer questions correctly and in the most beneficial manner for your business. Your management cannot work 24/7 and so about two years ago, after implementing this web form policy across our clients, we ran a series of tests by handing out a blackberry to the managers of the location.

When you hand a blackberry to your manager, express that you are taking care of their phone bill (if used reasonably, of course) but equally express that it comes with the added responsibility of responding to new business queries. The added responsibility, the perk of having no personal phone bill and, we would hope, the desire to see the venue successful and busy, should encourage that manager to respond to all email queries that come in promptly and professionally. If not, you need to question your choice of manager.

In owning your restaurant General Manager’s phone and therefore phone number, in the event of he or she leaving, the number, emails and communications role over to another member of staff in your organization. That handset and e-information belongs to the business which is another way in which providing this technology safeguards your business. Ownership of your customers is hot property and with ever increasing reliance on email marketing and promotions, the restaurant owner must under all circumstances not only own but also control any device used to interact with your customers.

We use hosted blackberry enterprise servers for our clients which synchronizes the users blackberry, email, contacts, calendar and sms messages to a server for backup and/or review. $14.99 per month is a more than reasonable price to secure your customers data and we encourage all our clients to understand the value of technology to increase productivity, secure data and therefore positively affect their whole business.

When a query comes in for a restaurant using this technology, a notional ticker starts with 30 minutes on the clock to respond, regardless of the requirement. “Table for 2 next Wednesday by the fireplace…” Whatever the message, customers appreciate a personalized email reply confirming their reservation and now more importantly a direct relationship has been created between the restaurant and potentially  the manager who will be onsite that evening. You have impressed and engaged that potential client before they have even booked.

We have all heard and seen the restaurants who are always too busy, unavailable and have the illusion of grandeur they are trying so hard to maintain. If you are so busy 24/7 then this level of bespoke response is not for you; if you are $$$$ dining you may want to implement stronger controls on communications and if you are a quick serve venue, this obviously does not apply. However for owner-operated mid level restaurants who are delighted to engage their potential customers, this is definitely for you.

There are times when the manager is unavailable and in those instances, there must be alternative mechanisms and people in place ready to respond. All responses should be sent with a set “template”, a style that leaves no room for errors – you must implement a top down policy regarding the manner in which your managers may speak to guests. We generally suggest an owner has access to the receiving and sending account in order to review communications in the early days. For our new clients, I ask to be cc:ed on all email traffic and that usually ensures rapid response and a little more thought on the manager’s part!

After running this test for only a few short weeks the results came back extremely positively. Not only did each restaurant report seeing a substantial increase in their email traffic from visitors coming to their website but also an increase of conversions from visitors to actual diners. This topic of conversions is the holy grail for restaurant e-marketing to be discussed at a later date.

The recipient of the email does not know whether the responder is sitting on a ride in Disneyland or behind a desk at the restaurant. To be frank, they probably do not care and whilst it is always optimal to be at your venue or office, it is even more important that this communication receives a response so at times, one has to be creative. The enquirer has a personal email and a name associated with the venue responding. Should anything crop up, need to be added or changed it is one simple email to the manager who confirmed the reservation or manager on duty which ensures the appropriate level of attention is bestowed upon the customer. This level of bespoke attention provides rewards.

“Running late – can you push the reservation 30mins?” is a common email and we are delighted to respond. This is not an opportunity for slang such as “np.” (no problem) and the veil of professionalism should never be removed, whether or not this is a repeat customer known to the restaurant staff.  In addition, we are alerted to special occasions and this contact provides a reason to make contact with the arriving guest, or for the manager to subsequently introduce him or herself to the table of guests. We delight in meeting new customers and install this at all staff levels at venues where we provide any element of food and beverage consultancy.

Placing the web form on the events page and keeping it very simple suddenly has traffic and emails daily requesting information on groups, birthdays, corporate parties and fun promotions. This is a hidden bonus for the venue.  As a restaurant owner you should also be tracking the number of visitors to your website, where they come from and what they search for – now you can track conversions into reservations.

Some restaurant owners have gone as far as checking in with the reservations the following day to ensure that their experience was perfect – a two line personal email is very different to automated review sites or other impersonal mechanisms. It creates a bond that makes people more likely to respond. We consult for a wide range of venues from casinos and hotels to restaurants and nightclubs. We do therefore recognize that this is time consuming. In restaurants where the check value is not reasonably high or in a venue which has high throughput of customers, this may not be best use of a manager’s time but if senior staff have capacity and the venue owner has an appetite for direct feedback.

What separates you from your competition is how delightfully easy it is to contact and do business with you and how attractive you make your restaurant and staff before a customer has even walked through the door. Technology facilitates this so we encourage clients to embrace it and use it.

The National Purchasing Program (NPP) is designed for our nationwide restaurant clients of all sizes, enabling them to join a network and benefit from the purchasing power of each other. Providing prices lower than one sole operator can negotiate whether you are a single unit location or a growing franchise. The combination of the NPP multi million dollar purchasing and the constant and aggressive negotiating on behalf of the whole group benefit each and every member.

By being part of the program, your purchasings are automatically provided to NPP by your vendors electronically. This allows the program to maintain an active role in pricing and combo-purchasing deals to make the changes in the back of house, without impacting your purchasing managers.

Negotiate like the largest franchises and purchase like Costco WITHOUT the fulfillment house and using many of the same vendors.

http://www.nppsavings.com/

West Hollywood reaches out to gay and lesbian tourists

The city is trying to shore up revenues by wooing a ‘very lucrative segment.’

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.”

WEST HOLLYWOOD UNVEILS ECONOMIC HARDSHIP PROGRAM
Program targets City’s Retail Stores, Restaurants & Hotels

In an attempt to boost local business during the economic downturn, the City of West Hollywood has partnered with the West Hollywood Chamber of Commerce to offer a special economic hardship package to local retailers, restaurants, hotels and other businesses.

The package was created by an ad-hoc committee comprised of businesses that assisted in the development of specific measures the city council should consider to sustain retail activity in tough economic times. The committee worked with the city, the West Hollywood Chamber, the Sunset Strip Business Association, Avenues of Art and Design, and the West Hollywood Marketing and Visitors Bureau to develop the newly released package.

While some elements of the package are still under review by the city council, including an increase to special events allowed per business from four per year to 12 per year, some of the package’s components have already been implemented. As of April, for instance, DJ’s are allowed to function as providers of ambient music in restaurants, and promoters are allowed to operate under a single permit, rather than a permit for each location in which they work. A reduction in fees for certain special event permits is also in place.

West Hollywood Mayor Abbe Land said the package is a great tool for businesses suffering economic hardship.

“While we are fortunate that our city budget is strong, we recognized that some of our businesses were struggling,” Land said. ” It is important to us as a city to have a vibrant, diverse and healthy business community, and so in addition to the Economic Hardship Package, we also continue to encourage our local residents and businesses to support each other by shopping West Hollywood and spending their dollars here.”

Sharon Sandow, president and CEO of the West Hollywood Chamber of Commerce, was a member of the committee that made the proposals outlined in the package. She said the city has been expeditious in getting the package enacted.

“The city wants to help business along, which I think is really commendable and really necessary,” Sandow said. “We are very grateful for the quick action the city has taken on this. They are trying to give businesses the most assistance possible in a short amount of time.”

James Sinclair, president of Onsite Consulting, operators of O-Bar in West Hollywood, said the economic hardship package is not only a financial measure, but one that will raise morale amongst business owners.

“Right now, restaurants have an increase in raw material costs and high minimum wage requirements,” Sinclair said. “With the sales tax increase, we can’t raise our prices right now if we want to get customers in the door. West Hollywood stepped up of their own accord to protect its own community. I have restaurants nationwide and I have never seen a city so proactive in protecting its businesses.”

Many of the items pending council review will be heard at the July 13 and July 20 West Hollywood City Council meetings. For more information, visit www.weho.org.

OnSite Consulting is a nationwide hospitality management & consulting company www.onsiteconsult.com