This issue we have another guest columnist, Bill Barker. Bill is a Commercial Segment Marketing Specialist with Gordon Food Service. He has excellent insight into the industry with tons of operations experience as well as 10+ years working for Gordon Food Service. Bill specializes in partnering with operators looking at their business model, engineering their menus and helping them establish best practices to optimize their efficiency and profitability.
If we could only count on Chef Ramsey to enter our facilities and save us from our own nightmares we would all be able to sleep a little better at night. As nice as that would be it probably won’t happen any time soon.
I promised myself I would not join the ranks of many gloom and doom stories about how bad the economy is and the devastation most of our Independent Food Service Operators are facing. I chose to offer some insight on issues and solutions that are real and of concern of the customers I consult with.
In this issue we will highlight the following topics:
Building sales in a slow economy
Quality versus price
“HOW DO WE BUILD SALES IN A SLOW ECONOMY?”
By far this has to be the number one question presented to me on almost a daily basis. The answer is not easy and requires a lot of thought and creativity. The easiest way I found to answer this is by watching what the national chains are doing and then adapting it to your style and brand. Remember these chains teams of people that research how to take market share (from you!)
I am sure some of those listed here will be all too familiar with you however; there is commonality here in what they are doing to gain that market share.
Mimi’s Café like several others have gone down the avenue of smaller portions with lower prices. They have spent very little of their marketing budget getting the word out through table tents, direct mailings and their web site.
Applebee’s has been blanketing the airwaves with their 2 meals for $20.00. The consumer gets to choose one sharable appetizer and choice of two entrees from a list of nine options.
Logan’s Roadhouse offers two meals for $12.99, on a recent visit to a Logan’s on a Tuesday night at 7:00 p.m. they were on a 1.5 hour.
T.G.I. Friday’s has hired Guy Fierri to promote their version of the “Right Price, Right Portion” concept. Here again they are offering some of their popular entrees in smaller portions at a discounted price and at the same time not sacrificing food cost. According to Erik Blauberg, Chief Executive EKB Restaurant Consulting “The most popular menus right now are those $20.00 three course menus. They’re important because you can make money on them and they raise customer counts. These margins may not be where you would like them however; I would rather make 7 or 8 dollars on a menu item than nothing at all.”
Don’t think these casual restaurants are the only operators offering these specials as I ran across an advertisement for McCormick & Schmick’s offering a $29.99 steak and shrimp special. Can you imagine McCormick & Schmicks offering such a deal!
Remember you don’t have to be like the national chains; you can tweak their ideas and make them your own!
QUALITY VS. PRICE
One thing I hope you have noticed is that I never suggest cutting quality to make up for food cost and margins. An example of this would be if you are known for a quality steak house you may consider lower the grade of your steak. As Technomic’s Darren Tristano notes puts it “Consumers want to feel that their dinner experience is a good value regardless of the price point.” Changing your product quality is probably not the best avenue to go down.
There are several ways to control your food costs without changing your quality.
WASTE TALLIES: these sheets need to be posted in the kitchen area and need to be completed for any reason there is food being thrown away. By having this information documented you can react quicker to reducing the amounts being prepped or reevaluate storage procedures. These sheets also need to be tallied each month to determine what level of food cost percent was affected.
LIMITED TIME OFFERS: This is by far the easiest way to drive food cost down and drive profits up. Take advantage of seasonal pricing opportunities or hot pricing specials from your distributors. The cost of producing limited time offerings is far cheaper than redesigning your everyday menus.
STANDARIZED RECIPES: Be sure to have all your recipes documented and make sure the kitchen staff is following them as they are written to ensure no over prepping. This is also important in consistency from day to day. This is especially important in making scratch soups and sauces as this is always one of the areas that, inspires random creativity.
PRODUCT EVALUATIONS: Check in regularly with your GFS Customer Development Specialist to determine what like products are available without cutting quality. GFS has many private label products that meet or exceed the National brands and Government specifications.
EVALUATE PORTION SIZES: Most consumers are willing to sacrifice the larger portions (which they usually take home) for a lower price offering. If you see that your guests are taking almost as much home with them as they eat this may be the time for considering “Right portion, Right price”.
DESSERT MENU OFFERINGS: In economic times such as these many consumers are passing on dessert as a way to keep their dining budgets in line (not to mention all the diets that will be started after the new year). Smaller dessert offerings are a way to offer lower price desserts without giving up your profits. It also provides the perception that if it is small it can’t be that bad for my diet. GFS has the tools and resources to help you build your new dessert menus.
Tuesday, December 23, 2008
Monday, December 15, 2008
Return Engagements
“The past is a guidepost, not a hitching post.” L. Thomas Holdcroft American Author.
Has anyone noticed a very popular concept that retailers are using this holiday season to help draw people into their establishments in January and February? I have three examples in my wallet right now, and I can’t believe that I haven’t passed this along sooner! Sometimes the answers lie right in front of us and it takes a while for us to recognize that it has been there all the time.
We all know that the key to success in our industry is repeat customers. In today’s economy it is even more important for us to seize the opportunities that lie before us and find a way to draw these same customers back again. How are you doing that? Are you improving your food quality? Your service profile? Or are you lowering your prices? Are you running loss leaders? All of these can be effective measures to draw customers back to your restaurant, but I think I came across a couple that are even better.
The first one I want to talk about is the one that I discovered while shopping for my daughters at American Eagle this weekend. It is kinda sneaky but it got me building my ticket size so that I could take advantage of it. I also want to talk about another variation of this same concept that I think adds some elements that will really speak to your customers.
Right now American Eagle is running the “for every $50 you spend you can get a $10 gift card for after January 1” promotion. This is effective because it gets customers (and me) finding that one more item that will propel them over that $50 increment so that they can take advantage of the next $10 gift card. It builds their check size and all but insures that I (or my kids) will be back in January to cash in my gift cards. Not a bad way to lock out the competition. American Eagle even imposed a minimum purchase in January for that gift card to be valid. I have to spend $50 more in order for that gift card(s) to be effective.
Buona Beef is running a similar promotion right now. They are offering a $5 gift certificate valid between January and March for every $25 gift card you purchase today. They are hoping to leverage that $5 gift certificate into a visit by you and a friend or two or three. Besides, who buys just $5 anywhere they go? Not a bad concept – they get cash now and give you a piece of paper that 25% or so of us will lose anyways. What a great way to convert today’s customers into customers in January and February, something we would all like to do.
My favorite variation of this concept is the “Secret Envelope” version. I think this one is a home run because it really does create good will and a talking point for word of mouth advertising when your customers leave. To implement the Secret Envelop tactic, all you need to do is create a wide range of prizes ranging from something as trivial as a cup of coffee all the way up to something as outrageous as a $500 gift card and stuff them into different envelopes. Here is the kicker, your customers can’t open the envelopes themselves (if they do, they forfeit the prize). They have to bring the envelopes back into the restaurant (during the designated time period [January – March]) to have a staff member open it to discover what their prize will be. What a great way to create a buzz and bring back that energy and enthusiasm to your customers.
Has anyone noticed a very popular concept that retailers are using this holiday season to help draw people into their establishments in January and February? I have three examples in my wallet right now, and I can’t believe that I haven’t passed this along sooner! Sometimes the answers lie right in front of us and it takes a while for us to recognize that it has been there all the time.
We all know that the key to success in our industry is repeat customers. In today’s economy it is even more important for us to seize the opportunities that lie before us and find a way to draw these same customers back again. How are you doing that? Are you improving your food quality? Your service profile? Or are you lowering your prices? Are you running loss leaders? All of these can be effective measures to draw customers back to your restaurant, but I think I came across a couple that are even better.
The first one I want to talk about is the one that I discovered while shopping for my daughters at American Eagle this weekend. It is kinda sneaky but it got me building my ticket size so that I could take advantage of it. I also want to talk about another variation of this same concept that I think adds some elements that will really speak to your customers.
Right now American Eagle is running the “for every $50 you spend you can get a $10 gift card for after January 1” promotion. This is effective because it gets customers (and me) finding that one more item that will propel them over that $50 increment so that they can take advantage of the next $10 gift card. It builds their check size and all but insures that I (or my kids) will be back in January to cash in my gift cards. Not a bad way to lock out the competition. American Eagle even imposed a minimum purchase in January for that gift card to be valid. I have to spend $50 more in order for that gift card(s) to be effective.
Buona Beef is running a similar promotion right now. They are offering a $5 gift certificate valid between January and March for every $25 gift card you purchase today. They are hoping to leverage that $5 gift certificate into a visit by you and a friend or two or three. Besides, who buys just $5 anywhere they go? Not a bad concept – they get cash now and give you a piece of paper that 25% or so of us will lose anyways. What a great way to convert today’s customers into customers in January and February, something we would all like to do.
My favorite variation of this concept is the “Secret Envelope” version. I think this one is a home run because it really does create good will and a talking point for word of mouth advertising when your customers leave. To implement the Secret Envelop tactic, all you need to do is create a wide range of prizes ranging from something as trivial as a cup of coffee all the way up to something as outrageous as a $500 gift card and stuff them into different envelopes. Here is the kicker, your customers can’t open the envelopes themselves (if they do, they forfeit the prize). They have to bring the envelopes back into the restaurant (during the designated time period [January – March]) to have a staff member open it to discover what their prize will be. What a great way to create a buzz and bring back that energy and enthusiasm to your customers.
Wednesday, December 3, 2008
Know Means No
This week I am excited to announce that I have a guest writer, Ken Wasco. Ken is a member of the National Speakers Association and the GFS marketing team who's gained a wide reputation in the food service industry for presenting timely seminars and workshops on obtaining higher levels of personal effectiveness through an emphasis on communication skills. As a highly regarded and entertaining presenter Ken has conducted thousands of sessions and written many articles on accomplishing results through people.
When it comes to change, hearing “no” is a great positive start!!
Got anyone on your staff who gives you a hard time whenever you ask them to do something new? Welcome to the club - we all know people resist change. Or better said – fear change – when fear is removed positive change happens – how? Read on!
“Positive Change” is not a contradiction in terms! It’s doable. All it takes to achieve it are some basic skills on your part. How basic? Hey if you can listen, write and talk - you can do it!
Let’s start with the writing part. Take out a note pad and write down the names of the people you work with that you’d most like to improve the “change attitude” of – one name per line with three columns. Now let’s go to “people school” on why they act the way they do!
Understanding the people side of management involves harnessing the dynamics of “human nature” – those sides of our personality that we all hold in common. Smart leaders improve their business not through forcing change but by focusing on their people first - through using the power of human nature in positive ways to help their people be the best that they can be. What results is a better operation too. Here’s three parts of that human nature that I bet you’ve seen in action.
Human nature says - “people want to be in the know”
“people want to be better off tomorrow then they are today”
“to one degree or another all of us resist change”
The “in the know” stuff, that’s why we watch the news, gossip, and buy tabloids. The “better off” stuff – watch out here because there are all types of ways that people define “better off” – more friends, more respect, more money are just a few – to motivate anyone you need to know what they want more of and don’t assume anything it’s different for everyone. If you know an important goal of each individual – write it along side their name – if you don’t – find out.
Now think about each person on the list and what kind of comments they say when you ask them to do something new – write each person’s favorite “excuse” after their name.
Here are a few of my favorites… “That’s not the way we do things around here.” If ain’t broke why are you fixin’ it?” “That’s not my job.” “We tried that before and it didn’t work.” ‘That will never work.” “Why is it always me and not somebody else who has to do this stuff?”
All these excuses are really hiding a very little word that they won’t say directly because they know you hate hearing it – that word only has 2 letters. Ready for a “people shock”? I think those who complain the loudest when you ask them to do something new are actually the best assets you have toward accomplishing the change you want. Why? Because their not going behind your back and bellyaching, they are telling you what they don’t like to your face – they’re communicating with you even if you don’t like what they’re saying. With people we can always deal with what we know and as long as they are talking then you know how they feel.
As manager’s we hate hearing “no” because we all think in simple positives and negatives, debits and credits, good and bad – but people who resist change really aren’t disguising the word “NO” –they are disguising the word that sounds just like “NO” yet it’s spelled differently “KNOW”. People put their feet in concrete when they fear what “might” happen. They don’t know why they should do this - how it will make their lives better – in short, what’s in it for them? Your job – as a leader of people – is to take the time, however much time it takes, to make sure each of your people understand the positives that will result from new activity.
Now let’s really give you an option for success with your team. However before I do that I just have to ask you one question, how often do you hold team meetings? Let me tell you a little secret – that question is one I ask foodservice professionals all the time. Guess what I hear? “Meetings, I hold them as little as possible” “Only when I have to” “I never have anything new to talk about” “We used to hold them but were too busy now” and on and on and on…. Yet what amazes me is that the people who are telling me that are the very ones who asked me to come in and give them a few suggestions. Well here is one for you right now.
THERE IS AN EXACT CORELATION BETWEEN HOW SUCCESSFUL YOUR BUSISNESS IS AND HOW WELL TRAINED YOUR TEAM IS.
Trust me on this one – the organizations that leap into your brain when “great guest service” comes to mind are the very ones who hold employee meetings EVERYDAY. Yup, you heard me – E V E R Y D A Y ! And oh by the way, those meetings never last longer then 5 minutes and never mention anything negative. What they talk about is the one person who they noticed doing the “best” at something today. People love attention – they love to be singled out in front of their peers – and those who aren’t will move heaven and earth to get you to mention them next time. How will they do that? They learn what gets your positive attention every time you mention how someone got your attention by doing their job “extra special” today. Once they KNOW what works – they’ll do it for themselves – not because you ordered them to, but because they want to.
When it comes to change, replace hearing “no” when your team speaks with thinking “know”, it can be the best comment you’ll ever hear!
Got anyone on your staff who gives you a hard time whenever you ask them to do something new? Welcome to the club - we all know people resist change. Or better said – fear change – when fear is removed positive change happens – how? Read on!
“Positive Change” is not a contradiction in terms! It’s doable. All it takes to achieve it are some basic skills on your part. How basic? Hey if you can listen, write and talk - you can do it!
Let’s start with the writing part. Take out a note pad and write down the names of the people you work with that you’d most like to improve the “change attitude” of – one name per line with three columns. Now let’s go to “people school” on why they act the way they do!
Understanding the people side of management involves harnessing the dynamics of “human nature” – those sides of our personality that we all hold in common. Smart leaders improve their business not through forcing change but by focusing on their people first - through using the power of human nature in positive ways to help their people be the best that they can be. What results is a better operation too. Here’s three parts of that human nature that I bet you’ve seen in action.
Human nature says - “people want to be in the know”
“people want to be better off tomorrow then they are today”
“to one degree or another all of us resist change”
The “in the know” stuff, that’s why we watch the news, gossip, and buy tabloids. The “better off” stuff – watch out here because there are all types of ways that people define “better off” – more friends, more respect, more money are just a few – to motivate anyone you need to know what they want more of and don’t assume anything it’s different for everyone. If you know an important goal of each individual – write it along side their name – if you don’t – find out.
Now think about each person on the list and what kind of comments they say when you ask them to do something new – write each person’s favorite “excuse” after their name.
Here are a few of my favorites… “That’s not the way we do things around here.” If ain’t broke why are you fixin’ it?” “That’s not my job.” “We tried that before and it didn’t work.” ‘That will never work.” “Why is it always me and not somebody else who has to do this stuff?”
All these excuses are really hiding a very little word that they won’t say directly because they know you hate hearing it – that word only has 2 letters. Ready for a “people shock”? I think those who complain the loudest when you ask them to do something new are actually the best assets you have toward accomplishing the change you want. Why? Because their not going behind your back and bellyaching, they are telling you what they don’t like to your face – they’re communicating with you even if you don’t like what they’re saying. With people we can always deal with what we know and as long as they are talking then you know how they feel.
As manager’s we hate hearing “no” because we all think in simple positives and negatives, debits and credits, good and bad – but people who resist change really aren’t disguising the word “NO” –they are disguising the word that sounds just like “NO” yet it’s spelled differently “KNOW”. People put their feet in concrete when they fear what “might” happen. They don’t know why they should do this - how it will make their lives better – in short, what’s in it for them? Your job – as a leader of people – is to take the time, however much time it takes, to make sure each of your people understand the positives that will result from new activity.
Now let’s really give you an option for success with your team. However before I do that I just have to ask you one question, how often do you hold team meetings? Let me tell you a little secret – that question is one I ask foodservice professionals all the time. Guess what I hear? “Meetings, I hold them as little as possible” “Only when I have to” “I never have anything new to talk about” “We used to hold them but were too busy now” and on and on and on…. Yet what amazes me is that the people who are telling me that are the very ones who asked me to come in and give them a few suggestions. Well here is one for you right now.
THERE IS AN EXACT CORELATION BETWEEN HOW SUCCESSFUL YOUR BUSISNESS IS AND HOW WELL TRAINED YOUR TEAM IS.
Trust me on this one – the organizations that leap into your brain when “great guest service” comes to mind are the very ones who hold employee meetings EVERYDAY. Yup, you heard me – E V E R Y D A Y ! And oh by the way, those meetings never last longer then 5 minutes and never mention anything negative. What they talk about is the one person who they noticed doing the “best” at something today. People love attention – they love to be singled out in front of their peers – and those who aren’t will move heaven and earth to get you to mention them next time. How will they do that? They learn what gets your positive attention every time you mention how someone got your attention by doing their job “extra special” today. Once they KNOW what works – they’ll do it for themselves – not because you ordered them to, but because they want to.
When it comes to change, replace hearing “no” when your team speaks with thinking “know”, it can be the best comment you’ll ever hear!
Friday, November 7, 2008
This mission, should you choose to accept it……..
“In the end it is important to remember that we cannot become what we need to be by remaining what we are.” Max Dupree, author and former CEO of Herman Miller.
This mission, should you choose to accept it……..
No, today’s economy is not Mission Impossible. It can be Mission Profitable if take this economic slowdown as an opportunity to improve your best practices and really take a look at things to see how they can be improved, revised and retooled. We have to do it, the business model that we all used last year will not work this year. It is a different environment entirely. Not hopeless, not worse, not doomsday, just different. It still is wrought with opportunity and profits. We all have to work a little harder and a little differently than we have in the past to achieve success and profitability.
Sometimes the answers can be simple. That doesn’t mean cheap, easy or quick. According to www.dictionary.com simple means:
1. Easy to understand, deal with, use, etc.
2. Not elaborate or artificial; plain.
3. Not ornate or luxurious; unadorned.
4. Unaffected; unassuming; modest.
5. Not complicated.
6. Not complex or compound; single.
As I travel throughout Chicagoland, I have the privilege of looking at different restaurants, caterers and banquet halls and seeing what is working and what isn’t. There are a wide variety of concepts that are finding success, but what interests me is not what the concept is, but rather what are the core, fundamental basics of what they are doing to find success in arguably the toughest economic times of the past 30 years. Invariably it all keeps coming back to the same thing. It doesn’t matter if it is a hot dog stand, a white table cloth restaurant, or something in between, the successful operations all have one thing in common at the root of their success. And it is simple. It is clear. It is easy to understand. It is not complex or complicated. It is simple.
When I was visiting family in North Carolina, my brother in law introduced me to a hamburger joint that he couldn’t stop gushing about from the minute we arrived. I was prepared to be disappointed – too much hype often leads to a tremendous let down. Instead, I walked out thoroughly impressed by the operation. I was so impressed that I grabbed a menu and jotted down their website so I could learn more about them. I checked out their website and was even more impressed with them – not because of all of the trappings of a well designed website, but by something much simpler and impactful. They had a clearly defined mission statement that they had obviously clearly communicated to every one of their employees because it was apparent in everything they did.
Their mission statement wasn’t wordy or grandiose. It was simple and clear. It wasn’t just a mantra that they throw up on their wall, it was a practical, applicable statement that was affecting everyone and everything in their organization. The restaurant is a chain operating out of Washington DC called Five Guys. Their mission statement is: We are in the business of selling burgers. Nothing more. Simply defined and easy to understand. It is what they do. Everything in their operation is geared toward selling burgers. Quality ingredients, simple menu (16 items of which 8 are burgers), and a clear vision has grown this chain from 1 store in 1986 to over 300 locations today. They aren’t the cheapest and they aren’t gimmicky. They are successful and they are simple. They know what they are and what they aren’t and they spend a lot of time and money trying to be the best at what they are. They are not worried about pleasing everyone, they are dedicated to pleasing burger lovers. It amazes me to see what they have done with such a simple vision and an even simpler menu.
They are singularly focused on selling burgers. They have found what they feel are the best ingredients and the best standard practices and never strayed from them. Because of their vision and mission, they have taken simplicity and made it a huge success. They sell burgers, hot dogs and grilled cheese sandwiches, and they charge a premium for them. How can they get away with that? They can pull it off because they know what they offer is a value, and they aren’t ashamed to ask the public to pay for value. The value is in their ingredients, their concept, their consistency and they aren’t worried about the place down the street or next door because they aren’t them! They worry about staying true to their mission and carrying out their mission to the best of their ability. Their business continues to thrive because of that value. The public continues to eat there despite the economy and despite the presence of cheaper options in the marketplace because the public knows what they are going to get from them each and every time they go for a burger. (check them out at www.fiveguys.com to see what I am talking about)
What does this all mean to us? Good question. How many of you have a mission statement for your business? How many of you communicate that mission to your manager, your chef or your servers? How many of you expect your staff to live out that mission? Does your staff even know what your mission is? If you have a mission statement in place, how long has it been since you looked at it and asked yourself if you are living it out? Mission statements are important, without one we won’t know where we are going or how to get there.
Imagine this, someone hands you the keys to a brand new Bentley Coupe (I can dream can’t I?) and tells you to start driving to Santa Fe, New Mexico. No maps - no mapquest - no GPS…..just start driving. How far do you get? How long until you find your self lost or headed in the wrong direction? You may eventually get there, but in all likelihood it takes you a heck of a lot longer to get there than if you had a map.
Having a mission statement is like getting a map. It gives us a baseline to keep coming back to for direction and guidance. It helps us keep our end game in mind and allows us to make every action we take bring us closer to that end game. If we don’t know where we are going, it is really hard to get there. Having a mission statement will help you decide what to keep on the menu and what to get off of it. Having a mission statement will help you make staffing decisions, help you decide what your hours of operation will be, it will help you decide what ingredients you are going to purchase. It will touch ever part of your operation. It will help you standardize your best practices. It will help you train your servers, your chefs, your bartenders and your bus people. It will give meaning to everything you do in your business. Without this guidepost we are left to whims and impulses that will drag us away from what we are here to do, and what we do best.
I encourage you to take advantage of the slower pace to be deliberate about what you are doing. It is in times like this that the cream begins to rise to the top. I want you to rise to the top. Take advantage of what life is throwing at you and set yourself up for success.
This mission, should you choose to accept it……..
No, today’s economy is not Mission Impossible. It can be Mission Profitable if take this economic slowdown as an opportunity to improve your best practices and really take a look at things to see how they can be improved, revised and retooled. We have to do it, the business model that we all used last year will not work this year. It is a different environment entirely. Not hopeless, not worse, not doomsday, just different. It still is wrought with opportunity and profits. We all have to work a little harder and a little differently than we have in the past to achieve success and profitability.
Sometimes the answers can be simple. That doesn’t mean cheap, easy or quick. According to www.dictionary.com simple means:
1. Easy to understand, deal with, use, etc.
2. Not elaborate or artificial; plain.
3. Not ornate or luxurious; unadorned.
4. Unaffected; unassuming; modest.
5. Not complicated.
6. Not complex or compound; single.
As I travel throughout Chicagoland, I have the privilege of looking at different restaurants, caterers and banquet halls and seeing what is working and what isn’t. There are a wide variety of concepts that are finding success, but what interests me is not what the concept is, but rather what are the core, fundamental basics of what they are doing to find success in arguably the toughest economic times of the past 30 years. Invariably it all keeps coming back to the same thing. It doesn’t matter if it is a hot dog stand, a white table cloth restaurant, or something in between, the successful operations all have one thing in common at the root of their success. And it is simple. It is clear. It is easy to understand. It is not complex or complicated. It is simple.
When I was visiting family in North Carolina, my brother in law introduced me to a hamburger joint that he couldn’t stop gushing about from the minute we arrived. I was prepared to be disappointed – too much hype often leads to a tremendous let down. Instead, I walked out thoroughly impressed by the operation. I was so impressed that I grabbed a menu and jotted down their website so I could learn more about them. I checked out their website and was even more impressed with them – not because of all of the trappings of a well designed website, but by something much simpler and impactful. They had a clearly defined mission statement that they had obviously clearly communicated to every one of their employees because it was apparent in everything they did.
Their mission statement wasn’t wordy or grandiose. It was simple and clear. It wasn’t just a mantra that they throw up on their wall, it was a practical, applicable statement that was affecting everyone and everything in their organization. The restaurant is a chain operating out of Washington DC called Five Guys. Their mission statement is: We are in the business of selling burgers. Nothing more. Simply defined and easy to understand. It is what they do. Everything in their operation is geared toward selling burgers. Quality ingredients, simple menu (16 items of which 8 are burgers), and a clear vision has grown this chain from 1 store in 1986 to over 300 locations today. They aren’t the cheapest and they aren’t gimmicky. They are successful and they are simple. They know what they are and what they aren’t and they spend a lot of time and money trying to be the best at what they are. They are not worried about pleasing everyone, they are dedicated to pleasing burger lovers. It amazes me to see what they have done with such a simple vision and an even simpler menu.
They are singularly focused on selling burgers. They have found what they feel are the best ingredients and the best standard practices and never strayed from them. Because of their vision and mission, they have taken simplicity and made it a huge success. They sell burgers, hot dogs and grilled cheese sandwiches, and they charge a premium for them. How can they get away with that? They can pull it off because they know what they offer is a value, and they aren’t ashamed to ask the public to pay for value. The value is in their ingredients, their concept, their consistency and they aren’t worried about the place down the street or next door because they aren’t them! They worry about staying true to their mission and carrying out their mission to the best of their ability. Their business continues to thrive because of that value. The public continues to eat there despite the economy and despite the presence of cheaper options in the marketplace because the public knows what they are going to get from them each and every time they go for a burger. (check them out at www.fiveguys.com to see what I am talking about)
What does this all mean to us? Good question. How many of you have a mission statement for your business? How many of you communicate that mission to your manager, your chef or your servers? How many of you expect your staff to live out that mission? Does your staff even know what your mission is? If you have a mission statement in place, how long has it been since you looked at it and asked yourself if you are living it out? Mission statements are important, without one we won’t know where we are going or how to get there.
Imagine this, someone hands you the keys to a brand new Bentley Coupe (I can dream can’t I?) and tells you to start driving to Santa Fe, New Mexico. No maps - no mapquest - no GPS…..just start driving. How far do you get? How long until you find your self lost or headed in the wrong direction? You may eventually get there, but in all likelihood it takes you a heck of a lot longer to get there than if you had a map.
Having a mission statement is like getting a map. It gives us a baseline to keep coming back to for direction and guidance. It helps us keep our end game in mind and allows us to make every action we take bring us closer to that end game. If we don’t know where we are going, it is really hard to get there. Having a mission statement will help you decide what to keep on the menu and what to get off of it. Having a mission statement will help you make staffing decisions, help you decide what your hours of operation will be, it will help you decide what ingredients you are going to purchase. It will touch ever part of your operation. It will help you standardize your best practices. It will help you train your servers, your chefs, your bartenders and your bus people. It will give meaning to everything you do in your business. Without this guidepost we are left to whims and impulses that will drag us away from what we are here to do, and what we do best.
I encourage you to take advantage of the slower pace to be deliberate about what you are doing. It is in times like this that the cream begins to rise to the top. I want you to rise to the top. Take advantage of what life is throwing at you and set yourself up for success.
Saturday, October 11, 2008
I GOT SOLD
"The most important single central fact about a free market is that no exchange takes place unless both parties benefit. " Milton Friedman, American Author, Economist, and Nobel Laureate.
It happened. I didn’t think it could, but someone outsold the salesman. I know the tricks, and I still got beat at my own game. I don’t know how many times I have sat in front of a salesperson and saw their next move, understood where they were heading and beat them to their spot and foiled their attempt to get me to buy more than I wanted. But I just got beat. And I mean beat bad. This salesperson was way ahead of me. I didn’t stand a chance. I never saw it coming. She hit me with an advanced move and I was powerless against it. She understood me, the customer, what makes me tick, how I think, and what my hot buttons are. I GOT SOLD.
Maybe a few of you are wondering what it was that I bought. How I got played. Maybe some of you aren’t really all that interested. You should be though. I bought dessert. I rarely ever do, but she nailed me, and I didn’t stand a chance. Here I am, an “industry insider,” I know her tricks. I was in my comfort zone ready for all her attempts to build my check average. I thought I was way ahead of her, but I didn’t stand a chance. She was one smooth operator that built her check average and nailed a bigger tip because of it. She understood me, the consumer. She knew how to whet my appetite and make me defenseless. I wasn’t ready for her moves because so few waiters ever try this one. I can’t understand why they don’t because it is an almost guaranteed close.
How did she get me to buy the taboo dessert? I mean I am frugal and am conscious about spending $20 extra bucks for something that I really don’t need - in this economy especially. That is 5 gallons of gas, it could go toward my heating bill (winter IS just around the corner), there are a million things that those $20 could have gone towards other than dessert, and yet, there I was powerless against her suggestion. How did she do it? She knew how I, and other consumers, buy. It starts with our eyes, moves to our nose and then hits our taste buds, and she smoothly moved through all three.
Dutch Apple Pie A La Mode.
As she was ushering us to our seats, she slyly mentioned how good the dessert looked at the table next to us. I couldn’t help but notice. My mouth watered just a bit. Then I took a deep breath and smelled the cinnamon and the apples melting together. I was lost already. (Think my brain stands a chance against my belly? That is one heck of a David v Goliath cage match if I have ever seen one) She must have seen my wife and I eyeballing the dessert at the next table because the next thing I knew, she was standing in front of us with 2 taster spoons full of that warm, gooey goodness. At that point I knew I was buying dessert, and I ordered accordingly. I had to leave room for dessert. It was as simple as that. It was a foregone conclusion that I was buying 2 slices of hot apple pie (with ice cream) and 2 flavored coffee desserts. $20 extra bucks on my ticket. Minimum $3 extra bucks on her tip. At the risk of using an already tired cliché, it was a win, win, win. I won – I got a great dessert, she won – she got a larger tip, and the restaurant won because I spent $20 more than I was planning on spending - 20 very profitable dollars for you, the restaurant owner/operator.
Training your waitstaff how to effectively grow their check averages is imperative in this economy. Customer counts are down everywhere and we need to take advantage of every opportunity that comes our way by growing check averages. Training your servers how to get your customers to buy more helps offset the impact of having less customers come through the front door. Selling desserts, flavored coffees, appetizers and drinks are all ways to help boost the check average. Not only do they boost your check size, but they significantly impact your bottom line profits because, as we all know, these are profit centers for you. These are the areas with smaller food costs and larger profits, and who doesn’t like that?
The best way to train your waitstaff is by dollarizing the impact of adding these menu options to the check on their tips. After all, compensation drives behavior for everyone. If they can clearly measure the benefit of adding 2 flavored coffees on their tips, then you will quickly gain converts. It only takes a few minutes to show them all how they will boost their pay. Now that you have made believers out of your staff, it is important to show them all HOW to sell these items. Teach them to paint a picture and cast a vision for their patrons. Plant the seed early in the meal – as they are ordering suggest that they leave room for dessert – our taste buds have some sort of mystical power over us, and you need to help them develop strategies for finding how to tap on that power. Sometimes offering a free taste nails it, sometimes it is just wheeling out a dessert cart, other times it is just having something that smells good on the burner throughout the meal that works. Find the right measures and implement them. It works! You can turn the biggest dessert naysayer into a satisfied customer in no time.
Sunday, August 31, 2008
Have You Ever Been Experienced?
I am fairly certain that Jimi posed that question in an entirely different way than I am, but I thought it lent itself nicely to the topic that I would like to cover today. When is the last time that you had a dining experience rather than just a meal? Are you selling meals or dining experiences? What is the difference? Why are dining experiences important in this economy? What are you training your staff to provide for your customers – meals or experiences? I am sure that many of you are saying that we aren’t necessarily set up to provide experiences – but you are! Because foot traffic is down, it is all the more important that we take advantage of every opportunity that walks through the door.
What is a dining experience? I have to admit that the first thing that jumps into my mind is white table cloth, candlelight, tuxedoed waiters and fancy schmanzy food. After I think about it for a few seconds more, I realize that a dining experience can take any number of forms. It only has to include food and something memorable or out of the ordinary to take it to the dining experience level. A dining experience is what compels your customers to tell their friends about their time in your establishment. It is what gives them the story to tell to have that ultra important word of mouth advertising. Creating a dining experience involves far more than the food you are serving. The experience often finds its roots in the servers, the plate presentation, the atmosphere and little something extra that you or your staff can provide.
To further illustrate what I mean by the experience stemming from somewhere outside of just the food, I would like to share a couple of experiences that I have either had or heard about from my friends (word of mouth advertising). Gene and Jude’s hot dogs – with 3 items on the menu, nowhere to sit and no ketchup to be found. Ed Debevic’s – servers dressed in 50s garb with a caustic edge to their interactions. Ann Sather’s – the owner / city alderman waiting tables on a Saturday afternoon. A hotel bar in Indiana where the server anticipated every one of my needs before I could articulate them. A server giving my toddler child a free dessert because she was so well behaved. My waiter playing Houdini every time I needed something. A manager stopping by to see how everything was going and actually meaning it!
These experiences can take on just about any form. As I said before, these experiences give your customers a story to tell – good and bad. They don’t take a menu retooling or a complete makeover of your establishment. Quite often all they take is hiring quality people and setting the appropriate expectations for them. The kind of service and effort that is required to provide experiences for your customers has to clearly communicated to your staff and modeled by you. Explaining the financial impact on the servers will go a long way towards getting them on board. A little salesmanship and suggestive selling builds check sizes and tip sizes. Illustrating to your staff how being committed to providing an experience to your customers will impact their pay will secure buy in on your servers’ part – after all, compensation drives behavior.
With the current state of the economy and people making more deliberate choices about where and how they spend their money, it is that much more important that each and every opportunity to create an added dimension of value and experience for your customer base be taken advantage of by you. This is an economic environment where the strong is going to survive, and this is one simple way for you to raise your game and exceed what every other operation on the street is doing. Create a memory. It could be as simple as giving everyone a free scoop of ice cream (and making it a point to tell them about it) or as simple as getting a commitment from your servers to treat each customer as an honored guest – the most important person in the room. The customer has chosen to spend their money with you – give them a reason to come back! It doesn’t have to take much, just leave them with a story to tell and you will keep traffic coming through your front door and profits in your account!
“Two roads diverged in the woods, and I – I took the one less traveled by, and that has made all the difference.” Robert Frost, American Poet.
What is a dining experience? I have to admit that the first thing that jumps into my mind is white table cloth, candlelight, tuxedoed waiters and fancy schmanzy food. After I think about it for a few seconds more, I realize that a dining experience can take any number of forms. It only has to include food and something memorable or out of the ordinary to take it to the dining experience level. A dining experience is what compels your customers to tell their friends about their time in your establishment. It is what gives them the story to tell to have that ultra important word of mouth advertising. Creating a dining experience involves far more than the food you are serving. The experience often finds its roots in the servers, the plate presentation, the atmosphere and little something extra that you or your staff can provide.
To further illustrate what I mean by the experience stemming from somewhere outside of just the food, I would like to share a couple of experiences that I have either had or heard about from my friends (word of mouth advertising). Gene and Jude’s hot dogs – with 3 items on the menu, nowhere to sit and no ketchup to be found. Ed Debevic’s – servers dressed in 50s garb with a caustic edge to their interactions. Ann Sather’s – the owner / city alderman waiting tables on a Saturday afternoon. A hotel bar in Indiana where the server anticipated every one of my needs before I could articulate them. A server giving my toddler child a free dessert because she was so well behaved. My waiter playing Houdini every time I needed something. A manager stopping by to see how everything was going and actually meaning it!
These experiences can take on just about any form. As I said before, these experiences give your customers a story to tell – good and bad. They don’t take a menu retooling or a complete makeover of your establishment. Quite often all they take is hiring quality people and setting the appropriate expectations for them. The kind of service and effort that is required to provide experiences for your customers has to clearly communicated to your staff and modeled by you. Explaining the financial impact on the servers will go a long way towards getting them on board. A little salesmanship and suggestive selling builds check sizes and tip sizes. Illustrating to your staff how being committed to providing an experience to your customers will impact their pay will secure buy in on your servers’ part – after all, compensation drives behavior.
With the current state of the economy and people making more deliberate choices about where and how they spend their money, it is that much more important that each and every opportunity to create an added dimension of value and experience for your customer base be taken advantage of by you. This is an economic environment where the strong is going to survive, and this is one simple way for you to raise your game and exceed what every other operation on the street is doing. Create a memory. It could be as simple as giving everyone a free scoop of ice cream (and making it a point to tell them about it) or as simple as getting a commitment from your servers to treat each customer as an honored guest – the most important person in the room. The customer has chosen to spend their money with you – give them a reason to come back! It doesn’t have to take much, just leave them with a story to tell and you will keep traffic coming through your front door and profits in your account!
“Two roads diverged in the woods, and I – I took the one less traveled by, and that has made all the difference.” Robert Frost, American Poet.
Thursday, July 24, 2008
Savings Consistency
“We are continually faced by great opportunities brilliantly disguised as insoluble problems.” Lee Iacocca, American Industrialist.
The above quote by Lee Iacocca is extremely relevant in today’s marketplace. The economy is throwing many challenges at us, and if we field them correctly we can make a significant impact on our success and profitability today and in the future. I don’t want to beat a dead horse, but people are still spending money – you still go out to dinner right? We are all still shopping, eating, driving, and buying….we are just using a different criteria than we have used for the past 10 years. It used to be that all you had to do was unlock the doors and customers came inside. Today, however, that isn’t the case anymore. We have to raise our games and bring things to a different level to succeed in this marketplace. You can do it! You all are too smart to let this opportunity slip through your fingers. Today’s business model will not provide you with the same success that you have enjoyed in the past. We are all being forced to change. Continuing to do things the way we have always done them will more often than not lead to a slow bleed out rather than continued sustainable success.
How can you stop the bleeding and right the ship? There are a number of things that you can do as an operator to position yourself for success. Controlling labor, product consistency, lowering your inventory dollars and maintaining food safety are 4 easy ways to improve and insure your profitability. Over the next couple of articles, I am going to explore each of these areas and how they can help you bring more money to your bottom line – I say bottom line because that is what we all got into business for – improving our profitability and making more for our bank accounts….we didn’t go into business to save money or to spend less, but to MAKE MORE MONEY TODAY AND IN THE FUTURE!
When sales dip and food, electric and gas bills increase we often find that the best place to look for savings is in labor costs. As it is, your food costs represent about 35% of your expenses and your labor is usually a little bit more than that number. You have to have food to sell, but how much staff do you need to keep things humming the way you would like them? That is a tough question – I have found some ways to minimize your labor costs AND improve your product consistency. Moving up the value chain from commodity items to a value added product. I know many of you are screaming – that costs more! You are right, when you look at the invoice, it DOES cost more. Don’t stop evaluating it at that level though, because as you walk through the pros and cons you will see that by using precut or pre-portioned items you will position your self for growing and sustainable success.
We all know that product consistency is one of the things that propel chains to great success. The burger from McDonalds tastes the same today as it did a year ago and will a year from now. Not everyone may like a McDonald’s hamburger, but they have sold how many billion of them? I bet we all wish we could sell just 10% of that number. They are on to something and it seems to be working. How does that translate to you? McDonalds doesn’t have someone chopping lettuce, onions, and pickles in their kitchens, they buy them all pre cut. As McDonalds has moved into fresh salads and other items, they have brought the same model along with them – they are buying pre cut salad mixes rather than paying someone or two or three to stand in the back and clean and chop lettuce. I know some of you are raising and waving the price flag again, and I can’t blame you – it is hard to wrap your head around spending more equating to making more, but it does. McDonald’s salads are less expensive than yours, but they seem to maintain profitability while buying a more expensive product and selling it for less. They wouldn’t be the giant they are today if they continued to dabble in losing ventures.
As operators, we have to take a broader view of the operation and evaluate the true costs of keeping help on staff when comparing it the values of using a pre cut item. Consistency can not be underestimated. Customers want to know what they are going to get from you each time they come into your restaurant. They want their salads, their steaks and their veggies to look and taste the same each time they visit. That is creating a positive perceived value which will serve to line your pockets even in the worst economic times. The public has proven again and again that they don’t have to get the best products (McDonald’s burgers again) in order for them to buy, buy and buy. They will trade quality for perceived consistent value just about everyday of the week. (by no means am I insinuating that buying pre cut items is going to sacrifice your quality – I am only trying to emphasize the value of consistency) Consequently when you save money by buying commodity meats, veggies and fruits and cut them yourself, you risk losing your repeat business because today’s steak looks different than last week’s or today’s salad was somehow different than yesterday’s. Only a small percentage of the consumers will say anything, more often than not, they just stop spending with you and move on to the place down the street. (How many of you have had a pizza delivered that wasn’t quite up to snuff and you didn’t call to complain – you called someone else next time you wanted pizza? It happens)
Aside from consistency, the other value that buying and using pre cut and pre portioned products brings to you is lowering your labor costs. Minimum wage has increased, workman’s comp insurance isn’t getting any cheaper and hiring good, quality people isn’t getting any easier. By transitioning into more pre cut items, you will eventually be able to trim a person or two from your labor pool. The savings generated from one or two less people on your payroll is significant. This doesn’t even bring in to account the costs associated with an employee cutting themselves or having to miss work days because of an accident in the kitchen. Nobody intends for or expects things like that to happen which is why they are called accidents. The hidden costs of issues like this can quickly get out of hand if you have someone who wants to milk the system or has less than perfect integrity.
As an operator you are challenged with many things that make running a sustainably profitable business difficult. One of the ways that you can help position yourself for long term success is by controlling both your labor and product consistency by using pre cut and pre portioned products. The chains are using them, maybe you should be too!
I would love to hear from you regarding things that you have found are helping you survive and flourish in today’s marketplace. Drop me a line at dj.tryba@gfs.com.
Thanks as always for reading!
The above quote by Lee Iacocca is extremely relevant in today’s marketplace. The economy is throwing many challenges at us, and if we field them correctly we can make a significant impact on our success and profitability today and in the future. I don’t want to beat a dead horse, but people are still spending money – you still go out to dinner right? We are all still shopping, eating, driving, and buying….we are just using a different criteria than we have used for the past 10 years. It used to be that all you had to do was unlock the doors and customers came inside. Today, however, that isn’t the case anymore. We have to raise our games and bring things to a different level to succeed in this marketplace. You can do it! You all are too smart to let this opportunity slip through your fingers. Today’s business model will not provide you with the same success that you have enjoyed in the past. We are all being forced to change. Continuing to do things the way we have always done them will more often than not lead to a slow bleed out rather than continued sustainable success.
How can you stop the bleeding and right the ship? There are a number of things that you can do as an operator to position yourself for success. Controlling labor, product consistency, lowering your inventory dollars and maintaining food safety are 4 easy ways to improve and insure your profitability. Over the next couple of articles, I am going to explore each of these areas and how they can help you bring more money to your bottom line – I say bottom line because that is what we all got into business for – improving our profitability and making more for our bank accounts….we didn’t go into business to save money or to spend less, but to MAKE MORE MONEY TODAY AND IN THE FUTURE!
When sales dip and food, electric and gas bills increase we often find that the best place to look for savings is in labor costs. As it is, your food costs represent about 35% of your expenses and your labor is usually a little bit more than that number. You have to have food to sell, but how much staff do you need to keep things humming the way you would like them? That is a tough question – I have found some ways to minimize your labor costs AND improve your product consistency. Moving up the value chain from commodity items to a value added product. I know many of you are screaming – that costs more! You are right, when you look at the invoice, it DOES cost more. Don’t stop evaluating it at that level though, because as you walk through the pros and cons you will see that by using precut or pre-portioned items you will position your self for growing and sustainable success.
We all know that product consistency is one of the things that propel chains to great success. The burger from McDonalds tastes the same today as it did a year ago and will a year from now. Not everyone may like a McDonald’s hamburger, but they have sold how many billion of them? I bet we all wish we could sell just 10% of that number. They are on to something and it seems to be working. How does that translate to you? McDonalds doesn’t have someone chopping lettuce, onions, and pickles in their kitchens, they buy them all pre cut. As McDonalds has moved into fresh salads and other items, they have brought the same model along with them – they are buying pre cut salad mixes rather than paying someone or two or three to stand in the back and clean and chop lettuce. I know some of you are raising and waving the price flag again, and I can’t blame you – it is hard to wrap your head around spending more equating to making more, but it does. McDonald’s salads are less expensive than yours, but they seem to maintain profitability while buying a more expensive product and selling it for less. They wouldn’t be the giant they are today if they continued to dabble in losing ventures.
As operators, we have to take a broader view of the operation and evaluate the true costs of keeping help on staff when comparing it the values of using a pre cut item. Consistency can not be underestimated. Customers want to know what they are going to get from you each time they come into your restaurant. They want their salads, their steaks and their veggies to look and taste the same each time they visit. That is creating a positive perceived value which will serve to line your pockets even in the worst economic times. The public has proven again and again that they don’t have to get the best products (McDonald’s burgers again) in order for them to buy, buy and buy. They will trade quality for perceived consistent value just about everyday of the week. (by no means am I insinuating that buying pre cut items is going to sacrifice your quality – I am only trying to emphasize the value of consistency) Consequently when you save money by buying commodity meats, veggies and fruits and cut them yourself, you risk losing your repeat business because today’s steak looks different than last week’s or today’s salad was somehow different than yesterday’s. Only a small percentage of the consumers will say anything, more often than not, they just stop spending with you and move on to the place down the street. (How many of you have had a pizza delivered that wasn’t quite up to snuff and you didn’t call to complain – you called someone else next time you wanted pizza? It happens)
Aside from consistency, the other value that buying and using pre cut and pre portioned products brings to you is lowering your labor costs. Minimum wage has increased, workman’s comp insurance isn’t getting any cheaper and hiring good, quality people isn’t getting any easier. By transitioning into more pre cut items, you will eventually be able to trim a person or two from your labor pool. The savings generated from one or two less people on your payroll is significant. This doesn’t even bring in to account the costs associated with an employee cutting themselves or having to miss work days because of an accident in the kitchen. Nobody intends for or expects things like that to happen which is why they are called accidents. The hidden costs of issues like this can quickly get out of hand if you have someone who wants to milk the system or has less than perfect integrity.
As an operator you are challenged with many things that make running a sustainably profitable business difficult. One of the ways that you can help position yourself for long term success is by controlling both your labor and product consistency by using pre cut and pre portioned products. The chains are using them, maybe you should be too!
I would love to hear from you regarding things that you have found are helping you survive and flourish in today’s marketplace. Drop me a line at dj.tryba@gfs.com.
Thanks as always for reading!
Thursday, June 19, 2008
How To Survive in This Economy
I was reading one of my weekly newsletters and came across this article that I thought relevant enough to share with everyone. While it has a sales orientation, the message is quite poignant. It reinforces all that I have been hammering you on about brand identity (they say the true test of a man's intellect is how much he agrees with you - this guy is BRILLIANT!). He uses a restaurant for his example which only serves to reinforce the value of understanding your brand and insuring that all that you do works to augment who and what you are. I hope you enjoy it as much as I did.
HIGHER GROUNDS
A Simple Recipe: Crafting Your Brand's Reputation
by: Brian Parsley
Do certain childhood memories evoke a cozy feeling within you? It's actually branding in disguise.
Some of my favorite memories were the visits to a down-home restaurant called The Farm Table in West Virginia. It was Southern food done right in nothing more than a small family-owned space. The home-cooked meals and "everyone is family" aura had people lined up out the door seven days a week. I've never forgotten their amazing food, made with love, that was often delivered with a hug. At The Farm Table, there was always a smile and acknowledgement that made you feel like you just got home.
Now, as a business professional, I reflect on how they built their brand and reputation. From what I can remember, they didn't advertise. There were no coupons or weekly specials. The decor and architecture was "hole-in-the wall" meets "backwoods." And the restaurant's location was not prime. It got me thinking that maybe a business doesn't need fancy campaigns to build a solid brand. Simplicity, quality, and a genuine interest in customers are the foundation of a company's reputation. It builds their brand.
The Farm Table didn't have to advertise to get new customers; their consistent delicious food, fair prices, and excellent service did it for them. These are the ingredients that created their recipe for brand success. It boils down to the daily interactions you have with customers -- those interactions will determine whether your reputation will be positive or negative.
Let me give you a perfect example of how service levels can create or destroy the brand cornerstone of a company's reputation. A few months ago, I had my oil changed and the technician advised me that I had a nail in my tire. He offered to fix it for free. After he finished, the manager approached me and said, "Sir, I just want you to know that we will NOT guarantee that your tire won't leak. He should have never helped you with that." That single interaction of just a few seconds put that brand's positive reputation in the dumps for me.
Your reputation yields your business outcome. Your revenues, number of customers, and bottom-line profitability are the result of how well you have been able to build a reputation around what customers value the most. Your sales are a direct result of your ability to generate repeat business and attract new fans. Yes, advertising does create awareness for your business, but it is not the whole strategy. Taken alone, advertising can often cost more than it's worth, especially if you give bad service when someone responds to your ad.
While some companies may be using the economy slowdown as an excuse for negative impact on their business, the truth is that people are still building, buying, and eating out. If business is
down, start asking your customers about how they define your reputation. With that information, you can create a recipe for a reputation that delivers quality and builds brand equity.
Let's go back to the manager at the oil change business. Maybe he should have asked me what I loved about my experience rather than tell me his employee did wrong by serving me. He could have discovered that the technician's extra effort would have made the difference between my returning or not.
Your brand and your reputation are dependent upon your level of sincerity, your willingness to serve your customer, and doing it from the heart. My father told me The Farm Table is still in business and going strong after 25 years. No web page, no voicemail, and no fancy gimmicks. Their brand and positive reputation developed over a period of time based on friendly service and the best home cooking. When you put effort into your reputation, you build a brand that will sustain your business through any economy.
Here are some great ways to build a positive reputation:
* Never answer the phone or greet a customer with "Can I help you?" Just say, "Good Morning" or "Welcome." People will tell you what they need.
* Offer to fix something that's NOT included because you care.
* Send your customers handwritten thank you notes.
* Build your business on quality, not lowest pricing.
* Thank your customers for coming to you when it's obvious they have several
other choices. Customers will remember your efforts, and that goes a long way to building a reputation that creates substantial brand equity.
* Get more involved with your local community so your name and your brand become known.
* Honor your word. If you commit to something, do it! Even if you lose money, time, or energy. Your reputation is built upon your actions.
And if you ever happen to be at The Farm Table, please make sure you order chicken and dumplings in my honor.
HIGHER GROUNDS
A Simple Recipe: Crafting Your Brand's Reputation
by: Brian Parsley
Do certain childhood memories evoke a cozy feeling within you? It's actually branding in disguise.
Some of my favorite memories were the visits to a down-home restaurant called The Farm Table in West Virginia. It was Southern food done right in nothing more than a small family-owned space. The home-cooked meals and "everyone is family" aura had people lined up out the door seven days a week. I've never forgotten their amazing food, made with love, that was often delivered with a hug. At The Farm Table, there was always a smile and acknowledgement that made you feel like you just got home.
Now, as a business professional, I reflect on how they built their brand and reputation. From what I can remember, they didn't advertise. There were no coupons or weekly specials. The decor and architecture was "hole-in-the wall" meets "backwoods." And the restaurant's location was not prime. It got me thinking that maybe a business doesn't need fancy campaigns to build a solid brand. Simplicity, quality, and a genuine interest in customers are the foundation of a company's reputation. It builds their brand.
The Farm Table didn't have to advertise to get new customers; their consistent delicious food, fair prices, and excellent service did it for them. These are the ingredients that created their recipe for brand success. It boils down to the daily interactions you have with customers -- those interactions will determine whether your reputation will be positive or negative.
Let me give you a perfect example of how service levels can create or destroy the brand cornerstone of a company's reputation. A few months ago, I had my oil changed and the technician advised me that I had a nail in my tire. He offered to fix it for free. After he finished, the manager approached me and said, "Sir, I just want you to know that we will NOT guarantee that your tire won't leak. He should have never helped you with that." That single interaction of just a few seconds put that brand's positive reputation in the dumps for me.
Your reputation yields your business outcome. Your revenues, number of customers, and bottom-line profitability are the result of how well you have been able to build a reputation around what customers value the most. Your sales are a direct result of your ability to generate repeat business and attract new fans. Yes, advertising does create awareness for your business, but it is not the whole strategy. Taken alone, advertising can often cost more than it's worth, especially if you give bad service when someone responds to your ad.
While some companies may be using the economy slowdown as an excuse for negative impact on their business, the truth is that people are still building, buying, and eating out. If business is
down, start asking your customers about how they define your reputation. With that information, you can create a recipe for a reputation that delivers quality and builds brand equity.
Let's go back to the manager at the oil change business. Maybe he should have asked me what I loved about my experience rather than tell me his employee did wrong by serving me. He could have discovered that the technician's extra effort would have made the difference between my returning or not.
Your brand and your reputation are dependent upon your level of sincerity, your willingness to serve your customer, and doing it from the heart. My father told me The Farm Table is still in business and going strong after 25 years. No web page, no voicemail, and no fancy gimmicks. Their brand and positive reputation developed over a period of time based on friendly service and the best home cooking. When you put effort into your reputation, you build a brand that will sustain your business through any economy.
Here are some great ways to build a positive reputation:
* Never answer the phone or greet a customer with "Can I help you?" Just say, "Good Morning" or "Welcome." People will tell you what they need.
* Offer to fix something that's NOT included because you care.
* Send your customers handwritten thank you notes.
* Build your business on quality, not lowest pricing.
* Thank your customers for coming to you when it's obvious they have several
other choices. Customers will remember your efforts, and that goes a long way to building a reputation that creates substantial brand equity.
* Get more involved with your local community so your name and your brand become known.
* Honor your word. If you commit to something, do it! Even if you lose money, time, or energy. Your reputation is built upon your actions.
And if you ever happen to be at The Farm Table, please make sure you order chicken and dumplings in my honor.
Sunday, June 8, 2008
Who Are You Anyway?
"The world stands aside to let anyone pass who knows where he is going." David Staff Jordan, ornithologist.
Just a few short weeks ago, my wife and I were treated to a wonderful steak dinner out at a local steakhouse – Wildwood in Geneva. I have to mention that I have eaten here about 10 times now, and the experience has always been the same – extraordinary! The place was packed. We arrived at 6:30 and stayed until after 10, and hardly a table sat vacant for more than 5 minutes. I couldn’t believe my eyes. Here I am an “industry insider” familiar with the many tales of woe from operators complaining that they can’t get people into their restaurants, and I struggled to wrap my head around the fact that the restaurant with its $40 average entrees is enjoying a packed house on a Friday night. Don’t let my wife know, but I tuned out of most of the conversation as I wrestled with the age old question of WHY?! A number of things sprung to mind about their success in this allegedly down market, and I would like to share a few of my realizations with you.
The first, and I believe the most important, thing is that they understood who they are. They had a clearly defined image of who they are and who they are trying to be. Without talking to anyone there, it was easy for me to recognize that they want to be the best steakhouse on the map. Someone told me once that if I don’t know where I am going, chances are that I won’t get there. Do I really have to explain how true that simple statement is in business, in the car or in life? We have to have a clearly outlined purpose for who we want to be as operators. In my position, I get to interact with a whole bunch of operators. Remarkably, very few have an identity and a goal that they are striving to achieve outside of running a profitable business. In my opinion, too many operators stray from their identity to try to appease every potential diner even if it compromises their vision. Wildwood doesn’t throw dishes on to their menu haphazardly to try to lure that one diner away from the place next door, they stick to their guns and put new items that fall in line with their identity and present them without compromising quality or image. They know who they are and figure that if the put options on the menu that make sense and stay true to their goals, they will continue to win new customers.
The second thing that struck me was that they were uncompromising on quality. This attitude reinforces their desire to be the best steakhouse on the map. They don’t cut corners or look for items that are merely passable. They provide the best for their customers. They have faith in their product and sacrifice nothing to try to provide the best dining experience for their patrons, and they aren’t afraid to charge them for it. They appear to be interested in making money at the front door rather than saving money at the back door. As a result, each time I have eaten here, the food has been consistent. The snap of the veggies, the quality of their meats, and their desserts….it has a quality that never wavers. They know that if they put an excellent meal on the table, their patrons will be willing to pay for it.
The third and final thing that I couldn’t help but notice was the room and the quality of the staff. The room was fantastic – clean, updated and taken care of….just like the rest of the experience, their focus was on providing the best atmosphere for their patrons. The wait staff was fantastic. They were pleasant looking and ready to do whatever they could to insure that we – the diners – had a dining experience that was top rate from start to finish. The management team at Wildwood had done and excellent job of communicating their vision to their employees. The employees have embraced it and made it their own as well. The staff was going the extra step to keep the place neat, the customers happy and to make each experience a memorable one. Consequently, the bathrooms were clean, the service was quick, the servers were pleasant and from top to bottom it was an excellent experience.
While it may be just a little slower out there, people are still spending money in this economy, they are just being choosier about where they spend it. My experience proved it, and I want you to share in the same success that Wildwood is having. They have positioned themselves as a destination restaurant by first understanding who they are and where they want to go. Next they are uncompromising on quality and serve nothing but the best in food. Finally they hire smart and keep the facility looking fantastic. By keeping those three simple ideas in mind, you too can keep your house full each and every night of the week.
Just a few short weeks ago, my wife and I were treated to a wonderful steak dinner out at a local steakhouse – Wildwood in Geneva. I have to mention that I have eaten here about 10 times now, and the experience has always been the same – extraordinary! The place was packed. We arrived at 6:30 and stayed until after 10, and hardly a table sat vacant for more than 5 minutes. I couldn’t believe my eyes. Here I am an “industry insider” familiar with the many tales of woe from operators complaining that they can’t get people into their restaurants, and I struggled to wrap my head around the fact that the restaurant with its $40 average entrees is enjoying a packed house on a Friday night. Don’t let my wife know, but I tuned out of most of the conversation as I wrestled with the age old question of WHY?! A number of things sprung to mind about their success in this allegedly down market, and I would like to share a few of my realizations with you.
The first, and I believe the most important, thing is that they understood who they are. They had a clearly defined image of who they are and who they are trying to be. Without talking to anyone there, it was easy for me to recognize that they want to be the best steakhouse on the map. Someone told me once that if I don’t know where I am going, chances are that I won’t get there. Do I really have to explain how true that simple statement is in business, in the car or in life? We have to have a clearly outlined purpose for who we want to be as operators. In my position, I get to interact with a whole bunch of operators. Remarkably, very few have an identity and a goal that they are striving to achieve outside of running a profitable business. In my opinion, too many operators stray from their identity to try to appease every potential diner even if it compromises their vision. Wildwood doesn’t throw dishes on to their menu haphazardly to try to lure that one diner away from the place next door, they stick to their guns and put new items that fall in line with their identity and present them without compromising quality or image. They know who they are and figure that if the put options on the menu that make sense and stay true to their goals, they will continue to win new customers.
The second thing that struck me was that they were uncompromising on quality. This attitude reinforces their desire to be the best steakhouse on the map. They don’t cut corners or look for items that are merely passable. They provide the best for their customers. They have faith in their product and sacrifice nothing to try to provide the best dining experience for their patrons, and they aren’t afraid to charge them for it. They appear to be interested in making money at the front door rather than saving money at the back door. As a result, each time I have eaten here, the food has been consistent. The snap of the veggies, the quality of their meats, and their desserts….it has a quality that never wavers. They know that if they put an excellent meal on the table, their patrons will be willing to pay for it.
The third and final thing that I couldn’t help but notice was the room and the quality of the staff. The room was fantastic – clean, updated and taken care of….just like the rest of the experience, their focus was on providing the best atmosphere for their patrons. The wait staff was fantastic. They were pleasant looking and ready to do whatever they could to insure that we – the diners – had a dining experience that was top rate from start to finish. The management team at Wildwood had done and excellent job of communicating their vision to their employees. The employees have embraced it and made it their own as well. The staff was going the extra step to keep the place neat, the customers happy and to make each experience a memorable one. Consequently, the bathrooms were clean, the service was quick, the servers were pleasant and from top to bottom it was an excellent experience.
While it may be just a little slower out there, people are still spending money in this economy, they are just being choosier about where they spend it. My experience proved it, and I want you to share in the same success that Wildwood is having. They have positioned themselves as a destination restaurant by first understanding who they are and where they want to go. Next they are uncompromising on quality and serve nothing but the best in food. Finally they hire smart and keep the facility looking fantastic. By keeping those three simple ideas in mind, you too can keep your house full each and every night of the week.
Sunday, May 4, 2008
Change Your Focus, Grow Your Business
This week I have a guest columnist, Dave Tebussek. Dave is a 35 year veteran of the restaurant industry. He has primarily worked on the operations side of the industry, and wants to share a bit of the wisdom his experiences have brought him.
Change Your Focus Grow Your Business
David Tebussek
Gordon Food Serivce
During my 35 year career in the restaurant industry, both in retail and sales, I have witnessed many tough economic times. Many of you have witnessed this and some of you have not. There have been 2 constants during the tough times. Only the strong survive and these economic times eventually turn around. I am tired of the negative talk the media continues to dish out on a daily basis, this type of mind numbing reporting only puts you in a state of mind that causes apathy. The first thing we can all change is our attitude, be positive. This is an area we can all control. After you have decided to change your focus you will realize there is still no magic bullet to success in any industry, if there was everyone would use it and everyone would succeed.
I have worked for two successful operators who have taught me to take a hard look at what you are doing during times like these to be sure you are the best. Quality, service, and cleanliness still work. You must also take a hard look at your business model to determine what is producing and reducing your profit. If you are willing to invest time in your business and roll up your sleeves I believe you will come out of this stronger on the back side because I have experienced this myself. I will give you some points to ponder.
QUALITY
Are your products made with the best raw materials that make them worth the money?
Would you pay your asking price for everything you sell?
Do you have signature products that are hard to get anywhere else? Are they marketed as such? (You can charge more for these items)
Does your quality carve out a niche for you?
Are your people passionate about quality? (Level of passion is demonstrated when the boss is gone)
Are there any current trends in food you can incorporate in your business? (There are scores of on line food publications)
What do your customers want to see in your business? (You need to ask)
SERVICE
Do you look at your service through the eyes of a customer? (Watch and listen to transactions, sit down in the dining area and pretend you are doing something else)
Can you invite anyone to experience your business as a secret shopper? (These people can’t be known by your staff and must be willing to provide candid feedback. Pay for the meal and charge it to marketing, it’s the cheapest marketing ever.)
Does your service include hospitality and name recognition? (Make it a game. Who can know the most names? How can we turn this place into “Cheers”?)
How would you rate business as it relates to hospitality? (Service must never be mechanical, it must be personal.)
How can we deliver efficient service every time? (Take a hard look at every system.)
Hire only people with a great personality, these people will attract others like themselves, and are capable of delivering hospitality. Sadly those who are not like this can’t deliver hospitality and you can’t teach them. The technical side of our business is easy to teach.
CLEANLINESS
Is everything neat, spotless, and organized? (Now you know it is not.) This one is easy you just need to have the proper tools and build a program that works. I always relate this one to people coming to the house when I was growing up. We used to sweep the garage and no one ever went in there, but they might.
Could you take someone into every corner and be proud?
PROFIT
Why are you selling what you are selling? (Does each item produce a profit margin equal to the labor and cost to produce it? You must look at each item and make the call, then label each item, keep, eliminate, or retool.)
Is all this labor necessary? (You may think this is cold but the reality is there are many ready to use products in the market designed to help eliminate labor. If you are loyal to your people to a fault these products can be introduced through attrition of your current staff. Have a plan in place to revise prep procedures as people quit.)
Are my people on board with controlling costs? Do I have a plan in place? Am I tracking costs? Do I know what my food cost is? Do I have any silent partners?
Can I renegotiate my lease? (Everything is open for negotiation.)
These are just a few suggestions to focus your energies in the right direction. You are all entrepreneurs with a passion for success. You could probably think of many more questions to ask yourself and I hope you do. You believed in your concept enough to get it off the ground, and for all of you reading this you are still in the game. I have never met or read about anyone who had success without hard work. All of this will take hard work and extra effort. The practices you put in place today to strengthen your operation will pay huge dividends both now and in the future. Sharpening your business through tough analysis is never a bad investment.
Oh by the way it is alright to steal an idea or two along the way.
David Tebussek
Gordon Food Serivce
During my 35 year career in the restaurant industry, both in retail and sales, I have witnessed many tough economic times. Many of you have witnessed this and some of you have not. There have been 2 constants during the tough times. Only the strong survive and these economic times eventually turn around. I am tired of the negative talk the media continues to dish out on a daily basis, this type of mind numbing reporting only puts you in a state of mind that causes apathy. The first thing we can all change is our attitude, be positive. This is an area we can all control. After you have decided to change your focus you will realize there is still no magic bullet to success in any industry, if there was everyone would use it and everyone would succeed.
I have worked for two successful operators who have taught me to take a hard look at what you are doing during times like these to be sure you are the best. Quality, service, and cleanliness still work. You must also take a hard look at your business model to determine what is producing and reducing your profit. If you are willing to invest time in your business and roll up your sleeves I believe you will come out of this stronger on the back side because I have experienced this myself. I will give you some points to ponder.
QUALITY
Are your products made with the best raw materials that make them worth the money?
Would you pay your asking price for everything you sell?
Do you have signature products that are hard to get anywhere else? Are they marketed as such? (You can charge more for these items)
Does your quality carve out a niche for you?
Are your people passionate about quality? (Level of passion is demonstrated when the boss is gone)
Are there any current trends in food you can incorporate in your business? (There are scores of on line food publications)
What do your customers want to see in your business? (You need to ask)
SERVICE
Do you look at your service through the eyes of a customer? (Watch and listen to transactions, sit down in the dining area and pretend you are doing something else)
Can you invite anyone to experience your business as a secret shopper? (These people can’t be known by your staff and must be willing to provide candid feedback. Pay for the meal and charge it to marketing, it’s the cheapest marketing ever.)
Does your service include hospitality and name recognition? (Make it a game. Who can know the most names? How can we turn this place into “Cheers”?)
How would you rate business as it relates to hospitality? (Service must never be mechanical, it must be personal.)
How can we deliver efficient service every time? (Take a hard look at every system.)
Hire only people with a great personality, these people will attract others like themselves, and are capable of delivering hospitality. Sadly those who are not like this can’t deliver hospitality and you can’t teach them. The technical side of our business is easy to teach.
CLEANLINESS
Is everything neat, spotless, and organized? (Now you know it is not.) This one is easy you just need to have the proper tools and build a program that works. I always relate this one to people coming to the house when I was growing up. We used to sweep the garage and no one ever went in there, but they might.
Could you take someone into every corner and be proud?
PROFIT
Why are you selling what you are selling? (Does each item produce a profit margin equal to the labor and cost to produce it? You must look at each item and make the call, then label each item, keep, eliminate, or retool.)
Is all this labor necessary? (You may think this is cold but the reality is there are many ready to use products in the market designed to help eliminate labor. If you are loyal to your people to a fault these products can be introduced through attrition of your current staff. Have a plan in place to revise prep procedures as people quit.)
Are my people on board with controlling costs? Do I have a plan in place? Am I tracking costs? Do I know what my food cost is? Do I have any silent partners?
Can I renegotiate my lease? (Everything is open for negotiation.)
These are just a few suggestions to focus your energies in the right direction. You are all entrepreneurs with a passion for success. You could probably think of many more questions to ask yourself and I hope you do. You believed in your concept enough to get it off the ground, and for all of you reading this you are still in the game. I have never met or read about anyone who had success without hard work. All of this will take hard work and extra effort. The practices you put in place today to strengthen your operation will pay huge dividends both now and in the future. Sharpening your business through tough analysis is never a bad investment.
Oh by the way it is alright to steal an idea or two along the way.
Thursday, April 24, 2008
Commitment
“No wind serves him who addresses his voyage to no certain port.” Michel De Montaigne, French Renaissance Essayist and Philosopher.
It seems like I am having the same conversation four or five times a week these days. You know the one that goes “How is it out there? I am dying here. My numbers just keep dwindling. I can’t figure out why the when I drive by the chains, their parking lots are still full. I serve better food than they do. What is going on? What do they have that I don’t?” Those are some loaded questions.
I think I could write for hours on some of my opinions of why the chains have full parking lots and some of the independent operators are struggling to bring people in – there are many things that the chains do very well that the independents should take note of and try their best to implement some variation of.
How is it out there? I think my fictional operator answers it pretty well, my numbers are getting smaller and the chains still have comparatively full parking lots. People are still dining out. Maybe not as often, but they are still doing it. Simply put, they are more judicious about where they are spending their money, but they are still spending. It has become less about the quality of the food, and more about the perceived value, the dining experience and the consistency.
As I think about why chains are holding up better than independents one thing jumps out at me, the chains have done an effective job of creating a destination atmosphere in their restaurants. There is no one magical ambience that we should all work to replicate, but rather there are commonalities between the successful operations’ atmospheres that we can all draw from and implement into our own vision. As I try to narrow down the most important component of setting the atmosphere and ambience the word that keeps coming to mind is COMMITMENT. It doesn’t have to be fancy, loud, quiet, white tablecloth, sporty, clubby, clubhousey, upscale, retro or any of the other decorative options – it just has to be committed to the vision. Without that commitment, great ideas become muddled, misguided and ineffective. Pick a direction and commit to it. With commitment crazy ideas work – Ed Debevic’s jumps to mind – kitschy décor with snotty servers dressed in a pseudo 50’s style, and they have flourished for over 20 years. How about ChuckECheese? Loud, game filled, anxiety inducing rooms filled with animated creatures fake singing to taped music, and they hung around for years? I know you can think of one or two places around you that leave you scratching your head when you try to figure out how that idea works. They all have one thing in common – commitment to their vision and a willingness to carry it through.
Coupled with their commitment and their vision chains have a clearly defined brand. They are keeping their menu fresh without overwhelming it with options – in fact, studies show that 80% of the national chains have reduced their menu sizes over the last 4 years. They have decided who they are and have worked to preserve and build upon that self image. They are not trying to have everybody’s favorite childhood meal on their menus, but rather they are limiting the selections and perfecting them. They track their sales and dump their dogs in favor of new ideas that have a greater potential for generating sales. Limiting the selection also limits their inventory dollars, increasing the velocity of their inventory dollars and thereby increasing the ROI of their inventory dollars. Tying up your money on inventory for menu dogs doesn’t do you any favors. In fact menu dogs are a double negative – they cost you money and muddle your successful image by lingering on the menu. To me, the message a reduced menu sends to consumers is one of confidence. It says “Here I am, this is what I do best, and you are going to like it!” It is not pandering to everyone’s secret desire to have to choose between an open faced roast beef sandwich, liver and onions, and a filet. It is incongruous to have those items on the same menu – what are you communicating to your customers by having them all on the same menu – that I can’t figure out who I am, so I will make sure that I turn over every stone and put it on my menu lest the 1% of my customers who want that obscure entrée leaves unfulfilled? Define your brand and stick to it. You and your customers won’t be disappointed.
The last part I want to address is consistency and perceived value. I have been out with friends and listened to the discussion about where we are going to eat. Frequently a chain will win out because each of us knows what to expect when we get there. We know 80% of the menu without looking at it. We know roughly where it is going to be priced. We are confident that while we may not always get the best food, we will get food that tastes exactly like it did the last couple of times we ate there. The consistency and the brand identification of the restaurant created perceived value. It may not be the “most valuable” meal, but the risk/reward relationship has been defined – I will go there to find ___ on the menu priced at ___ and I know what it will taste like, and I find that to be acceptable. Many independents haven’t defined their brand and worked through having a clearly outlined step by step menu prep manual that creates consistency regardless of who is doing the cooking tonight.
The characteristics that have made many of the chains successful ARE transferable and can be implemented to help you, the independent operator, achieve similar success even in down economic times. You CAN do it with a vision, a commitment and consistency.
It seems like I am having the same conversation four or five times a week these days. You know the one that goes “How is it out there? I am dying here. My numbers just keep dwindling. I can’t figure out why the when I drive by the chains, their parking lots are still full. I serve better food than they do. What is going on? What do they have that I don’t?” Those are some loaded questions.
I think I could write for hours on some of my opinions of why the chains have full parking lots and some of the independent operators are struggling to bring people in – there are many things that the chains do very well that the independents should take note of and try their best to implement some variation of.
How is it out there? I think my fictional operator answers it pretty well, my numbers are getting smaller and the chains still have comparatively full parking lots. People are still dining out. Maybe not as often, but they are still doing it. Simply put, they are more judicious about where they are spending their money, but they are still spending. It has become less about the quality of the food, and more about the perceived value, the dining experience and the consistency.
As I think about why chains are holding up better than independents one thing jumps out at me, the chains have done an effective job of creating a destination atmosphere in their restaurants. There is no one magical ambience that we should all work to replicate, but rather there are commonalities between the successful operations’ atmospheres that we can all draw from and implement into our own vision. As I try to narrow down the most important component of setting the atmosphere and ambience the word that keeps coming to mind is COMMITMENT. It doesn’t have to be fancy, loud, quiet, white tablecloth, sporty, clubby, clubhousey, upscale, retro or any of the other decorative options – it just has to be committed to the vision. Without that commitment, great ideas become muddled, misguided and ineffective. Pick a direction and commit to it. With commitment crazy ideas work – Ed Debevic’s jumps to mind – kitschy décor with snotty servers dressed in a pseudo 50’s style, and they have flourished for over 20 years. How about ChuckECheese? Loud, game filled, anxiety inducing rooms filled with animated creatures fake singing to taped music, and they hung around for years? I know you can think of one or two places around you that leave you scratching your head when you try to figure out how that idea works. They all have one thing in common – commitment to their vision and a willingness to carry it through.
Coupled with their commitment and their vision chains have a clearly defined brand. They are keeping their menu fresh without overwhelming it with options – in fact, studies show that 80% of the national chains have reduced their menu sizes over the last 4 years. They have decided who they are and have worked to preserve and build upon that self image. They are not trying to have everybody’s favorite childhood meal on their menus, but rather they are limiting the selections and perfecting them. They track their sales and dump their dogs in favor of new ideas that have a greater potential for generating sales. Limiting the selection also limits their inventory dollars, increasing the velocity of their inventory dollars and thereby increasing the ROI of their inventory dollars. Tying up your money on inventory for menu dogs doesn’t do you any favors. In fact menu dogs are a double negative – they cost you money and muddle your successful image by lingering on the menu. To me, the message a reduced menu sends to consumers is one of confidence. It says “Here I am, this is what I do best, and you are going to like it!” It is not pandering to everyone’s secret desire to have to choose between an open faced roast beef sandwich, liver and onions, and a filet. It is incongruous to have those items on the same menu – what are you communicating to your customers by having them all on the same menu – that I can’t figure out who I am, so I will make sure that I turn over every stone and put it on my menu lest the 1% of my customers who want that obscure entrée leaves unfulfilled? Define your brand and stick to it. You and your customers won’t be disappointed.
The last part I want to address is consistency and perceived value. I have been out with friends and listened to the discussion about where we are going to eat. Frequently a chain will win out because each of us knows what to expect when we get there. We know 80% of the menu without looking at it. We know roughly where it is going to be priced. We are confident that while we may not always get the best food, we will get food that tastes exactly like it did the last couple of times we ate there. The consistency and the brand identification of the restaurant created perceived value. It may not be the “most valuable” meal, but the risk/reward relationship has been defined – I will go there to find ___ on the menu priced at ___ and I know what it will taste like, and I find that to be acceptable. Many independents haven’t defined their brand and worked through having a clearly outlined step by step menu prep manual that creates consistency regardless of who is doing the cooking tonight.
The characteristics that have made many of the chains successful ARE transferable and can be implemented to help you, the independent operator, achieve similar success even in down economic times. You CAN do it with a vision, a commitment and consistency.
Thursday, March 27, 2008
Adaptation
“Obstacles are those frightful things you see when you take your eyes off the goal.” Hannah Moore author and philosopher.
I attended a food show yesterday and spent some time discussing the current state of the industry marketplace with many industry experts, vendors, brokers and successful operators. The most common insight I received from them was that this “down season” was going to end, and that it was important that operators emerge from it in as strong a position as possible. Now is the time to explore how to bring more profit to the bottom line. How they suggested accomplishing this took many forms, some of which I would like to share with you today.
I think that the most important advice of all that I received yesterday was to preserve or improve product integrity. This means that saving money to improve profitability should not start by cheapening the products that you are bringing in the back door. This is a short cut and will eventually lead to bad things for your establishment. Trying to squeeze an extra buck out of your menu by downgrading your ingredients is readily apparent to your regulars and is not putting your best foot forward with your new customers. In this economic environment consumers are still spending, it is just that they are being more judicious about how and where they are spending. The quickest way to alienate your core business and not earn new repeat customers is by sacrificing your food quality in an effort to save a buck. Keep your product integrity and consistency and you will survive.
Another significant piece of advice that I picked up was that we should all be working toward finding new things to offer your customers without departing from your already successful brand. New flavors, new toppings, a new side or a seasonal offering will go a long way towards keeping your customers interested. Don’t necessarily expand your menu, but rather bring in an item or two as a special or offer a variation of an existing menu item as an alternative on your specials (keep the chicken sandwich, but now offer a Chipotle chicken sandwich as a special) – it keeps your inventory dollars under control and adds to your establishment’s allure.
One more that I thought was pretty good was to focus on expanding salads, fish and pork as menu options. Due to the high demand and consequent high costs of wheat and corn, livestock that feed on corn in particular will continue to escalate in price (feed prices increase and are passed on to the market). As it warms up, people will shift their focus to lighter menus and offering salads and fish in particular will strike a chord with consumers. As a result, you will be offering a seasonally popular meal that has less cost volatility for you. You can’t ask for a much better combination in this market!
Last but not least is menu pricing. It is not the same market as it was a year ago….shortening, eggs, flour, milk, cheese, meat, and chicken in particular are priced significantly higher today than they were a year ago. Consumers are being bombarded with news reports that things are more expensive. They expect it. They can’t expect you to try to save the economy by holding your prices steady. You WILL catch flak about raising your prices. The customers will get over it if you continue to provide value for their dollars. Consumers are still spending - they are just being more discerning about where they are spending their money. They will come back if you continue to serve GOOD food at a fair price. If your product is consistent, quality and fairly priced in the market, they will return – you are familiar, they have a relationship with you, and your food is good.
We can no longer afford to sit back and react to movements in the marketplace. We need to be proactive and in front of what is happening out there. To sit back and try and ride it out while doing what you have always done is not a good choice. The market is changing. You must be too!
I attended a food show yesterday and spent some time discussing the current state of the industry marketplace with many industry experts, vendors, brokers and successful operators. The most common insight I received from them was that this “down season” was going to end, and that it was important that operators emerge from it in as strong a position as possible. Now is the time to explore how to bring more profit to the bottom line. How they suggested accomplishing this took many forms, some of which I would like to share with you today.
I think that the most important advice of all that I received yesterday was to preserve or improve product integrity. This means that saving money to improve profitability should not start by cheapening the products that you are bringing in the back door. This is a short cut and will eventually lead to bad things for your establishment. Trying to squeeze an extra buck out of your menu by downgrading your ingredients is readily apparent to your regulars and is not putting your best foot forward with your new customers. In this economic environment consumers are still spending, it is just that they are being more judicious about how and where they are spending. The quickest way to alienate your core business and not earn new repeat customers is by sacrificing your food quality in an effort to save a buck. Keep your product integrity and consistency and you will survive.
Another significant piece of advice that I picked up was that we should all be working toward finding new things to offer your customers without departing from your already successful brand. New flavors, new toppings, a new side or a seasonal offering will go a long way towards keeping your customers interested. Don’t necessarily expand your menu, but rather bring in an item or two as a special or offer a variation of an existing menu item as an alternative on your specials (keep the chicken sandwich, but now offer a Chipotle chicken sandwich as a special) – it keeps your inventory dollars under control and adds to your establishment’s allure.
One more that I thought was pretty good was to focus on expanding salads, fish and pork as menu options. Due to the high demand and consequent high costs of wheat and corn, livestock that feed on corn in particular will continue to escalate in price (feed prices increase and are passed on to the market). As it warms up, people will shift their focus to lighter menus and offering salads and fish in particular will strike a chord with consumers. As a result, you will be offering a seasonally popular meal that has less cost volatility for you. You can’t ask for a much better combination in this market!
Last but not least is menu pricing. It is not the same market as it was a year ago….shortening, eggs, flour, milk, cheese, meat, and chicken in particular are priced significantly higher today than they were a year ago. Consumers are being bombarded with news reports that things are more expensive. They expect it. They can’t expect you to try to save the economy by holding your prices steady. You WILL catch flak about raising your prices. The customers will get over it if you continue to provide value for their dollars. Consumers are still spending - they are just being more discerning about where they are spending their money. They will come back if you continue to serve GOOD food at a fair price. If your product is consistent, quality and fairly priced in the market, they will return – you are familiar, they have a relationship with you, and your food is good.
We can no longer afford to sit back and react to movements in the marketplace. We need to be proactive and in front of what is happening out there. To sit back and try and ride it out while doing what you have always done is not a good choice. The market is changing. You must be too!
Wednesday, March 5, 2008
Your Customers, they’re at 7 and counting...or Sweatin' the small stuff
This week I am excited to announce that I have a guest writer, Ken Wasco. Ken is a member of the National Speakers Association and the GFS marketing team who's gained a wide reputation in the food service industry for presenting timely seminars and workshops on obtaining higher levels of personal effectiveness through an emphasis on communication skills. As a highly regarded and entertaining presenter Ken has conducted thousands of sessions and written many articles on accomplishing results through people. Ken will be presenting two new seminars in Ft. Wayne, IN on March 26th entitled "50 Ways to Get New Customers Today" and "50 Ways to Keep Your Customers Happy." His presentations are a must see!
Here’s a news flash - people love food! They love every thing about it - they love to make it - they love to serve it - they talk, read and think about it - but mostly people love to eat it. Food’s basic to life - necessary - timeless - yet it always somehow seems new - and it’s always exciting. It has to be the ultimate disposable! Because people always seem to be looking for it. What a great business to be in.
Here’s another news flash. Food’s a people business. Can you imagine a conversation about food that didn’t include a reference to people? People are what food is all about - it’s purpose for existing. The idea of people and food are inseparable - they go to together - like a burger and fries, ham and eggs, salad and dressing - I’m getting hungry - let’s eat!
In the food business we love recipes, menus and concepts - they’re are a lot of great ones out there - but when you take off your operator hat and put on your consumer one it becomes obvious that the best food experiences always have a great people element attached. When the food is right and the service is too the experience moves to memorable and the impression is set. That’s why at Gordon Food Service we are proud to offer this new dimension of RSVP because we know that when you mix great new ideas with great people you earn yourself great success. After all, basically “Foodservice… it’s about people.”
So let’s get going. You already know that when it comes to dealing with people there is no one “sure” method that works for everybody - despite what the marketers of books and tapes tell you - you’ve learned that there is no “one size fits all” magic approach that produces great results every time. In food service there is no short cut to effectiveness. To work foodservice magic in the kitchen you need a great recipe, quality ingredients and the willingness of someone to devote the time it takes to do it well. It’s not that much different with people. Accomplishing results with people is just doing a lot of little things well - little things that along the way add up to big thing things. Things that impress people.
Impressions happen all the time, and it is human nature to be continually forming them. But first impressions - now they’re unique. They happen fast. So fast in fact that by now you’ve already decided whether this new feature of RSVP will be worth your time. And whether you will read again next month. First impressions happen quickly - they lead to action and their effect is long lasting. In today’s world people will give you only seven seconds before they form that first impression - that’s it, that’s all you’ve got - and in those seven seconds you have to win a customer, keep a customer, and keep a customer coming back.
First impressions are created before a customer ever walks in the door. And that first impression can happen anywhere before they do. A newspaper, internet or telephone book advertisement may create it - a drive by and glance at your parking lot may do it - how clean and inviting the look of your entrance is may be it. Every impression reinforces the next action but you have to be aware that the first impression starts it all out. For most of us that happens when we hear about something from someone else. Your menu has to be creative and the food great but what makes the experience memorable and what gets others talking - is always the people.
So here’s the secret to finding out the first people impression your place creates - become your customer - walk out the back door and walk in the front. What is the first people experience you encounter in the first seven seconds? Whatever you see and smell will be the same for your guests, but what you hear combined with that will be the key. Who is the first person you saw - how’s the greeting - did the person smile - did they walk toward you - did they look you in the eye - did they invite you in - what did they say? Now pick up the phone - give your operation a call - how did they answer - could you sense that the person was smiling and inviting you over?
Remember, in the fast paced world of today you’ve only got seven seconds to create a great first impression - make ‘em count.
Here’s another news flash. Food’s a people business. Can you imagine a conversation about food that didn’t include a reference to people? People are what food is all about - it’s purpose for existing. The idea of people and food are inseparable - they go to together - like a burger and fries, ham and eggs, salad and dressing - I’m getting hungry - let’s eat!
In the food business we love recipes, menus and concepts - they’re are a lot of great ones out there - but when you take off your operator hat and put on your consumer one it becomes obvious that the best food experiences always have a great people element attached. When the food is right and the service is too the experience moves to memorable and the impression is set. That’s why at Gordon Food Service we are proud to offer this new dimension of RSVP because we know that when you mix great new ideas with great people you earn yourself great success. After all, basically “Foodservice… it’s about people.”
So let’s get going. You already know that when it comes to dealing with people there is no one “sure” method that works for everybody - despite what the marketers of books and tapes tell you - you’ve learned that there is no “one size fits all” magic approach that produces great results every time. In food service there is no short cut to effectiveness. To work foodservice magic in the kitchen you need a great recipe, quality ingredients and the willingness of someone to devote the time it takes to do it well. It’s not that much different with people. Accomplishing results with people is just doing a lot of little things well - little things that along the way add up to big thing things. Things that impress people.
Impressions happen all the time, and it is human nature to be continually forming them. But first impressions - now they’re unique. They happen fast. So fast in fact that by now you’ve already decided whether this new feature of RSVP will be worth your time. And whether you will read again next month. First impressions happen quickly - they lead to action and their effect is long lasting. In today’s world people will give you only seven seconds before they form that first impression - that’s it, that’s all you’ve got - and in those seven seconds you have to win a customer, keep a customer, and keep a customer coming back.
First impressions are created before a customer ever walks in the door. And that first impression can happen anywhere before they do. A newspaper, internet or telephone book advertisement may create it - a drive by and glance at your parking lot may do it - how clean and inviting the look of your entrance is may be it. Every impression reinforces the next action but you have to be aware that the first impression starts it all out. For most of us that happens when we hear about something from someone else. Your menu has to be creative and the food great but what makes the experience memorable and what gets others talking - is always the people.
So here’s the secret to finding out the first people impression your place creates - become your customer - walk out the back door and walk in the front. What is the first people experience you encounter in the first seven seconds? Whatever you see and smell will be the same for your guests, but what you hear combined with that will be the key. Who is the first person you saw - how’s the greeting - did the person smile - did they walk toward you - did they look you in the eye - did they invite you in - what did they say? Now pick up the phone - give your operation a call - how did they answer - could you sense that the person was smiling and inviting you over?
Remember, in the fast paced world of today you’ve only got seven seconds to create a great first impression - make ‘em count.
Sunday, February 17, 2008
Carpe Diem
“The trouble with opportunity is that it’s always more recognizable going than coming.” Author unknown.
I am hearing it everywhere – on TV, Radio, Internet, in the office, at work, at church….just about anywhere. The economy is not where any of us would like it to be. Sales are down. Customer counts are down. Profits are down. Everyone is getting a little nervous. Are you? What are you doing? How are you going to insure that you are going to come out of this better than your competition? Have you even thought of how to take advantage of this economic slowdown?
When faced with situations like this there are three primary options – 1) DOING SOMETHING ABOUT IT. 2) Doing nothing about it. 3) Complaining about it. Which category do you fall into? I hope the 1st! Now is the time to act – to reinvest, to retool, and to reinvent. Don’t put it off - holding on to what you have always done is not taking advantage of this opportunity. Take a look at your best practices and see if they can be improved.
The major areas to look at are your menu, your labor, and your marketing. Let’s take them one at a time. Your menu – when is the last time you took the time to cost it out? Are your prices set profitably? Food costs have risen significantly, have you adapted your margins? Over the past 5 years national chains have reduced their menu options by 20% - why? To make sure that what they had on their menu sold….no sense in tying up inventory dollars on items that don’t turn. Do your menu selections reinforce your reputation and brand? If they don’t why are they on there? These are just some of the things we need to be looking at while the market is slow. Now is the time to do the leg work and put in the investment for more profitable and busier times.
Your labor – are you over staffed? Are their labor saving opportunities available in the marketplace that may cost a little more on the invoice that could result in long term financial savings. I know – none of us likes to let someone go, but is carrying too much staffing worth running your profits into the ground? Slow times like this are the perfect times to review your best practices models. Is there some retraining that could be done? Is there an opportunity to stream line your business model so that in busier times you can be more profitable and turn more tables? How about in the back of the house? Is your line set as efficiently as it could be? I know that everyone is resistant to change, but if nothing changes, then nothing changes!
Your marketing – are you reaching the right people with the right information and messages? I know I harp on this one a lot, but I believe that strong marketing ideas can drive sales exponentially. What are you doing to draw people into your establishment? There are lots of options available to the consumers. What are you doing to earn your slice of the pie? There is business out there to be had – the question is what are you going to do to grab it? Limited time offers, prizes, community groups, monthly themes, and daily specials – just about anything goes when you are trying to draw customers into your restaurant. When consumers are watching their pennies, we need to raise our games to get our share of them, and slow times provide a great opportunity to explore some new ideas.
Believe me, I see what is happening in the marketplace and it frightens me a little too. How much longer will it last? Who knows! What I do know is that there is no time like the present to put into action those steps necessary to create bigger, more pronounced points of difference between you and your competition. Consumers haven’t stopped spending, they have just changed how, when and where they are spending, and the challenge lies before us to raise our games to go out and grab our market share. I know that you – the people reading this – can do it and have done it in the past. I believe in you and your businesses and I want to be a part of your success!
Thursday, January 31, 2008
Perspective
"Don't find fault. Find a remedy." Henry Ford, inventor and industrialist
It seems like everywhere we turn these days, economic doom and gloom is the topic of conversation - whether it is on the news, at the water cooler, or at the dinner table. It almost seems hopeless. I don’t know about you, but it after a while it can’t help but get to you. I read something this week that helped me put the current economic conditions into perspective, and I thought I would share a portion of it with you.
“Even in a recession, more than 90 percent of workers who want to work will be employed. Even in a recession, most businesses will make a profit. Even in a recession in this era, more than 10 million men and women will need cars and trucks. Many millions will need new homes. Tens of millions will need retirement investment products and life insurance. In the United States, even in a recession, there are plenty of people with money to spend….There's another key truth about recessions: They always end, and the economy always goes on to a new plateau. It may take a while, but the economy always moves on to a new high.” Ben Stein actor, comedian, lawyer, professor, White House speechwriter and game show host.
He is right. People are still spending money. People still consume and have wants and desires. Lives are still busy and people still desire convenience and ease. We still want to eat out. It is just how and where we spend our money that is going to change. I am sure that you have altered your spending as well. But you haven’t stopped spending have you?
The trick is going to be trying to avoid focusing on saving money and focus on making money. We all need to raise our games. Find innovative menu ideas. Become more efficient. Find labor saving steps. Improve service standards.
You are a smart consumer. You make good decisions with your money. What are the things that inspire you to spend? How do you decide where you are going to dinner? What is special about that place? The answers to those questions can be a great guide to what you can do to become the business that not only survives the down economic times but the business that thrives.
It seems like everywhere we turn these days, economic doom and gloom is the topic of conversation - whether it is on the news, at the water cooler, or at the dinner table. It almost seems hopeless. I don’t know about you, but it after a while it can’t help but get to you. I read something this week that helped me put the current economic conditions into perspective, and I thought I would share a portion of it with you.
“Even in a recession, more than 90 percent of workers who want to work will be employed. Even in a recession, most businesses will make a profit. Even in a recession in this era, more than 10 million men and women will need cars and trucks. Many millions will need new homes. Tens of millions will need retirement investment products and life insurance. In the United States, even in a recession, there are plenty of people with money to spend….There's another key truth about recessions: They always end, and the economy always goes on to a new plateau. It may take a while, but the economy always moves on to a new high.” Ben Stein actor, comedian, lawyer, professor, White House speechwriter and game show host.
He is right. People are still spending money. People still consume and have wants and desires. Lives are still busy and people still desire convenience and ease. We still want to eat out. It is just how and where we spend our money that is going to change. I am sure that you have altered your spending as well. But you haven’t stopped spending have you?
The trick is going to be trying to avoid focusing on saving money and focus on making money. We all need to raise our games. Find innovative menu ideas. Become more efficient. Find labor saving steps. Improve service standards.
You are a smart consumer. You make good decisions with your money. What are the things that inspire you to spend? How do you decide where you are going to dinner? What is special about that place? The answers to those questions can be a great guide to what you can do to become the business that not only survives the down economic times but the business that thrives.
Save 10% Now
“Lack of loyalty is one of the major causes of failure in every walk of life.” Napoleon Hill, author Think and Grow Rich
This is a reproduction of an article published in the February 16, 2006 edition of restaurantowner.com. I may be a little biased here, but I am convinced that there is value in what Mr. Marvin writes.
The Easiest Way to Cut Your Food Cost 10%
by Bill Marvin, The Restaurant Doctor
While there are few absolutes in this business this is one - "Engaging in ongoing competitive bidding practices to get the lowest prices actually leads to higher food costs, not lower."
That's right. Contrary to what most of us, who have grown up in this business have been taught, having an ongoing purchasing process that revolves around using lots of vendors, comparing bids, price shopping and buying from the lowest bidder NOT only doesn't save you any money but ends up costing you in several ways.
To prove my point, how many professionally managed, large chain operators employ ongoing competitive bidding practices? ZERO, NONE, NADA! Every large chain uses one primary purveyor to supply 80% - 100% of it's food products. How many independent operators do this? Probably less than 10%, easily less than 20%.
And who makes more money at the restaurant level, the typical chain or independent restaurant? According to industry averages published by NRA the average independent nets about a nickel or 5% of sales before federal and state income taxes. Having worked with several chain operators and from perusing the annual reports and 10-Ks of many publicly held chains, the average restaurant level net income before corporate overhead and income taxes is around 12% - 15% of net sales.
The fact that chain restaurants are 2 to 3 times more profitable than independent operations may not be entirely due to purchasing practices but I'm sure it's a factor, possibly a big one.
Distraction from High-Return Activities
Another factor to consider is the amount of time it takes to constantly evaluate bids, deal with lots of vendors and put away lots of deliveries, lots of small deliveries, that is. Using a prime vendor frees up management time that can be better spent on high return activities like taking better care of your customers and developing your people. In my mind, trying to save 25 cents on a case of green beans is hardly a high return activity worthy of much owner or management time.
What Determines Supplier Prices?
There are four basic elements that go into the pricing formula of most suppliers.
Product Costs: What it costs the vendor to purchase the products from their suppliers such as manufacturers, growers and other wholesalers. The more they buy, the lower their costs are so there's a built-in incentive for suppliers to move lots of product.
Administrative & Selling Costs: Includes the cost of servicing the account and processing the orders. Factors that can affect these costs include order processing time, lead time, order frequency, number of invoices processed, specialty products needed and credit terms. Another point is that these costs are basically fixed and suppliers want to spread these costs over as many sales dollars as possible.
Delivery & Handling Costs: This boils down to cost per drop. The drop cost to deliver 1 case to your back door is about the same as it costs to deliver 100 cases. To a supplier, bigger orders mean less delivery cost per dollar of product delivered. Number of deliveries per week and the time of the day you will accept deliveries can also affect these costs.
Profit on the Account: This is the percentage mark-up or gross profit in dollars the supplier needs to make an account profitable after considering all the factors discussed above and the potential volume on the account.
The key point is that if you find ways to lower the vendor's cost of servicing your account and give them the opportunity to make more profit "dollars", they are usually willing to work on a lower "mark-up." As a result, you get lower overall prices and other important benefits too, which I'll discuss further below.
Give Suppliers the Opportunity to Make More Money on Your Account
Yes, you read that right. It's in everyone's best interest to position a supplier to make more money on your account in return for something . . . LOWER PRICES! Here's how it works . . .
Smart suppliers don't just look at the percentage mark-up on an account. What's more important is the potential total gross profit in dollars they can make. For example . .
Assume you buy around $600,000 of food a year. You currently spread your purchases around to 2 or 3 broadline distributors and several specialty suppliers. You spend about $100,000 a year with Distributor A and Distributor A is adding a 20% markup to everything they sell you (Case 1). Do you think Distributor A might be willing to work on a smaller margin percent if they could get more, a lot more of your business?
As you see, it makes economic sense for Distributor A to work on a smaller margin % IF it means converting you from a $100,000 account into a $500,000 account. You can see in Case 2, Distributor A has the opportunity to more than double their gross profit dollars on the account even though they gave up a large slice of their average markup % to get more of your business.
A Case In Point
When I took over as the Food & Beverage Director of the U.S. Olympic Training Center (OTC) in Colorado Springs they were using lots of suppliers. As many as 15 to 20 vendors a week.
Sensing the need to do something different, I invited the major vendors in the area to submit a proposal if they were interested in being considered as a prime vendor. In short, the program would be a year-long, non-contractual agreement whereby the OTC would agree to purchase a major portion of its total food purchases (50% to 70%) from one supplier in exchange for a fixed "mark-up" (not price) on their products.
In a notice to the prime vendor candidates, I included a quote sheet (called the Prime Vendor Quote Sheet below) outlining the products and specification of the OTC's principle products and the quantities purchased in a typical week. Each vendor was asked to quote their current prices on those products and how they would determine their mark-up on each product (cost plus a percentage or cost plus a fixed amount per unit) over the term of the prime vendor program, which in this case was 1 year.
Results
We noticed these benefits as a result of going on the prime vendor program:
1. Reduction in food cost: Immediately after implementing the prime vendor program, the OTC's food cost per meal dropped 10% while maintaining the same menu using the same ingredients.
2. Fewer vendors and invoices to deal with. Instead of dealing with nearly 20 vendors and lots of deliveries and invoices, the number of vendors dropped to 5 or 6. Fewer people and paperwork to deal with.
3. Less purchasing activities: Prior to the prime vendor program, the OTC had a full time purchasing clerk. That position was no longer needed and was phased out.
4. Better vendor service. The prime vendor became much more responsive to special requests and to situations that required immediate action.
5. Improved product consistency. Food was now coming from one source, not the low-bidder of the week. This meant better food quality and consistency.
6. Closer vendor relationship. There was now the incentive for the sales rep to provide more attention, and to maintain a good working relationship.
"Yeah, But . . . "
One common response to a prime vendor arrangement is that the vendor will ratchet the prices up once they know you're not watching them like a hawk. Sure that's possible, but now we're talking about being a sizeable account which the supplier knows will be put out to bid again within a year. If they do play games with the pricing, chances are you'll find out sooner or later.
There is an element of trust involved in a prime vendor relationship. The question you need to answer is, "will a supplier intentionally inflate prices if it puts them in jeopardy of losing a big customer?" Sure it's possible but it's hardly a smart business move on the part of any supplier who wants you as a customer over the long term.
Speaking of trust, in this type of arrangement trust goes both ways. You'll always have another supplier come to you with a better price on a case of tomato sauce today or box of ribs tomorrow, but the point is sticking with the prime vendor as much as possible to get the lowest "overall" prices day after day (and spend your time in more productive activities). Once you start cherry-picking the best deals out there product by product you defeat the purpose of a having prime vendor and it probably won't work.
Does Prime Vendor Make Sense For Your Restaurant?
There's really only one way to find out, try it! While not a panacea, virtually every operator I've met who has tried prime vendor, say they'd never go back to competitive bidding again.
RestaurantOwner.com members can download the following forms and templates to make the prime vendor evaluation process faster, easier and enhance your changes of getting the best possible deal:
Cover Letter Template - Use this to describe, to each prime vendor candidate, the prime vendor program your are proposing, how they can submit a proposal to you, and the basis you're going to use to select your prime vendor.
Prime Vendor Spec Sheet - To get the best deal, you need to be aware of all the important factors to consider in structuring your prime vendor arrangement. Includes delivery frequency and time, order lead time, method of ordering, credit terms and other key factors you can negotiate on to improve your bargaining position and lower your prices.
Prime Vendor Quote Sheet - Here's where you list the product specifications and average weekly usage of your principal products. The vendor candidates use this to fill in their current price quote for each product and the formula used to determine each product's price (the vendor's cost plus a percentage or the vendor's cost plus a fixed amount per unit).
Prime Vendor Summary Sheet - This is a summary sheet to collect and summarize all the candidates' quotes and pricing formulas. Makes it easy to compare each candidate's bid in total and product by product.
Bill Marvin, The Restaurant DoctorTM is an advisor to service-oriented organizations around the world. For more information, visit Bill's website at www.RestaurantDoctor.com or email him at bill@RestaurantDoctor.com.
This is a reproduction of an article published in the February 16, 2006 edition of restaurantowner.com. I may be a little biased here, but I am convinced that there is value in what Mr. Marvin writes.
The Easiest Way to Cut Your Food Cost 10%
by Bill Marvin, The Restaurant Doctor
While there are few absolutes in this business this is one - "Engaging in ongoing competitive bidding practices to get the lowest prices actually leads to higher food costs, not lower."
That's right. Contrary to what most of us, who have grown up in this business have been taught, having an ongoing purchasing process that revolves around using lots of vendors, comparing bids, price shopping and buying from the lowest bidder NOT only doesn't save you any money but ends up costing you in several ways.
To prove my point, how many professionally managed, large chain operators employ ongoing competitive bidding practices? ZERO, NONE, NADA! Every large chain uses one primary purveyor to supply 80% - 100% of it's food products. How many independent operators do this? Probably less than 10%, easily less than 20%.
And who makes more money at the restaurant level, the typical chain or independent restaurant? According to industry averages published by NRA the average independent nets about a nickel or 5% of sales before federal and state income taxes. Having worked with several chain operators and from perusing the annual reports and 10-Ks of many publicly held chains, the average restaurant level net income before corporate overhead and income taxes is around 12% - 15% of net sales.
The fact that chain restaurants are 2 to 3 times more profitable than independent operations may not be entirely due to purchasing practices but I'm sure it's a factor, possibly a big one.
Distraction from High-Return Activities
Another factor to consider is the amount of time it takes to constantly evaluate bids, deal with lots of vendors and put away lots of deliveries, lots of small deliveries, that is. Using a prime vendor frees up management time that can be better spent on high return activities like taking better care of your customers and developing your people. In my mind, trying to save 25 cents on a case of green beans is hardly a high return activity worthy of much owner or management time.
What Determines Supplier Prices?
There are four basic elements that go into the pricing formula of most suppliers.
Product Costs: What it costs the vendor to purchase the products from their suppliers such as manufacturers, growers and other wholesalers. The more they buy, the lower their costs are so there's a built-in incentive for suppliers to move lots of product.
Administrative & Selling Costs: Includes the cost of servicing the account and processing the orders. Factors that can affect these costs include order processing time, lead time, order frequency, number of invoices processed, specialty products needed and credit terms. Another point is that these costs are basically fixed and suppliers want to spread these costs over as many sales dollars as possible.
Delivery & Handling Costs: This boils down to cost per drop. The drop cost to deliver 1 case to your back door is about the same as it costs to deliver 100 cases. To a supplier, bigger orders mean less delivery cost per dollar of product delivered. Number of deliveries per week and the time of the day you will accept deliveries can also affect these costs.
Profit on the Account: This is the percentage mark-up or gross profit in dollars the supplier needs to make an account profitable after considering all the factors discussed above and the potential volume on the account.
The key point is that if you find ways to lower the vendor's cost of servicing your account and give them the opportunity to make more profit "dollars", they are usually willing to work on a lower "mark-up." As a result, you get lower overall prices and other important benefits too, which I'll discuss further below.
Give Suppliers the Opportunity to Make More Money on Your Account
Yes, you read that right. It's in everyone's best interest to position a supplier to make more money on your account in return for something . . . LOWER PRICES! Here's how it works . . .
Smart suppliers don't just look at the percentage mark-up on an account. What's more important is the potential total gross profit in dollars they can make. For example . .
Assume you buy around $600,000 of food a year. You currently spread your purchases around to 2 or 3 broadline distributors and several specialty suppliers. You spend about $100,000 a year with Distributor A and Distributor A is adding a 20% markup to everything they sell you (Case 1). Do you think Distributor A might be willing to work on a smaller margin percent if they could get more, a lot more of your business?
As you see, it makes economic sense for Distributor A to work on a smaller margin % IF it means converting you from a $100,000 account into a $500,000 account. You can see in Case 2, Distributor A has the opportunity to more than double their gross profit dollars on the account even though they gave up a large slice of their average markup % to get more of your business.
A Case In Point
When I took over as the Food & Beverage Director of the U.S. Olympic Training Center (OTC) in Colorado Springs they were using lots of suppliers. As many as 15 to 20 vendors a week.
Sensing the need to do something different, I invited the major vendors in the area to submit a proposal if they were interested in being considered as a prime vendor. In short, the program would be a year-long, non-contractual agreement whereby the OTC would agree to purchase a major portion of its total food purchases (50% to 70%) from one supplier in exchange for a fixed "mark-up" (not price) on their products.
In a notice to the prime vendor candidates, I included a quote sheet (called the Prime Vendor Quote Sheet below) outlining the products and specification of the OTC's principle products and the quantities purchased in a typical week. Each vendor was asked to quote their current prices on those products and how they would determine their mark-up on each product (cost plus a percentage or cost plus a fixed amount per unit) over the term of the prime vendor program, which in this case was 1 year.
Results
We noticed these benefits as a result of going on the prime vendor program:
1. Reduction in food cost: Immediately after implementing the prime vendor program, the OTC's food cost per meal dropped 10% while maintaining the same menu using the same ingredients.
2. Fewer vendors and invoices to deal with. Instead of dealing with nearly 20 vendors and lots of deliveries and invoices, the number of vendors dropped to 5 or 6. Fewer people and paperwork to deal with.
3. Less purchasing activities: Prior to the prime vendor program, the OTC had a full time purchasing clerk. That position was no longer needed and was phased out.
4. Better vendor service. The prime vendor became much more responsive to special requests and to situations that required immediate action.
5. Improved product consistency. Food was now coming from one source, not the low-bidder of the week. This meant better food quality and consistency.
6. Closer vendor relationship. There was now the incentive for the sales rep to provide more attention, and to maintain a good working relationship.
"Yeah, But . . . "
One common response to a prime vendor arrangement is that the vendor will ratchet the prices up once they know you're not watching them like a hawk. Sure that's possible, but now we're talking about being a sizeable account which the supplier knows will be put out to bid again within a year. If they do play games with the pricing, chances are you'll find out sooner or later.
There is an element of trust involved in a prime vendor relationship. The question you need to answer is, "will a supplier intentionally inflate prices if it puts them in jeopardy of losing a big customer?" Sure it's possible but it's hardly a smart business move on the part of any supplier who wants you as a customer over the long term.
Speaking of trust, in this type of arrangement trust goes both ways. You'll always have another supplier come to you with a better price on a case of tomato sauce today or box of ribs tomorrow, but the point is sticking with the prime vendor as much as possible to get the lowest "overall" prices day after day (and spend your time in more productive activities). Once you start cherry-picking the best deals out there product by product you defeat the purpose of a having prime vendor and it probably won't work.
Does Prime Vendor Make Sense For Your Restaurant?
There's really only one way to find out, try it! While not a panacea, virtually every operator I've met who has tried prime vendor, say they'd never go back to competitive bidding again.
RestaurantOwner.com members can download the following forms and templates to make the prime vendor evaluation process faster, easier and enhance your changes of getting the best possible deal:
Cover Letter Template - Use this to describe, to each prime vendor candidate, the prime vendor program your are proposing, how they can submit a proposal to you, and the basis you're going to use to select your prime vendor.
Prime Vendor Spec Sheet - To get the best deal, you need to be aware of all the important factors to consider in structuring your prime vendor arrangement. Includes delivery frequency and time, order lead time, method of ordering, credit terms and other key factors you can negotiate on to improve your bargaining position and lower your prices.
Prime Vendor Quote Sheet - Here's where you list the product specifications and average weekly usage of your principal products. The vendor candidates use this to fill in their current price quote for each product and the formula used to determine each product's price (the vendor's cost plus a percentage or the vendor's cost plus a fixed amount per unit).
Prime Vendor Summary Sheet - This is a summary sheet to collect and summarize all the candidates' quotes and pricing formulas. Makes it easy to compare each candidate's bid in total and product by product.
Bill Marvin, The Restaurant DoctorTM is an advisor to service-oriented organizations around the world. For more information, visit Bill's website at www.RestaurantDoctor.com or email him at bill@RestaurantDoctor.com.
The Keys to Success
“The trouble with opportunity is that it’s always more recognizable going than coming.” Author unknown
I would like to share with you another marketing approach that has worked wonders for a restaurant in Bartlett. There is nothing “in the box” about this thinking, but it has WORKED! I am sure many of you have seen this type of set up at fund raisers and the like, but I am sure that few of you have seen it implemented at a restaurant. I realize that this might not match the business profile for everyone on this mailing list, but I am sure that some of you can put this, or something like it, to work to your advantage.
It gets a little complicated, but bear with me. What this operator has done is purchase 2 Harley Davidson Motorcycles and offers them up as a prize for whoever buys the lucky keys to the cycles. The first time I heard it, I was like, whoa….that doesn’t seem like such a good idea – giving away 2 motorcycles? But as I was walked through the strategy, it began to make a whole lot of sense.
How do you buy a key to the cycle? You get the opportunity to put a key in the cycles by purchasing a $100 gift card for the restaurant. The gift cards can be used in the bar (ideally) and in the restaurant (still a good thing). Let’s figure that his food cost is 30%.....so each time he sells the chance to be a winner, he puts $70 into his pocket. If he spent $21,000 combined on the bikes, then all he needs to do is sell 300 of the gift cards to recoup his initial investment. Imagine the positive energy and excitement centered on the opportunity to win the motorcycles.
Fast forward 2 months and March Madness is upon us. It is noon on Friday of the opening weekend and your bar is filled to capacity. 4 guys are seated at a bar table, settled in for the duration of afternoon. They are staring down lunch, appetizers and an afternoon of drinks. It is not hard to imagine that they will each spend close to $100. Your server suggests that they purchase a key. Don’t you think they will go home and tell their friends about the chance they have to win a Harley (or whatever you want – home entertainment center, a car, a motorcycle, a vacation, a cruise, snowmobiles, anything)? Talk about a buzz being generated. Think about gift giving holidays or occasions (graduations, weddings, Christmas, Father’s Day) wherein a customer could buy the gift card as a gift and get the chance to win the prize. I am sure the purchaser is going to spend more than just the $100 for the gift card – they are in your restaurant after all. Then the recipient arrives at your place with a gift card burning a hole in their pocket. A night like that (what the heck it isn’t costing me anything) probably will result in all the stops being pulled out. Are they really going to stay below a hundred dollars? Doubtfully.
The opportunities to use this marketing scheme are limitless. Contact your local car dealer and tell him you want to advertise one of his cars for 90 days in your restaurant. You offer to get the dealership involved – their name in lights, signage, an insert in the menus or on the tables. You have to believe that they would work something out with you on the cost of the car. They would love the good publicity and word of mouth that your promotion would generate for them. Talk to a travel agent, a furniture store owner or an electronics store owner and get them involved. You don’t even have to do just one grand prize, you could have 2, 3, 4 prizes – heck as many as you would like! There is no end to what kind of positive energy, excitement, buzz, talk and reputation you can generate with a promotion like this.
Then, when it is time to do the drawing, or starting of the car/jet ski/motorcycle – you have a great excuse to get people BACK to your restaurant or bar, spend more money, during the “final festivities” event party weekend! This can be a great type of event – part of the proceeds can go to a charity if you would like. Think big, what about winning a house or condo!?!? A builder may want to get in on something like this – you never know until you start working it.
Bottom line – this is something that sets you apart from your competition. This generates excitement and leads to fun energy. What a great way to reinforce your reputation as THE PLACE TO BE!!!
I would like to share with you another marketing approach that has worked wonders for a restaurant in Bartlett. There is nothing “in the box” about this thinking, but it has WORKED! I am sure many of you have seen this type of set up at fund raisers and the like, but I am sure that few of you have seen it implemented at a restaurant. I realize that this might not match the business profile for everyone on this mailing list, but I am sure that some of you can put this, or something like it, to work to your advantage.
It gets a little complicated, but bear with me. What this operator has done is purchase 2 Harley Davidson Motorcycles and offers them up as a prize for whoever buys the lucky keys to the cycles. The first time I heard it, I was like, whoa….that doesn’t seem like such a good idea – giving away 2 motorcycles? But as I was walked through the strategy, it began to make a whole lot of sense.
How do you buy a key to the cycle? You get the opportunity to put a key in the cycles by purchasing a $100 gift card for the restaurant. The gift cards can be used in the bar (ideally) and in the restaurant (still a good thing). Let’s figure that his food cost is 30%.....so each time he sells the chance to be a winner, he puts $70 into his pocket. If he spent $21,000 combined on the bikes, then all he needs to do is sell 300 of the gift cards to recoup his initial investment. Imagine the positive energy and excitement centered on the opportunity to win the motorcycles.
Fast forward 2 months and March Madness is upon us. It is noon on Friday of the opening weekend and your bar is filled to capacity. 4 guys are seated at a bar table, settled in for the duration of afternoon. They are staring down lunch, appetizers and an afternoon of drinks. It is not hard to imagine that they will each spend close to $100. Your server suggests that they purchase a key. Don’t you think they will go home and tell their friends about the chance they have to win a Harley (or whatever you want – home entertainment center, a car, a motorcycle, a vacation, a cruise, snowmobiles, anything)? Talk about a buzz being generated. Think about gift giving holidays or occasions (graduations, weddings, Christmas, Father’s Day) wherein a customer could buy the gift card as a gift and get the chance to win the prize. I am sure the purchaser is going to spend more than just the $100 for the gift card – they are in your restaurant after all. Then the recipient arrives at your place with a gift card burning a hole in their pocket. A night like that (what the heck it isn’t costing me anything) probably will result in all the stops being pulled out. Are they really going to stay below a hundred dollars? Doubtfully.
The opportunities to use this marketing scheme are limitless. Contact your local car dealer and tell him you want to advertise one of his cars for 90 days in your restaurant. You offer to get the dealership involved – their name in lights, signage, an insert in the menus or on the tables. You have to believe that they would work something out with you on the cost of the car. They would love the good publicity and word of mouth that your promotion would generate for them. Talk to a travel agent, a furniture store owner or an electronics store owner and get them involved. You don’t even have to do just one grand prize, you could have 2, 3, 4 prizes – heck as many as you would like! There is no end to what kind of positive energy, excitement, buzz, talk and reputation you can generate with a promotion like this.
Then, when it is time to do the drawing, or starting of the car/jet ski/motorcycle – you have a great excuse to get people BACK to your restaurant or bar, spend more money, during the “final festivities” event party weekend! This can be a great type of event – part of the proceeds can go to a charity if you would like. Think big, what about winning a house or condo!?!? A builder may want to get in on something like this – you never know until you start working it.
Bottom line – this is something that sets you apart from your competition. This generates excitement and leads to fun energy. What a great way to reinforce your reputation as THE PLACE TO BE!!!
Putting Coupons to Work for You
“Everything comes to him who hustles while he waits.” Thomas Alva Edison
I hope everyone enjoyed their holidays. With all of the chaos over the holidays, I elected to take a little time off from writing. So now that the insanity is over, I figured I would jump back in where I left off in November. At that time we were discussing the value of offering coupons and other incentives to your customers.
As I mentioned in my earlier ramblings, one of my favorite types of buyer incentive programs is the spend $50 get $5 off your next purchase variety. I like this because it insures that your customers are spending before you discount your products. It is a win / win for everyone. Ironically, since I last posted, I signed up for one of these programs at a local eatery. I was really impressed with their program and I would like to share with you a few of the details.
Let me begin with the presentation of the program. I thought this was masterful on their end because I didn’t feel like I was getting sold anything. They left it out there for me to discover. It wasn’t pushy. It was effective. The waitress dropped off the check in the check presenter folder and opposite the bill was an invitation to join the Frequent Diner Program. It was easy to fill out (took less than 2 minutes) and it assured me that my info would be kept confidential. I filled it out, paid my bill and went on my way.
Less than 2 weeks later (outstanding response time) I received my frequent diner card and the details of the program (spend $350 and get a $25 gift card). The part that I liked most was a 2 paragraph note that was included (hand signed by the manager) that welcomed me to the club and gave a brief synopsis of who they are and what they do. Impressive. Simple. Effective.
I loved it - primarily because instead of cheapening their products and services, they raised my expectations. That is a fantastic marketing idea. That is putting coupons and incentives to good use.
I would love to hear your feedback on what has and hasn’t worked at your establishment.
I hope everyone enjoyed their holidays. With all of the chaos over the holidays, I elected to take a little time off from writing. So now that the insanity is over, I figured I would jump back in where I left off in November. At that time we were discussing the value of offering coupons and other incentives to your customers.
As I mentioned in my earlier ramblings, one of my favorite types of buyer incentive programs is the spend $50 get $5 off your next purchase variety. I like this because it insures that your customers are spending before you discount your products. It is a win / win for everyone. Ironically, since I last posted, I signed up for one of these programs at a local eatery. I was really impressed with their program and I would like to share with you a few of the details.
Let me begin with the presentation of the program. I thought this was masterful on their end because I didn’t feel like I was getting sold anything. They left it out there for me to discover. It wasn’t pushy. It was effective. The waitress dropped off the check in the check presenter folder and opposite the bill was an invitation to join the Frequent Diner Program. It was easy to fill out (took less than 2 minutes) and it assured me that my info would be kept confidential. I filled it out, paid my bill and went on my way.
Less than 2 weeks later (outstanding response time) I received my frequent diner card and the details of the program (spend $350 and get a $25 gift card). The part that I liked most was a 2 paragraph note that was included (hand signed by the manager) that welcomed me to the club and gave a brief synopsis of who they are and what they do. Impressive. Simple. Effective.
I loved it - primarily because instead of cheapening their products and services, they raised my expectations. That is a fantastic marketing idea. That is putting coupons and incentives to good use.
I would love to hear your feedback on what has and hasn’t worked at your establishment.
Don't Discount Coupons
"A prudent person foresees the danger ahead and takes precautions. The simpleton goes blindly on and suffers the consequences." Proverbs 27:12
Today’s economy is looking pretty brutal, and all signs indicate that it is not going to clear up anytime soon. A looming election, a drawn out war, rising home foreclosures and climbing oil prices all paint a pretty ominous picture for the near future in the economy. What are you doing to prepare yourself for weathering the storm? What are you doing different today to make sure that when this economy snaps out of its doldrums, you will not only still be open, but you will be poised to flourish? Are you convinced that what you have always done will pull you through?
Now, I am not calling for radical remodels or a wholesale departure from what has brought you success in the past, but rather a quick self examination to see if there are small things that you could be doing to strengthen your position. As the holidays arrive amidst this troubled economy and the public has less to spend and more to spend it on, what are you doing to make sure that you get your share of those disposable dollars? Have you thought of any ways to draw consumers to you, or to find ways to streamline your operations so that you can find some extra profit dollars in your existing business model?
I was reading the newspaper this morning and 2 coupons fell out of it. Ironically, they were both for restaurants. It set me to thinking about coupons and their effectiveness for operators. I am normally not a big fan of coupons for restaurants….I feel that a restaurant should stand on its own merits and should not have to sacrifice profit in order to keep people coming through the door, but in this economy, I have begun to rethink the value of coupons. We are all dependant on people spending money with our businesses, the cash flow is imperative to sustain business. We need to keep people coming back to us. In a tightening economy coupons can be an effective measure to draw people into your establishment. A number of national chains are obviously starting to implement coupons in their marketing schemes (the 2 coupons were issued by chains), and from what I have read, they forecast continuing to use them until the economy recovers.
What kind of coupons should you use? I would love to hear some feedback from you all about what has and hasn’t worked in the past. I am not a big fan of the $5 off your next purchase coupons. I think they just end up cheapening your product. Instead, I like the give / get type of coupons….the I win and you win variety. I think the spend $25 and get $5 off coupons are the most effective (insert your own dollar values). It insures that the consumers aren’t necessarily cherry picking you and using the coupon to your greatest disadvantage. It gets them spending a decent amount of money before they get to use their coupon, and if they are willing to spend that kind of money to take advantage of the coupon, more often than not they will order an extra course “to take advantage” of the coupon. The whole “what the heck, it is basically free, so let’s order dessert” mentality exists. You get additional sales all around.
Another successful coupon tactic is the frequent buyer card. I, for one, will almost always do whatever it takes to take advantage of a frequent buyer situation. (I frequently laugh at myself for some of the decisions I make to try to capitalize on these opportunities – like driving 15 minutes out of my way to fill up with gas) I know I am not alone in that mentality, I see it all over the place. What awesome drawing power this could be for your establishment. People will return again and again if they see that they can get a future benefit for doing so. Give them a new reason to come back. Let’s say you offered $10 off after the purchase of 5 entrees….don’t you think that you have made enough to cover that $10 coupon without to severely denting your profitability model? How bout $25 off a catering after the purchasing of 3 $200 caterings? Think that might lock up some additional corporate sales?
In order for a coupon to be truly effective for an operator it must provide the consumer with incentives to spend MORE money at your establishment. When you can create volume spending, you have more room to make up the loss in profitability that a coupon can represent. The idea is to lure them into your business, and draw them back again in the future. If you can do that without giving away the farm, you have provided yourself with an effective tool to weather this economy.
Thanks for reading and have a great Thanksgiving!
Today’s economy is looking pretty brutal, and all signs indicate that it is not going to clear up anytime soon. A looming election, a drawn out war, rising home foreclosures and climbing oil prices all paint a pretty ominous picture for the near future in the economy. What are you doing to prepare yourself for weathering the storm? What are you doing different today to make sure that when this economy snaps out of its doldrums, you will not only still be open, but you will be poised to flourish? Are you convinced that what you have always done will pull you through?
Now, I am not calling for radical remodels or a wholesale departure from what has brought you success in the past, but rather a quick self examination to see if there are small things that you could be doing to strengthen your position. As the holidays arrive amidst this troubled economy and the public has less to spend and more to spend it on, what are you doing to make sure that you get your share of those disposable dollars? Have you thought of any ways to draw consumers to you, or to find ways to streamline your operations so that you can find some extra profit dollars in your existing business model?
I was reading the newspaper this morning and 2 coupons fell out of it. Ironically, they were both for restaurants. It set me to thinking about coupons and their effectiveness for operators. I am normally not a big fan of coupons for restaurants….I feel that a restaurant should stand on its own merits and should not have to sacrifice profit in order to keep people coming through the door, but in this economy, I have begun to rethink the value of coupons. We are all dependant on people spending money with our businesses, the cash flow is imperative to sustain business. We need to keep people coming back to us. In a tightening economy coupons can be an effective measure to draw people into your establishment. A number of national chains are obviously starting to implement coupons in their marketing schemes (the 2 coupons were issued by chains), and from what I have read, they forecast continuing to use them until the economy recovers.
What kind of coupons should you use? I would love to hear some feedback from you all about what has and hasn’t worked in the past. I am not a big fan of the $5 off your next purchase coupons. I think they just end up cheapening your product. Instead, I like the give / get type of coupons….the I win and you win variety. I think the spend $25 and get $5 off coupons are the most effective (insert your own dollar values). It insures that the consumers aren’t necessarily cherry picking you and using the coupon to your greatest disadvantage. It gets them spending a decent amount of money before they get to use their coupon, and if they are willing to spend that kind of money to take advantage of the coupon, more often than not they will order an extra course “to take advantage” of the coupon. The whole “what the heck, it is basically free, so let’s order dessert” mentality exists. You get additional sales all around.
Another successful coupon tactic is the frequent buyer card. I, for one, will almost always do whatever it takes to take advantage of a frequent buyer situation. (I frequently laugh at myself for some of the decisions I make to try to capitalize on these opportunities – like driving 15 minutes out of my way to fill up with gas) I know I am not alone in that mentality, I see it all over the place. What awesome drawing power this could be for your establishment. People will return again and again if they see that they can get a future benefit for doing so. Give them a new reason to come back. Let’s say you offered $10 off after the purchase of 5 entrees….don’t you think that you have made enough to cover that $10 coupon without to severely denting your profitability model? How bout $25 off a catering after the purchasing of 3 $200 caterings? Think that might lock up some additional corporate sales?
In order for a coupon to be truly effective for an operator it must provide the consumer with incentives to spend MORE money at your establishment. When you can create volume spending, you have more room to make up the loss in profitability that a coupon can represent. The idea is to lure them into your business, and draw them back again in the future. If you can do that without giving away the farm, you have provided yourself with an effective tool to weather this economy.
Thanks for reading and have a great Thanksgiving!
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