"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.
Thursday, January 31, 2008
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!
Grease Is The Word
Anyone remember how much shortening was last October? Are you sitting down? Do you really want to know how much more it costs per case this year than it did last year? Answer: $13.75/case. Yep, that’s right, $5 a case more than last year’s price. If you use 10 cases of shortening a week, that is a difference on your bottom line of over $2600 on one ingredient alone! Most economists do not see an end to the rising costs of oil. Most pop culture watchers do not see an end to America’s insatiable hunger for fried foods. Sounds like an ominous forecast for operators.
What can we do about it? I know we would like to control the price of shortening, but unfortunately we can’t. What we can do is influence the amount of oil that we are using. Wait, you say, “you just said that Americans crave fried foods more than ever” how can I use less? There are a couple of ways to reduce the amount of oil that you are using, and I would like to explore them with you.
I know that most of us think that oil is oil is oil is oil, that there is no difference in any of the shortenings. NEWS FLASH – There is a difference between oils. On the surface it is a little hard to believe, but if you think about it for just a minute, you will see that there are differences. Shortening is a valuable commodity. Millions of restaurants use it all across the country. Millions of pounds of shortening are sold each day. It is the highest volume item in the foodservice industry. The manufacturers want that business. They want ALL of the business. In a lot of ways, shortening is the grease that keeps all of the parts of the foodservice economy moving. It is important. When anything is important and people stand to make or lose a lot of money on it, money is spent on researching and developing ways to make it better, to differentiate their products from the competition. The manufacturers want to earn and keep your business. The manufacturers have spent millions of dollars on scientists to find a way to make better performing shortening to earn your business and loyalty. It is not an urban legend; there is a difference between economy and premium oils.
Okay, I can’t say that they spent all this money on R & D without mentioning a few of the scientific things that they have come up with to create a better product. 1) They have engineered a better quality soybean (high oleic) that creates more stable vegetable oil. 2) The processing is far more involved on the premium oils – the oil now lasts longer and is more stable. 3) They have invented new and improved methods for hydrogenating the oil, which again makes it last longer and increases its stability.
Alright, enough of the scientific stuff, let’s get back to regular stuff. As I did a little investigating about shortening one major fact jumped out at me. The major players in the industry do NOT use CHEAP shortening. Those organizations with the resources to study their usage and analyze the cost/benefit relationship have squarely sided with premium oils. Why? They have moved to premium oils for 3 primary reasons. 1) Less absorption – fried foods come out dry and not greasy (kind of important). 2) Less flavor transfer – they want their customers to enjoy the flavor of the food they are frying rather than the taste of the shortening (important). Why would you want to take shrimp at $13 a pound and deep fry it in the cheapest oil available? It doesn’t make a whole lot of sense. 3) Longer oil life – while the oil may cost more on the invoice, they found that they spend less on oil per year when they use higher grade oils (very important). McDonald’s has even reported that they average 14 days of usage with their oil. That is a lot of frying! Think about it. With the economy shortening, 3 full days of frying is a stretch – 14 days – amazing! I think they might be on to something.
Not convinced yet? Still think that shortening is shortening is shortening? There is still hope for you to influence how much oil you are using. Here are a couple of helpful hints about fryer maintenance that if followed will help increase the life of your shortening:
Fryer Management
Heat: Fryer temp at 350 or lower. Turn it down when you are slow.
Air: Oxygen breaks down oil. Cover fryer at night and when it’s slow.
Moisture: Water kills fat. Fill baskets away from fryer.
Metals: No copper or brass and avoid cleaning with steel wool.
Salt: Avoid salting/seasoning food over the fryer to prevent breakdown of the oil.
Oil prices are high, and there is no end in sight for the elevated prices. Americans love fried food and there doesn’t seem to be an end to that either. Consequently, oil and shortening is an important expenditure for operators. Oil is a major ingredient, not just a cooking medium, and just like the rest of your ingredients, you should want the best. Premium oils will provide you many benefits. You will buy fewer cases and spend less money over the course of year. You will spend less on labor because you will have to change it less frequently. You will have better tasting, better looking fried foods. That sounds like a winning combination to me.
What can we do about it? I know we would like to control the price of shortening, but unfortunately we can’t. What we can do is influence the amount of oil that we are using. Wait, you say, “you just said that Americans crave fried foods more than ever” how can I use less? There are a couple of ways to reduce the amount of oil that you are using, and I would like to explore them with you.
I know that most of us think that oil is oil is oil is oil, that there is no difference in any of the shortenings. NEWS FLASH – There is a difference between oils. On the surface it is a little hard to believe, but if you think about it for just a minute, you will see that there are differences. Shortening is a valuable commodity. Millions of restaurants use it all across the country. Millions of pounds of shortening are sold each day. It is the highest volume item in the foodservice industry. The manufacturers want that business. They want ALL of the business. In a lot of ways, shortening is the grease that keeps all of the parts of the foodservice economy moving. It is important. When anything is important and people stand to make or lose a lot of money on it, money is spent on researching and developing ways to make it better, to differentiate their products from the competition. The manufacturers want to earn and keep your business. The manufacturers have spent millions of dollars on scientists to find a way to make better performing shortening to earn your business and loyalty. It is not an urban legend; there is a difference between economy and premium oils.
Okay, I can’t say that they spent all this money on R & D without mentioning a few of the scientific things that they have come up with to create a better product. 1) They have engineered a better quality soybean (high oleic) that creates more stable vegetable oil. 2) The processing is far more involved on the premium oils – the oil now lasts longer and is more stable. 3) They have invented new and improved methods for hydrogenating the oil, which again makes it last longer and increases its stability.
Alright, enough of the scientific stuff, let’s get back to regular stuff. As I did a little investigating about shortening one major fact jumped out at me. The major players in the industry do NOT use CHEAP shortening. Those organizations with the resources to study their usage and analyze the cost/benefit relationship have squarely sided with premium oils. Why? They have moved to premium oils for 3 primary reasons. 1) Less absorption – fried foods come out dry and not greasy (kind of important). 2) Less flavor transfer – they want their customers to enjoy the flavor of the food they are frying rather than the taste of the shortening (important). Why would you want to take shrimp at $13 a pound and deep fry it in the cheapest oil available? It doesn’t make a whole lot of sense. 3) Longer oil life – while the oil may cost more on the invoice, they found that they spend less on oil per year when they use higher grade oils (very important). McDonald’s has even reported that they average 14 days of usage with their oil. That is a lot of frying! Think about it. With the economy shortening, 3 full days of frying is a stretch – 14 days – amazing! I think they might be on to something.
Not convinced yet? Still think that shortening is shortening is shortening? There is still hope for you to influence how much oil you are using. Here are a couple of helpful hints about fryer maintenance that if followed will help increase the life of your shortening:
Fryer Management
Heat: Fryer temp at 350 or lower. Turn it down when you are slow.
Air: Oxygen breaks down oil. Cover fryer at night and when it’s slow.
Moisture: Water kills fat. Fill baskets away from fryer.
Metals: No copper or brass and avoid cleaning with steel wool.
Salt: Avoid salting/seasoning food over the fryer to prevent breakdown of the oil.
Oil prices are high, and there is no end in sight for the elevated prices. Americans love fried food and there doesn’t seem to be an end to that either. Consequently, oil and shortening is an important expenditure for operators. Oil is a major ingredient, not just a cooking medium, and just like the rest of your ingredients, you should want the best. Premium oils will provide you many benefits. You will buy fewer cases and spend less money over the course of year. You will spend less on labor because you will have to change it less frequently. You will have better tasting, better looking fried foods. That sounds like a winning combination to me.
Takeout - The Competition
“It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.” Charles Darwin
A recent survey from Technomics revealed that while in home dining is increasing, 42% of those meals are not prepared in the home. Apparently, gone are the days of genuine home cooked meals. Where are consumers getting these “faux home cooked meals?” A growing number of them are turning toward to-go options at their favorite restaurants. They aren’t just getting pizza or Chinese food delivered anymore, they are turning to fully prepared meals from local grocery stores, fast casual restaurants and a growing number of prepared meals to go enterprises like “Dinner by Design” and their ilk.
What does this mean to the average operator? It means adapt or get left behind. In my town alone there are 2 establishments that do not have a dine in option but offer fully prepared meals (that you can assemble yourself or purchase fully assembled) and a Whole Foods that offer heat and serve top of the line entrees for the whole family. They have to be putting a dent in the local restaurants’ bottom line. This doesn’t seem to be a trend that is going away. There are too many double income homes that can’t afford the time to prepare their own meals while not wanting to sacrifice a family meal in their own home. They are turning away from the traditional pizza, Chinese and fast food options and turning toward meals that reflect a more traditional home cooked meal.
How can we stay relevant to these diners (and their dollars)? We need to jump on board the train before it leaves town! Meeting this demand may require rethinking the menu and making adjustments to preparation and packaging methods. The growth in takeout business has forced many chefs, even those at upscale independent restaurants, to change preparation techniques to preserve food quality during transit. For example, Chef Carlos Gayton of Chicago’s Bistrot Margot serves pommes frites with sirloin butt steak laced with garlic butter. To preserve the crispness of the fried potatoes, he wraps them loosely in butcher paper that encourages air circulation and minimizes condensation. To-go vegetables are blanched, slightly reheated and immediately sealed in a container, which allows them to cook a little more on the way home without becoming limp. Proteins are cooked only to rare or medium rare, and all sauces are served on the side. These are just some of the adaptations operators are implementing to stay in the game.
Another thing that needs to be addressed is to-go packaging. Manufacturers are developing new packaging options that will allow diners to transport their meals home without compromising the integrity of the meals. Venting, improved stability and durability and a more upscale presentation are some of the options now available on the market. Increased packaging costs are offset by the savings on staffing (wait staff, bus staff, dishwashers) and on wear and tear on your china, glassware, and flatware. It is imperative to send the meal home in packaging that will not compromise the integrity of the meal because the consumers’ top priorities are centered on being able to duplicate at-the-restaurant quality in the comfort of their home. If you are going to venture into this arena, I strongly encourage you to put your best foot forward right out of the gate because you might not get a second chance at earning their business.
Consumers now have more sophisticated tastes, but even less time to cook. In all foodservice segments, takeout offerings that give them convenience without compromising quality will be able to capture substantial incremental sales.
I have included this link to a story from www.QSR.com that explores even further the takeout phenomena. http://www.qsrmagazine.com/articles/features/107/curbside-1.phtml
A recent survey from Technomics revealed that while in home dining is increasing, 42% of those meals are not prepared in the home. Apparently, gone are the days of genuine home cooked meals. Where are consumers getting these “faux home cooked meals?” A growing number of them are turning toward to-go options at their favorite restaurants. They aren’t just getting pizza or Chinese food delivered anymore, they are turning to fully prepared meals from local grocery stores, fast casual restaurants and a growing number of prepared meals to go enterprises like “Dinner by Design” and their ilk.
What does this mean to the average operator? It means adapt or get left behind. In my town alone there are 2 establishments that do not have a dine in option but offer fully prepared meals (that you can assemble yourself or purchase fully assembled) and a Whole Foods that offer heat and serve top of the line entrees for the whole family. They have to be putting a dent in the local restaurants’ bottom line. This doesn’t seem to be a trend that is going away. There are too many double income homes that can’t afford the time to prepare their own meals while not wanting to sacrifice a family meal in their own home. They are turning away from the traditional pizza, Chinese and fast food options and turning toward meals that reflect a more traditional home cooked meal.
How can we stay relevant to these diners (and their dollars)? We need to jump on board the train before it leaves town! Meeting this demand may require rethinking the menu and making adjustments to preparation and packaging methods. The growth in takeout business has forced many chefs, even those at upscale independent restaurants, to change preparation techniques to preserve food quality during transit. For example, Chef Carlos Gayton of Chicago’s Bistrot Margot serves pommes frites with sirloin butt steak laced with garlic butter. To preserve the crispness of the fried potatoes, he wraps them loosely in butcher paper that encourages air circulation and minimizes condensation. To-go vegetables are blanched, slightly reheated and immediately sealed in a container, which allows them to cook a little more on the way home without becoming limp. Proteins are cooked only to rare or medium rare, and all sauces are served on the side. These are just some of the adaptations operators are implementing to stay in the game.
Another thing that needs to be addressed is to-go packaging. Manufacturers are developing new packaging options that will allow diners to transport their meals home without compromising the integrity of the meals. Venting, improved stability and durability and a more upscale presentation are some of the options now available on the market. Increased packaging costs are offset by the savings on staffing (wait staff, bus staff, dishwashers) and on wear and tear on your china, glassware, and flatware. It is imperative to send the meal home in packaging that will not compromise the integrity of the meal because the consumers’ top priorities are centered on being able to duplicate at-the-restaurant quality in the comfort of their home. If you are going to venture into this arena, I strongly encourage you to put your best foot forward right out of the gate because you might not get a second chance at earning their business.
Consumers now have more sophisticated tastes, but even less time to cook. In all foodservice segments, takeout offerings that give them convenience without compromising quality will be able to capture substantial incremental sales.
I have included this link to a story from www.QSR.com that explores even further the takeout phenomena. http://www.qsrmagazine.com/articles/features/107/curbside-1.phtml
One More Time
“When you are through changing, you’re through.” – Bruce Barton, advertiser and creator of Betty Crocker.
If I promise not to write about raising your menu prices again next time, will you please bear with me for one more column about raising your prices while offering your customers a value proposition in exchange for the increased price?
I stumbled across the results of a survey conducted by RBC Capital Markets that said that “food quality far outpaced price and convenience as the most-cited driver of restaurant choice, 55% to 12%.” I also came across two other studies’ results that said that “by 2010, natural and organic food sales are expected to increase by 63%,” and that “41.7% of the 25,446 new food products introduced since mid 2004
have [sic] been in the ’all natural or organic’ category.”
So what does that mean? Let’s start with the obvious, how the food tastes is the most important determinant of where diners are going to spend their money. Next, price and convenience take a back seat to quality. Finally, the organic and all natural product categories are here to stay. Combine them all together and it makes sense to upgrade your meats to All Natural or Organic selections and improve your profitability.
How does upgrading your meats make you more profitable? First of all, you are responding to the consumer trends, which will insure that more people are coming through your front door and spending money in your restaurant. Second, because you are offering your customers a perceived (and real) value by changing your meats, you can build in more profit margin for the greater value you are offering. Those two factors work together to help insure you improve your profitability.
Okay, I hear you saying “Enough already! I get the point.” So I will wrap it up there with only one last thought – “It is not a sin to be profitable.”
If I promise not to write about raising your menu prices again next time, will you please bear with me for one more column about raising your prices while offering your customers a value proposition in exchange for the increased price?
I stumbled across the results of a survey conducted by RBC Capital Markets that said that “food quality far outpaced price and convenience as the most-cited driver of restaurant choice, 55% to 12%.” I also came across two other studies’ results that said that “by 2010, natural and organic food sales are expected to increase by 63%,” and that “41.7% of the 25,446 new food products introduced since mid 2004
have [sic] been in the ’all natural or organic’ category.”
So what does that mean? Let’s start with the obvious, how the food tastes is the most important determinant of where diners are going to spend their money. Next, price and convenience take a back seat to quality. Finally, the organic and all natural product categories are here to stay. Combine them all together and it makes sense to upgrade your meats to All Natural or Organic selections and improve your profitability.
How does upgrading your meats make you more profitable? First of all, you are responding to the consumer trends, which will insure that more people are coming through your front door and spending money in your restaurant. Second, because you are offering your customers a perceived (and real) value by changing your meats, you can build in more profit margin for the greater value you are offering. Those two factors work together to help insure you improve your profitability.
Okay, I hear you saying “Enough already! I get the point.” So I will wrap it up there with only one last thought – “It is not a sin to be profitable.”
Profits, Naturally
“We get paid for bringing value to the marketplace.” Jim Rohn, author and speaker.
Last issue I explored a couple of different methods for raising your menu prices to adapt to the changing economic conditions (higher fuel costs and increased food costs) by offsetting the price with a value proposition for your customers. From the response I got, I think it is a topic that I should continue to expand upon. I have stumbled upon another value proposition that can add dollars to your bottom line while further developing your restaurants’ reputations as a destination location. It also will provide you with a cutting edge image and create a substantial point of differentiation from your competitors.
Consumers (just like you and me) are bombarded by messages and images that we need to be more health conscious. You can’t watch TV or read a magazine or newspaper without encountering some news story aimed at increasing our awareness of the importance of leading a healthy lifestyle. In my eyes, that means a heck of a lot of people are doing the marketing for you, if you are willing to step out and do something different from your competition.
We have heard all about the value of switching to zero trans fat oils for our frying (if you haven’t – it is time to move out of the cave). I don’t think this is a fad, I believe that it is here to stay. You can capitalize on that trend by switching to all zero trans fat oils AND noting it on your menu. Don’t be afraid to move the price up a little for the added benefit of knowing that your deep fried cheese sticks are a little bit healthier because they were fried in a healthier oil! It is not a crime to provide an added service and charge for it.
Along that same vein is getting out in front of the industry trend toward organics and natural products. Consumers are more educated today than they ever have been. Whole Foods continues to expand their presence in the market (and serving meals to go) and consumers are willing to spend more on items they perceive to be healthier alternatives (see the aforementioned Whole Foods). In the 2007 Consumer Attitudes about Nutrition survey they found that 60% of consumers are willing to pay extra for healthier foods. Why not take advantage of all of the publicity that this trend is receiving in the media and rework your menu to include some healthier – more natural / organic – options?
In a recent issue of Food Navigator (an online industry newsletter) they cite a study conducted by the USB that “respondents insinuated they would like the products they already enjoy to be made healthier.” This rings true in my life – I have been one of those people paying exorbitant prices for organic meats at Whole Foods. I, like many other consumers, am willing to pay more for something that I perceive is bringing added value to my life or dining experience. I have seen a number of successful restaurants jump on this trend and switch their meats to All Natural selections and raise their prices because of the added value they are providing their customers. Not only did they provide a healthier alternative to their patrons, but they created a significant point of difference from their competition. That is the kind of point of difference that will lead to word of mouth advertising, which invariably leads to sales and profit growth for the operator (YOU).
A tighter economic climate does not have to lead to leaner times for restaurant operators. In fact, it could mean newer, increased profits for operators IF they are willing to think outside the box and creatively add value and difference to their customer’s dining experiences. REMEMBER, YOUR COMPETITION ISN’T JUST INCREASING, IT IS IMPROVING TOO.
Last issue I explored a couple of different methods for raising your menu prices to adapt to the changing economic conditions (higher fuel costs and increased food costs) by offsetting the price with a value proposition for your customers. From the response I got, I think it is a topic that I should continue to expand upon. I have stumbled upon another value proposition that can add dollars to your bottom line while further developing your restaurants’ reputations as a destination location. It also will provide you with a cutting edge image and create a substantial point of differentiation from your competitors.
Consumers (just like you and me) are bombarded by messages and images that we need to be more health conscious. You can’t watch TV or read a magazine or newspaper without encountering some news story aimed at increasing our awareness of the importance of leading a healthy lifestyle. In my eyes, that means a heck of a lot of people are doing the marketing for you, if you are willing to step out and do something different from your competition.
We have heard all about the value of switching to zero trans fat oils for our frying (if you haven’t – it is time to move out of the cave). I don’t think this is a fad, I believe that it is here to stay. You can capitalize on that trend by switching to all zero trans fat oils AND noting it on your menu. Don’t be afraid to move the price up a little for the added benefit of knowing that your deep fried cheese sticks are a little bit healthier because they were fried in a healthier oil! It is not a crime to provide an added service and charge for it.
Along that same vein is getting out in front of the industry trend toward organics and natural products. Consumers are more educated today than they ever have been. Whole Foods continues to expand their presence in the market (and serving meals to go) and consumers are willing to spend more on items they perceive to be healthier alternatives (see the aforementioned Whole Foods). In the 2007 Consumer Attitudes about Nutrition survey they found that 60% of consumers are willing to pay extra for healthier foods. Why not take advantage of all of the publicity that this trend is receiving in the media and rework your menu to include some healthier – more natural / organic – options?
In a recent issue of Food Navigator (an online industry newsletter) they cite a study conducted by the USB that “respondents insinuated they would like the products they already enjoy to be made healthier.” This rings true in my life – I have been one of those people paying exorbitant prices for organic meats at Whole Foods. I, like many other consumers, am willing to pay more for something that I perceive is bringing added value to my life or dining experience. I have seen a number of successful restaurants jump on this trend and switch their meats to All Natural selections and raise their prices because of the added value they are providing their customers. Not only did they provide a healthier alternative to their patrons, but they created a significant point of difference from their competition. That is the kind of point of difference that will lead to word of mouth advertising, which invariably leads to sales and profit growth for the operator (YOU).
A tighter economic climate does not have to lead to leaner times for restaurant operators. In fact, it could mean newer, increased profits for operators IF they are willing to think outside the box and creatively add value and difference to their customer’s dining experiences. REMEMBER, YOUR COMPETITION ISN’T JUST INCREASING, IT IS IMPROVING TOO.
Price Raising Strategies
“Success often comes to those who have the aptitude to see way down the road.” Laing Burns Jr., author.
I want to revisit a topic that I covered in an earlier edition – raising menu prices. I know that previously I shared why it is important to raise prices in light of the current supply markets, but I didn’t really explore any suggestions on how to do this effectively without alienating your customer base. I would like to take a little time to discuss some strategies for raising menu pricing.
In a recent issue of R&I magazine, they interviewed a number of successful operators about this topic, and I found a couple of ideas that made a lot of sense that I thought worthy of sharing with you. A couple that jumped out at me were “pick two combos” and “the value added concept.” These two in particular seem to have found a way to raise prices while disguising them with menu changes to cover up what they were truly doing - raising prices.
“Pick Two Combos,” in this concept the operator gives the patron the opportunity to pick two (duh) items and pair them together for a value added meal. The operators shrunk portion sizes and allowed customers to feel that they had control over their pairing and left them feeling like they received a better value for their dollars. By pairing low cost menu options in smaller portions, the customer gets to pick two items from a specified menu and receive a perceived higher value for their expenditure. Pairing a half sandwich and a bowl of soup or a small salad allows consumers to walk away full and satisfied while leaving profits in the portions for the operators. This is an easy way to disguise profitable menu ideas as value added options for consumers.
“The Value Added Concept” will allow operators to upgrade their menu selections and split the difference in cost with the consumer. One example that I particularly liked is upgrading a hamburger from regular ground beef with Angus beef. The cost of an 8z burger will climb from $0.72 to $1.20, but with Angus on the menu, you can charge more than the $0.48 increase in the cost of the raw materials. You could take your burger from $5.99 to $6.99 and no one would bat an eye because of the perceived increase in value of the item. In this example the consumer sees (and tastes) an upgrade in the quality of the meat, and the operator raises the price more than the minimum to offset the rise in cost of the raw materials. This results in greater profitability for the operator, while leaving the consumer feeling like they received an added value for their meal dollars. Another example of this could be executed by upgrading your fish selections on the menu. Consumers want value in exchange for their dollars, and offering a better quality fish on the menu allows you to charge more for the entrée, thereby disguising a menu price increase as a value upgrade.
The “value added concept” is in stark contrast to a maneuver that I have seen many businesses make that will eventually lead to their failure. This is what I call the “Shoot Yourself in the Foot Method.” In this method, operators either hold or raise their prices while lowering the quality of the food they are bringing in the back door. This may lead to an immediate lift in profitability, but it will eventually lead to an empty restaurant as diners begin to refer to the business as the “place I used to go to get a good meal.” Consumers are smarter than you may think, you might be able to fool them once or twice, but they eventually catch on to this move and will move on to other establishments.
The key to successfully raising your menu prices is to offer your patrons a better perceived value for their money. If you can effectively execute that, then you can alleviate any worries you might have that your consumers think that you are taking advantage of them. Your patrons stay happy, and your bank account stays full!
I want to revisit a topic that I covered in an earlier edition – raising menu prices. I know that previously I shared why it is important to raise prices in light of the current supply markets, but I didn’t really explore any suggestions on how to do this effectively without alienating your customer base. I would like to take a little time to discuss some strategies for raising menu pricing.
In a recent issue of R&I magazine, they interviewed a number of successful operators about this topic, and I found a couple of ideas that made a lot of sense that I thought worthy of sharing with you. A couple that jumped out at me were “pick two combos” and “the value added concept.” These two in particular seem to have found a way to raise prices while disguising them with menu changes to cover up what they were truly doing - raising prices.
“Pick Two Combos,” in this concept the operator gives the patron the opportunity to pick two (duh) items and pair them together for a value added meal. The operators shrunk portion sizes and allowed customers to feel that they had control over their pairing and left them feeling like they received a better value for their dollars. By pairing low cost menu options in smaller portions, the customer gets to pick two items from a specified menu and receive a perceived higher value for their expenditure. Pairing a half sandwich and a bowl of soup or a small salad allows consumers to walk away full and satisfied while leaving profits in the portions for the operators. This is an easy way to disguise profitable menu ideas as value added options for consumers.
“The Value Added Concept” will allow operators to upgrade their menu selections and split the difference in cost with the consumer. One example that I particularly liked is upgrading a hamburger from regular ground beef with Angus beef. The cost of an 8z burger will climb from $0.72 to $1.20, but with Angus on the menu, you can charge more than the $0.48 increase in the cost of the raw materials. You could take your burger from $5.99 to $6.99 and no one would bat an eye because of the perceived increase in value of the item. In this example the consumer sees (and tastes) an upgrade in the quality of the meat, and the operator raises the price more than the minimum to offset the rise in cost of the raw materials. This results in greater profitability for the operator, while leaving the consumer feeling like they received an added value for their meal dollars. Another example of this could be executed by upgrading your fish selections on the menu. Consumers want value in exchange for their dollars, and offering a better quality fish on the menu allows you to charge more for the entrée, thereby disguising a menu price increase as a value upgrade.
The “value added concept” is in stark contrast to a maneuver that I have seen many businesses make that will eventually lead to their failure. This is what I call the “Shoot Yourself in the Foot Method.” In this method, operators either hold or raise their prices while lowering the quality of the food they are bringing in the back door. This may lead to an immediate lift in profitability, but it will eventually lead to an empty restaurant as diners begin to refer to the business as the “place I used to go to get a good meal.” Consumers are smarter than you may think, you might be able to fool them once or twice, but they eventually catch on to this move and will move on to other establishments.
The key to successfully raising your menu prices is to offer your patrons a better perceived value for their money. If you can effectively execute that, then you can alleviate any worries you might have that your consumers think that you are taking advantage of them. Your patrons stay happy, and your bank account stays full!
You Want Me to Charge How Much?
I don’t know about you, but I am feeling the squeeze. Gas prices are up. That accounts for an extra $30 drain on my budget per week. That comes directly out of the disposable income that I normally use for eating out and other things. I know it is affecting you. I see it in sales. I hear it from you. In talking with many of you, I have sensed a common thread to our conversations as it relates to the state of the economy, and that thread kind of scares me. Almost no one is willing to raise their menu prices. Almost everyone is afraid of losing customers due to price increases. I want to caution you not to try to win the battle at the expense of losing the war. I want to take a minute to share some of my experiences so that perhaps you all won’t have to go through some of the challenges I did.
I had my business humming. I had grown the business to about $4 million in sales. I was living fat and sassy. Things were good, 4 trucks on the road, and a staff of 7. Not bad at all. Then the unthinkable occurred – reshaping the economy. September 11th. The gravy train came to a screeching halt. Everyone’s disposable income shrunk. Drastically. Sales quickly dropped. I panicked. How would I keep this thing afloat? Boy did I learn a very painful lesson. I reacted the wrong way – a way very similar to the tacks that I see many of you taking. I tried to bear the brunt of the impact rather than passing it on to my customers. Looking back, I see that I (in my role of consumer) accepted that things began to cost more. I understood why. Groceries, gas, insurance, essentially everything rose in cost. I (in my role as business owner) refused to believe that my customers would recognize that my products had to increase in price as well. I held my price – in fact I lowered my margins. I thought that I could ease the burden for everyone else. Boy was I WRONG. I thought that I could keep it afloat by being a lower cost option for my customers. I might have been able to weather the storm if consumers had money to spend, but they didn’t. And I didn’t either. Since consumers didn’t have as much money to spend on my products, I was selling less. My overhead didn’t decrease – it went up just like everyone else’s. The route I took resulted in fewer sales, and less profit per item….a deadly combination for a small business owner. I won’t bore you with the gory details, but I will tell you this. I no longer sell trading cards and collectibles for myself; I sell food for a company owned by someone else. It came to an end because I didn’t react appropriately to the changing market conditions.
I don’t want you to learn the same lesson the same way. I want you to succeed. I want you to succeed for a couple of reasons. 1) Failing sucks – there is no other way to put it. 2) I like you and care about you and your success.
We are all afraid of losing customers because we have raised our prices. I understand completely. But I caution you not to lose the war because you tried to win this battle. It is a slow bleed out filled with sleepless nights and hair loss! Your customers (like me) expect to pay more. They pay more for gas, they pay more at the grocery store and they pay more for almost everything. It is not unreasonable for them to pay more for your goods and services. Sales will slow down. They are going to anyway because of the drains on disposable income. Don’t couple that slow down with a decrease in your profitability because it will be disastrous. Don’t ignore this because it costs too much to reprint your menus or because you are afraid that people will go somewhere else because you have raised your prices by a dollar. I have seen the movie and I know how it ends!
I found this in a recent USA Today, and I thought it was pertinent enough to share with everyone:
By Barbara Hagenbaugh USA TODAY
Food and beverage costs rose 3.9% in May from a year earlier, outpacing the overall inflation rate by more than a full percentage point and is the biggest increase in three years, the Labor Department said Friday. Costs for a variety of goods, including meat, milk, soft drinks and fresh fruit all rose from April. Higher prices are being seen not only at grocery stores, but also at restaurants. The cost of dining out has risen 3.3% in the last year. A combination of forces, including bad weather, heightened demand for corn to produce ethanol, strong buying from consumers and higher energy costs, is boosting prices. "I don't see the current commodity pricing in agriculture … turning around and dropping quickly," says Michael Swanson, agricultural economist at Wells Fargo in Minneapolis.
Companies are continuing to raise prices in June. General Mills later this month is reducing the sizes of boxes of many types of cereal, such as Cheerios, Wheaties and Cocoa Puffs. Although the company will sell the boxes for less than it's been charging for the bigger sizes, the change will increase the price per ounce. "This will help offset rising input costs," including higher energy and grain prices, General Mills spokesman Tom Forsythe says.
Prices rising across the board Joe Hall, owner of J.W. Hall's Steak and Seafood Inn in Aliquippa, Pa., recently raised prices for a number of items on his menu, including the prime rib dinner, which went from $19.50 to $21.50. He said his costs for beef, seafood, butter, coffee, even condiments such as ketchup, have risen substantially in recent months. "I just had no choice," says Hall, who says he has rarely seen prices go up this much, this fast, in his 26 years of business. "Prices are going up across the board. I waited a long time to react. I was hoping they would level off a little bit. But it doesn't seem like that's happening."
Behind the increases: Weather. Bad weather has been plaguing farmers for the past year, leading to delayed planting, damaged crops and shrunken harvests. A freeze in California in January caused $1.4 billion in agricultural losses, with severe damage to a number of crops, such as oranges, avocados and broccoli, according to the state's agriculture department. More than one-third of the continental USA is now in a drought, including crop-rich Florida. And recently in the Midwest, the nation's bread basket, "it rained where it didn't need rain, and it didn't rain where it needed rain," says Tom Jackson, agricultural economist at consulting firm Global Insight.
Ethanol.
The food price increase "has a lot to do with corn, and it has a lot to do with ethanol," Wells Fargo's Swanson says. U.S. farmers are estimated to have planted the largest corn crop in decades this year in response to strong demand for corn to make ethanol, a fuel alternative that is blended with gasoline and, in the USA, is most often made by fermenting corn. But even with greater corn supplies, the ethanol surge has led to higher prices for corn. And because farmers are switching acreage from soybeans, rice and other crops to cash in on the corn frenzy, prices for those crops have also risen. Corn and soybeans are used to feed chickens, pigs, cattle and other animals. Higher feed costs have led to increased meat and dairy prices. Corn is also used to make a sweetener, so soft-drink prices have risen.
Demand.
Strength in economies around the globe has led to increased demand for all types of food. That has helped boost prices. In the USA, "We still have got very good income numbers, we have low unemployment, so the demand side remains strong," American Farm Bureau Federation senior economist Terry Francl says.
Energy.
Farming is an energy-intensive business, whether it's fueling tractors, paying to refrigerate trucks to keep food fresh or buying fertilizer, which is derived from natural gas. Even food packaging is typically petroleum-based. Rising energy prices have boosted the cost of producing food, and those costs are being passed on to consumers.
Bigger concern than gasoline
Because food is an item that people cannot do without, higher food costs mean consumers have less money to spend in other parts of the economy. And because consumer spending accounts for more than two-thirds of all U.S. economic activity, reduced spending in non-food segments of the economy could lead to slower growth in those areas. Carl Weinberg, chief economist at High Frequency Economics in Valhalla, N.Y., calls higher food prices "one of the three or four biggest potential risks to our forecast," arguing food prices could have a far more detrimental impact on the economy than higher gasoline costs. U.S. consumers on average spend 15% of their budgets on food and beverages, vs. 4% on gasoline.
I had my business humming. I had grown the business to about $4 million in sales. I was living fat and sassy. Things were good, 4 trucks on the road, and a staff of 7. Not bad at all. Then the unthinkable occurred – reshaping the economy. September 11th. The gravy train came to a screeching halt. Everyone’s disposable income shrunk. Drastically. Sales quickly dropped. I panicked. How would I keep this thing afloat? Boy did I learn a very painful lesson. I reacted the wrong way – a way very similar to the tacks that I see many of you taking. I tried to bear the brunt of the impact rather than passing it on to my customers. Looking back, I see that I (in my role of consumer) accepted that things began to cost more. I understood why. Groceries, gas, insurance, essentially everything rose in cost. I (in my role as business owner) refused to believe that my customers would recognize that my products had to increase in price as well. I held my price – in fact I lowered my margins. I thought that I could ease the burden for everyone else. Boy was I WRONG. I thought that I could keep it afloat by being a lower cost option for my customers. I might have been able to weather the storm if consumers had money to spend, but they didn’t. And I didn’t either. Since consumers didn’t have as much money to spend on my products, I was selling less. My overhead didn’t decrease – it went up just like everyone else’s. The route I took resulted in fewer sales, and less profit per item….a deadly combination for a small business owner. I won’t bore you with the gory details, but I will tell you this. I no longer sell trading cards and collectibles for myself; I sell food for a company owned by someone else. It came to an end because I didn’t react appropriately to the changing market conditions.
I don’t want you to learn the same lesson the same way. I want you to succeed. I want you to succeed for a couple of reasons. 1) Failing sucks – there is no other way to put it. 2) I like you and care about you and your success.
We are all afraid of losing customers because we have raised our prices. I understand completely. But I caution you not to lose the war because you tried to win this battle. It is a slow bleed out filled with sleepless nights and hair loss! Your customers (like me) expect to pay more. They pay more for gas, they pay more at the grocery store and they pay more for almost everything. It is not unreasonable for them to pay more for your goods and services. Sales will slow down. They are going to anyway because of the drains on disposable income. Don’t couple that slow down with a decrease in your profitability because it will be disastrous. Don’t ignore this because it costs too much to reprint your menus or because you are afraid that people will go somewhere else because you have raised your prices by a dollar. I have seen the movie and I know how it ends!
I found this in a recent USA Today, and I thought it was pertinent enough to share with everyone:
By Barbara Hagenbaugh USA TODAY
Food and beverage costs rose 3.9% in May from a year earlier, outpacing the overall inflation rate by more than a full percentage point and is the biggest increase in three years, the Labor Department said Friday. Costs for a variety of goods, including meat, milk, soft drinks and fresh fruit all rose from April. Higher prices are being seen not only at grocery stores, but also at restaurants. The cost of dining out has risen 3.3% in the last year. A combination of forces, including bad weather, heightened demand for corn to produce ethanol, strong buying from consumers and higher energy costs, is boosting prices. "I don't see the current commodity pricing in agriculture … turning around and dropping quickly," says Michael Swanson, agricultural economist at Wells Fargo in Minneapolis.
Companies are continuing to raise prices in June. General Mills later this month is reducing the sizes of boxes of many types of cereal, such as Cheerios, Wheaties and Cocoa Puffs. Although the company will sell the boxes for less than it's been charging for the bigger sizes, the change will increase the price per ounce. "This will help offset rising input costs," including higher energy and grain prices, General Mills spokesman Tom Forsythe says.
Prices rising across the board Joe Hall, owner of J.W. Hall's Steak and Seafood Inn in Aliquippa, Pa., recently raised prices for a number of items on his menu, including the prime rib dinner, which went from $19.50 to $21.50. He said his costs for beef, seafood, butter, coffee, even condiments such as ketchup, have risen substantially in recent months. "I just had no choice," says Hall, who says he has rarely seen prices go up this much, this fast, in his 26 years of business. "Prices are going up across the board. I waited a long time to react. I was hoping they would level off a little bit. But it doesn't seem like that's happening."
Behind the increases: Weather. Bad weather has been plaguing farmers for the past year, leading to delayed planting, damaged crops and shrunken harvests. A freeze in California in January caused $1.4 billion in agricultural losses, with severe damage to a number of crops, such as oranges, avocados and broccoli, according to the state's agriculture department. More than one-third of the continental USA is now in a drought, including crop-rich Florida. And recently in the Midwest, the nation's bread basket, "it rained where it didn't need rain, and it didn't rain where it needed rain," says Tom Jackson, agricultural economist at consulting firm Global Insight.
Ethanol.
The food price increase "has a lot to do with corn, and it has a lot to do with ethanol," Wells Fargo's Swanson says. U.S. farmers are estimated to have planted the largest corn crop in decades this year in response to strong demand for corn to make ethanol, a fuel alternative that is blended with gasoline and, in the USA, is most often made by fermenting corn. But even with greater corn supplies, the ethanol surge has led to higher prices for corn. And because farmers are switching acreage from soybeans, rice and other crops to cash in on the corn frenzy, prices for those crops have also risen. Corn and soybeans are used to feed chickens, pigs, cattle and other animals. Higher feed costs have led to increased meat and dairy prices. Corn is also used to make a sweetener, so soft-drink prices have risen.
Demand.
Strength in economies around the globe has led to increased demand for all types of food. That has helped boost prices. In the USA, "We still have got very good income numbers, we have low unemployment, so the demand side remains strong," American Farm Bureau Federation senior economist Terry Francl says.
Energy.
Farming is an energy-intensive business, whether it's fueling tractors, paying to refrigerate trucks to keep food fresh or buying fertilizer, which is derived from natural gas. Even food packaging is typically petroleum-based. Rising energy prices have boosted the cost of producing food, and those costs are being passed on to consumers.
Bigger concern than gasoline
Because food is an item that people cannot do without, higher food costs mean consumers have less money to spend in other parts of the economy. And because consumer spending accounts for more than two-thirds of all U.S. economic activity, reduced spending in non-food segments of the economy could lead to slower growth in those areas. Carl Weinberg, chief economist at High Frequency Economics in Valhalla, N.Y., calls higher food prices "one of the three or four biggest potential risks to our forecast," arguing food prices could have a far more detrimental impact on the economy than higher gasoline costs. U.S. consumers on average spend 15% of their budgets on food and beverages, vs. 4% on gasoline.
Are You Pouring Profits Down the Drain? - by Steve Bostler
First impressions make lasting impressions. Being in this business, I have entered a lot of kitchens, some were impressive, some were dated but the ones that leave me with a lasting impression are the clean extremes. The clean extremes are “Wow, this kitchen is very clean, I would eat here!” and “Wow, I hope they don’t offer me food because I don’t want to eat something from this kitchen!”
You can tell what the owner thinks of his business and his clientele by checking the cleanliness of 2 rooms; the kitchen and the bathroom. I feel that the kitchen shows how the owner feels about his or her business. Are they there to cash a check and go through the motions or are they actively engaged in the business, striving to make their product noticed by the customer. This is about pride in workmanship, in keeping the area where the creation happens clean – it shows a respect for the customer. I believe that this sets the average dining experience apart from the extraordinary.
It’s in the details.
Cleaning and maintaining cleanliness is hard work. Most often it is not done by the people that care the most – they are just pushing a mop around to get their job completed, they don’t feel that they are accomplishing anything important. There may be ways to incent people to do their job better, to your satisfaction.
How about giving the employee a bonus for cleaning the area well? Maybe after they clean the area well a certain number of times, they earn an award and a reward. It doesn’t have to be much. It can be money, gift certificates to a movie, Best Buy, I-tunes or a free day off. You can post their name on a board as the outstanding employee of the week – give them the choice parking spot – whatever, just be creative and make it mean something to you. If you make it important and meaningful to you, it will be important and meaningful to them.
Make it be a team bonus or accomplishment so that everyone gets involved. The better the restaurant looks, the better the customers will feel about eating there, they tell people about the experience and your business grows – everyone benefits. This also sets up for positive peer pressure, for them to push each other to get their job done correctly.
Give them goals to accomplish and hold them accountable for them. Reward them when they reach them and work with them to achieve those goals. If you do that, they will take pride in what they are doing – no matter if they are serving meals or sweeping the parking lot. Everyone likes to feel important, that their job matters, and that they have accomplished something.
You may be asking yourself, why would I want to spend more money to pay people to do their jobs? Great point. First and foremost, I will argue that a team that doesn’t have a lot of experience but has great morale, will outperform an experienced team with poor morale everyday of the week. Morale may be the single most important ingredient to your team. If they feel good about coming to work and doing a good job, you have a motivated employee. Motivated employees are easier to manage and do better work.
Secondly, how are you spending your money on chemicals? How do your people measure the amount of soap and cleaning solutions they use? If you are using the “Glug Glug” method, which is pour it until it “looks good” – you might as well be pouring money down the drain. More soap or solution doesn’t automatically mean better cleaning. It can also mean that harsh chemicals will shorten the life of what you are cleaning – costing you even more money in the long AND short run.
The solutions are simple and will save you money by using the appropriate amount of product;
1. Buy Ready to Use chemicals. Use these chemicals right out of the bottle, no dilution is necessary and thus you will not use 4 ounces of product when only 1 ounce is needed.
2. Get a measuring cup and make sure the people use it – you could tie it into the rewards program – if they are seen just pouring into the bucket, they lose points off of their bonus. This isn’t difficult, you probably already have a measuring cup somewhere that isn’t being used.
3. Incorporate a wall mounted chemical dispenser that mixes the appropriate amount of solution every time into the bottle or mop bucket. These are installed free of charge and help keep the area neat, clean and organized. The best kind of dispenser has the product metering device sealed inside the container of product – not allowing anyone to tamper or remove it so that you end up using more chemicals than are necessary. The correct amount is mixed every time, saving you hundreds or even thousands per year.
When not measured, we have seen people spend up to four times more on their cleaning supplies! By incorporating portion control on this often overlooked aspect of your business, you may be able to increase the money your profits. The chains usually have this area controlled. Having control of this area can help fund a program that rewards the behavior you are looking for in your employees. These suggestions will save you money, improve your restaurant, and increase your chances to grow your business, all at the same time.
Now for the bathroom, let’s get it out in the open. NOBODY REALLY LIKES TO CLEAN THEIR OWN BATHROOM LET ALONE A PUBLIC BATHROOM! It is definitely the most unglamorous job in existence. They have made a TV show about jobs like this – I think it is called “Dirty Work.” It is brutal. However, it is an important part of your restaurant. A dirty bathroom leaves an indelible memory for your patrons about your restaurant. It speaks volumes about how you feel about the details. It doesn’t reflect well on anything – I will often equate the bathroom with the kitchen – I don’t know why, but I do. If the bathroom isn’t sanitary, I immediately wonder about the sanitary state of the kitchen. It is just where my mind jumps to immediately.
Now, how to you get your employees to develop a sense of responsibility for the bathroom? Not an easy question to answer. I think that many of the strategies outlined above could easily be incorporated for the bathrooms too. Some restaurants schedule hourly bathroom checks. If you keep your bathroom clean, visitors will automatically keep it cleaner than when it is already messy. Patrons usually have a “one more paper towel on the floor won’t really matter” attitude when it is left in disarray. Take steps to insure that its cleanliness is maintained, and your patrons will partner with you subconsciously purely out of respect for the work that is going into maintaining the bathroom. I recently read an article about the impact a bathroom attendant had on the public’s perception of the establishment. Maybe consider adding an attendant during the busy hours – let them work for tips and see what happens. Another tip – if your bathroom consistently smells – it may be the ceiling! When a toilet is flushed, with the lid up, the water (or anything else in there) can be sprayed up to 15 feet. This means that an enzyme based, odor counteractant sprayed on the ceiling a few times per week will do the trick and keep your bathroom smelling fresh.
These are just a few ideas to help keep your image up, and your profits where they should be – in your pocket rather than going down the drain.
You can tell what the owner thinks of his business and his clientele by checking the cleanliness of 2 rooms; the kitchen and the bathroom. I feel that the kitchen shows how the owner feels about his or her business. Are they there to cash a check and go through the motions or are they actively engaged in the business, striving to make their product noticed by the customer. This is about pride in workmanship, in keeping the area where the creation happens clean – it shows a respect for the customer. I believe that this sets the average dining experience apart from the extraordinary.
It’s in the details.
Cleaning and maintaining cleanliness is hard work. Most often it is not done by the people that care the most – they are just pushing a mop around to get their job completed, they don’t feel that they are accomplishing anything important. There may be ways to incent people to do their job better, to your satisfaction.
How about giving the employee a bonus for cleaning the area well? Maybe after they clean the area well a certain number of times, they earn an award and a reward. It doesn’t have to be much. It can be money, gift certificates to a movie, Best Buy, I-tunes or a free day off. You can post their name on a board as the outstanding employee of the week – give them the choice parking spot – whatever, just be creative and make it mean something to you. If you make it important and meaningful to you, it will be important and meaningful to them.
Make it be a team bonus or accomplishment so that everyone gets involved. The better the restaurant looks, the better the customers will feel about eating there, they tell people about the experience and your business grows – everyone benefits. This also sets up for positive peer pressure, for them to push each other to get their job done correctly.
Give them goals to accomplish and hold them accountable for them. Reward them when they reach them and work with them to achieve those goals. If you do that, they will take pride in what they are doing – no matter if they are serving meals or sweeping the parking lot. Everyone likes to feel important, that their job matters, and that they have accomplished something.
You may be asking yourself, why would I want to spend more money to pay people to do their jobs? Great point. First and foremost, I will argue that a team that doesn’t have a lot of experience but has great morale, will outperform an experienced team with poor morale everyday of the week. Morale may be the single most important ingredient to your team. If they feel good about coming to work and doing a good job, you have a motivated employee. Motivated employees are easier to manage and do better work.
Secondly, how are you spending your money on chemicals? How do your people measure the amount of soap and cleaning solutions they use? If you are using the “Glug Glug” method, which is pour it until it “looks good” – you might as well be pouring money down the drain. More soap or solution doesn’t automatically mean better cleaning. It can also mean that harsh chemicals will shorten the life of what you are cleaning – costing you even more money in the long AND short run.
The solutions are simple and will save you money by using the appropriate amount of product;
1. Buy Ready to Use chemicals. Use these chemicals right out of the bottle, no dilution is necessary and thus you will not use 4 ounces of product when only 1 ounce is needed.
2. Get a measuring cup and make sure the people use it – you could tie it into the rewards program – if they are seen just pouring into the bucket, they lose points off of their bonus. This isn’t difficult, you probably already have a measuring cup somewhere that isn’t being used.
3. Incorporate a wall mounted chemical dispenser that mixes the appropriate amount of solution every time into the bottle or mop bucket. These are installed free of charge and help keep the area neat, clean and organized. The best kind of dispenser has the product metering device sealed inside the container of product – not allowing anyone to tamper or remove it so that you end up using more chemicals than are necessary. The correct amount is mixed every time, saving you hundreds or even thousands per year.
When not measured, we have seen people spend up to four times more on their cleaning supplies! By incorporating portion control on this often overlooked aspect of your business, you may be able to increase the money your profits. The chains usually have this area controlled. Having control of this area can help fund a program that rewards the behavior you are looking for in your employees. These suggestions will save you money, improve your restaurant, and increase your chances to grow your business, all at the same time.
Now for the bathroom, let’s get it out in the open. NOBODY REALLY LIKES TO CLEAN THEIR OWN BATHROOM LET ALONE A PUBLIC BATHROOM! It is definitely the most unglamorous job in existence. They have made a TV show about jobs like this – I think it is called “Dirty Work.” It is brutal. However, it is an important part of your restaurant. A dirty bathroom leaves an indelible memory for your patrons about your restaurant. It speaks volumes about how you feel about the details. It doesn’t reflect well on anything – I will often equate the bathroom with the kitchen – I don’t know why, but I do. If the bathroom isn’t sanitary, I immediately wonder about the sanitary state of the kitchen. It is just where my mind jumps to immediately.
Now, how to you get your employees to develop a sense of responsibility for the bathroom? Not an easy question to answer. I think that many of the strategies outlined above could easily be incorporated for the bathrooms too. Some restaurants schedule hourly bathroom checks. If you keep your bathroom clean, visitors will automatically keep it cleaner than when it is already messy. Patrons usually have a “one more paper towel on the floor won’t really matter” attitude when it is left in disarray. Take steps to insure that its cleanliness is maintained, and your patrons will partner with you subconsciously purely out of respect for the work that is going into maintaining the bathroom. I recently read an article about the impact a bathroom attendant had on the public’s perception of the establishment. Maybe consider adding an attendant during the busy hours – let them work for tips and see what happens. Another tip – if your bathroom consistently smells – it may be the ceiling! When a toilet is flushed, with the lid up, the water (or anything else in there) can be sprayed up to 15 feet. This means that an enzyme based, odor counteractant sprayed on the ceiling a few times per week will do the trick and keep your bathroom smelling fresh.
These are just a few ideas to help keep your image up, and your profits where they should be – in your pocket rather than going down the drain.
Can I Get That to Go?
The other day I was driving past a McDonald’s that they had knocked down and are rebuilding. It took me a minute, but I figured out what was different. They had reduced their seating area substantially. That is weird. I thought that the object was to get people in to their restaurant. I mean, isn’t that what it is all about? A couple of days later, I read an article in the NRA’s newsletter about the industry trending towards to go service at all levels of restaurants. I drove by that same McDonald’s and saw that instead of additional seating, they had constructed a 2nd drive thru lane. Interesting.
According to the article “Well over half of the meals purchased at the nation's estimated 935,000 restaurants are gobbled up at home, back at the office or in the car. Twenty-five years ago, far more people ate restaurant food in eateries than took it out. By 2006, the typical American ate 81 meals inside restaurants but ordered 127 to go, reports researcher NPD Group.” Those are some statistics that can’t be ignored. It appears to be a trend that would be foolish to ignore. Aside from all of the “normal” drive thru venues such as McDonalds, Wendy’s, Burger King and the like, other national chains are attempting to get out in front of this trend by offering curbside pickup and the like. Chili’s, Outback, and Applebee’s are already doing it. I read somewhere that Outback dedicates at least 3 employees per shift just to address the pick up and to go customers’ needs. At the risk of beating a dead horse, those companies employ lots of people and spend even more money on marketing research to find out what we, the consumer, likes. Take advantage of their efforts and put those ideas to work for you.
How does this affect you? Well, the studies show that if you are not currently doing a to-go menu, you might be missing out on some sales. I am guessing that some of you are shaking your heads saying “it would never work here.” You might be right. And I guarantee you that if you don’t ever offer it, it will NEVER work there! I would recommend trying it out for a little while to see if you are in fact missing some opportunities. The start up costs is minimal, and it truly is an extension of your existing operation. Who knows what it will bring to your bottom line.
I do recommend that you consider a couple of things, however.
1) This is a service. This is something special. It is okay to charge a premium for it. Don’t be afraid to be profitable.
2) Assess your commitment level to this and make your decisions accordingly. When a customer dines in your restaurant, you will go to great lengths to assure that everything is as it should be for them. This might even be more important for your to-go customers. I don’t know if you have ever had the experience of arriving at home only to find out that they left the onions on your wife’s sandwich (OUCH). I think I have invented about 20 new expletives on my way back to pick up a new sandwich.
3) To go containers matter. In my mind they are the equivalent to a clean bathroom. In my mind DIRTY BATHROOM = I AM NOT IMPORTANT. Likewise CHEAP TO GO CONTAINERS = I AM NOT IMPORTANT. For a few cents more per serving you can upgrade your to-go-ware and insure that your customers remember this experience for the right reasons.
4) Have competent people answer the phone for the order. It has happened to me a whole lot, and it drives me nuts. I call to place my order, and the person on the other end isn’t paying attention, doesn’t understand me, or isn’t really invested in our conversation, and my order gets messed up. Again, not the memory that you want to create for your patrons.
For the generations that preceded us, dining was an event. For some of us it still is. However, in the US, eating is becoming more and more something we do while we are doing something else. Don’t miss out on that market segment by ignoring the trend or your customers will be eating as they are doing something else – driving by your restaurant.
According to the article “Well over half of the meals purchased at the nation's estimated 935,000 restaurants are gobbled up at home, back at the office or in the car. Twenty-five years ago, far more people ate restaurant food in eateries than took it out. By 2006, the typical American ate 81 meals inside restaurants but ordered 127 to go, reports researcher NPD Group.” Those are some statistics that can’t be ignored. It appears to be a trend that would be foolish to ignore. Aside from all of the “normal” drive thru venues such as McDonalds, Wendy’s, Burger King and the like, other national chains are attempting to get out in front of this trend by offering curbside pickup and the like. Chili’s, Outback, and Applebee’s are already doing it. I read somewhere that Outback dedicates at least 3 employees per shift just to address the pick up and to go customers’ needs. At the risk of beating a dead horse, those companies employ lots of people and spend even more money on marketing research to find out what we, the consumer, likes. Take advantage of their efforts and put those ideas to work for you.
How does this affect you? Well, the studies show that if you are not currently doing a to-go menu, you might be missing out on some sales. I am guessing that some of you are shaking your heads saying “it would never work here.” You might be right. And I guarantee you that if you don’t ever offer it, it will NEVER work there! I would recommend trying it out for a little while to see if you are in fact missing some opportunities. The start up costs is minimal, and it truly is an extension of your existing operation. Who knows what it will bring to your bottom line.
I do recommend that you consider a couple of things, however.
1) This is a service. This is something special. It is okay to charge a premium for it. Don’t be afraid to be profitable.
2) Assess your commitment level to this and make your decisions accordingly. When a customer dines in your restaurant, you will go to great lengths to assure that everything is as it should be for them. This might even be more important for your to-go customers. I don’t know if you have ever had the experience of arriving at home only to find out that they left the onions on your wife’s sandwich (OUCH). I think I have invented about 20 new expletives on my way back to pick up a new sandwich.
3) To go containers matter. In my mind they are the equivalent to a clean bathroom. In my mind DIRTY BATHROOM = I AM NOT IMPORTANT. Likewise CHEAP TO GO CONTAINERS = I AM NOT IMPORTANT. For a few cents more per serving you can upgrade your to-go-ware and insure that your customers remember this experience for the right reasons.
4) Have competent people answer the phone for the order. It has happened to me a whole lot, and it drives me nuts. I call to place my order, and the person on the other end isn’t paying attention, doesn’t understand me, or isn’t really invested in our conversation, and my order gets messed up. Again, not the memory that you want to create for your patrons.
For the generations that preceded us, dining was an event. For some of us it still is. However, in the US, eating is becoming more and more something we do while we are doing something else. Don’t miss out on that market segment by ignoring the trend or your customers will be eating as they are doing something else – driving by your restaurant.
Effective Marketing Idea
I hope everyone had a great 4th of July celebration. I know that in our industry that the 4th is frequently a slow business week and I have had lots of conversations with many of you regarding new ideas to bring in more people to your establishment. I have stumbled upon an idea that I would like to share with you to get more people into your restaurant and to help position your place as an important part of the community.
The idea that I have is one that will reach a specific audience, make your restaurant the place to be and enhance your image as a concerned partner in the community - all of which are important impressions to create and develop to improve your standing in town.
In my hometown of Wheaton, the PTA is an influential group in the community. The PTA at my daughter’s school came up with a great idea that I would like to share with you. They have instituted a “Cook’s Night Off” once a month wherein they have contacted local restaurants to offer a special night for their school. What they do is ask the restaurant to donate 10% of the sales to the PTA. In exchange for the 10%, they send out 2 mailings to the entire school body during the month stating that on that particular night Your Restaurant is sponsoring the “Cook’s Night Off.” Now that might not seem like much, but I have to tell you what a powerful marketing force a group of 5 – 11 year olds can be. Not many parents stand a chance against an 8 year old demanding that they be part of this event. Try telling your kid that you aren’t going…..you will soon find out that you are a mean, grumpy parent and that your decisions aren’t fair! What a great marketing scheme to tap into. As a dad, I have struggled to come up with pliable reasons not to attend. Short of feigning illness, I have yet to come up with an excuse that doesn’t land me in my kids’ dog house. It is quite a racket that the PTA and the local restaurants have created.
Now many of you are probably screaming “Why the heck would I want a restaurant full of kids?” Good question. I will tell you what it has created for those restauranteurs brave enough to give it a spin. It gets you a captive audience to tap into. 2 free mailings to a relevant demographic. It gets you a full house on a night that is typically a slow night for sales. Good will in the community – you are helping the KIDS after all. That good will goes a long way with the parents when they looking to spend their dining dollars the next time they go out for a meal.
Some things to keep in mind when you consider taking this on for a night: 1) Limit your menu – you should get a pretty good turnout, and you may want to limit the diners’ choices. 2) Encourage people to phone ahead with their orders. I have seen a sandwich shop in town have people waiting 45 minutes for a cold cut sandwich. The next time they did it, they asked people to submit their orders ahead of time and it turned a potentially negative experience into an extremely positive one (imagine waiting 45 minutes to get your food in a room full of 200 kids – enough said!) 3) Be adequately staffed….a room full of kids can create a lot of service headaches. Cleaning up can be a bit of a challenge. 4) Remember it is for the kids, and with the kids come the parents – who are the ones spending money tonight and in the future. 5) Make your restaurant as kid friendly as you can. Many families have more than one child, and there will be younger ones in tow too.
So, in review, contacting your local PTA to try to set up a “Cook’s Night Off” can be a great way to position your restaurant as a concerned partner in community, provide you with effective marketing to a specific demographic, provide you with a tax write off (10% is going to a school charity), and get people who might otherwise never come to your establishment in the door. Sounds like a win, win, win, win to me.
The idea that I have is one that will reach a specific audience, make your restaurant the place to be and enhance your image as a concerned partner in the community - all of which are important impressions to create and develop to improve your standing in town.
In my hometown of Wheaton, the PTA is an influential group in the community. The PTA at my daughter’s school came up with a great idea that I would like to share with you. They have instituted a “Cook’s Night Off” once a month wherein they have contacted local restaurants to offer a special night for their school. What they do is ask the restaurant to donate 10% of the sales to the PTA. In exchange for the 10%, they send out 2 mailings to the entire school body during the month stating that on that particular night Your Restaurant is sponsoring the “Cook’s Night Off.” Now that might not seem like much, but I have to tell you what a powerful marketing force a group of 5 – 11 year olds can be. Not many parents stand a chance against an 8 year old demanding that they be part of this event. Try telling your kid that you aren’t going…..you will soon find out that you are a mean, grumpy parent and that your decisions aren’t fair! What a great marketing scheme to tap into. As a dad, I have struggled to come up with pliable reasons not to attend. Short of feigning illness, I have yet to come up with an excuse that doesn’t land me in my kids’ dog house. It is quite a racket that the PTA and the local restaurants have created.
Now many of you are probably screaming “Why the heck would I want a restaurant full of kids?” Good question. I will tell you what it has created for those restauranteurs brave enough to give it a spin. It gets you a captive audience to tap into. 2 free mailings to a relevant demographic. It gets you a full house on a night that is typically a slow night for sales. Good will in the community – you are helping the KIDS after all. That good will goes a long way with the parents when they looking to spend their dining dollars the next time they go out for a meal.
Some things to keep in mind when you consider taking this on for a night: 1) Limit your menu – you should get a pretty good turnout, and you may want to limit the diners’ choices. 2) Encourage people to phone ahead with their orders. I have seen a sandwich shop in town have people waiting 45 minutes for a cold cut sandwich. The next time they did it, they asked people to submit their orders ahead of time and it turned a potentially negative experience into an extremely positive one (imagine waiting 45 minutes to get your food in a room full of 200 kids – enough said!) 3) Be adequately staffed….a room full of kids can create a lot of service headaches. Cleaning up can be a bit of a challenge. 4) Remember it is for the kids, and with the kids come the parents – who are the ones spending money tonight and in the future. 5) Make your restaurant as kid friendly as you can. Many families have more than one child, and there will be younger ones in tow too.
So, in review, contacting your local PTA to try to set up a “Cook’s Night Off” can be a great way to position your restaurant as a concerned partner in community, provide you with effective marketing to a specific demographic, provide you with a tax write off (10% is going to a school charity), and get people who might otherwise never come to your establishment in the door. Sounds like a win, win, win, win to me.
The Place To Be
I know that many of you must be getting sick of discussing branding, but I can’t lay the issue to rest without addressing one important aspect of developing your restaurant’s brand reputation. The last two weeks we have discussed why branding your restaurant is important and some of the ways you can help develop your brand. Let’s wrap up this issue of branding with a discussion of how great service and the right environment helps reinforce your brand.
Why do many diners choose the restaurants that they do? A lot of the reason lies with the feeling that it is THE PLACE TO BE. What exactly is the place to be? What are the common characteristics? Think about it. What attracts you to a certain restaurant? Why do you eat where you do? With the escalating cost of gas and the other drains on personal economies coupled with the influx of chains and other competition in the marketplace, it is imperative that you create a destination atmosphere at your restaurant. You have to create a space and a dining experience that draws both your existing clients and other new diners to your establishment.
Imagine that you have out of town guests visiting and you have to pick the place to eat. It is your money, your reputation and you don’t want to blow it. What do you choose? What are the characteristics of that place? It doesn’t have to be a dinner, it could be a breakfast or a lunch too…just imagine. What pops into your mind? Is it your restaurant? Is it another place (it’s ok if it is)? Why that place? What is special about it? Why did you choose it? How does your place stack up to that image?
In my little fantasy the places I tend to pick have the right room, the right kind of atmosphere, great service and of course a good meal. Let’s look at the room and the atmosphere. First of all it is clean. Cleanliness is a must have. No one likes to eat at a place that looks unclean. The floors, the walls, the tables, the dishes, the bathroom, the servers, what I can see of the kitchen….everything has to be clean. Thinking about this underscores in my mind what a tough task you have in keeping things up to snuff.
The room does not have to be brand spanking new, it can be dated and lacking all of the latest accoutrements. It just has to be kept up and have a cared for appearance. Some of the best places don’t have all the razzle dazzle of cutting edge fashions and trends. At the core though, it has to be clean and neat. This is the foundation for the right dining atmosphere. The atmosphere is important. Nobody wants to go somewhere that people aren’t smiling or having fun…it is very much a part of the dining experience. How many times have you walked away from the meal saying that the food was great but the person serving darn near ruined your meal with their attitude? It is an integral part of the meal. I have often eaten a very so-so meal that was served to me by someone who “got it” and I left saying that I would definitely go back for another meal. The public is not made up of professional food critics, it is made up of humans who want to feel a connection to the place and people where they dine and live.
Getting to the people part of the dining experience is opening a whole other can of worms. We all know the challenges in hiring the backbone of your crew. It’s not easy to hire great servers and bus boys – it isn’t the most glamorous job out there by any stretch. But it is very important to hire the right kind of people. It is an integral part of the dining experience. It helps create a destination atmosphere for your restaurant. Last weekend we were out at a wedding, enjoying a little time with friends before the reception. We stopped at a place for a quick drink and some appetizers. Our server looked to be a real dud at first glance. But was I surprised when she anticipated our needs, and exceeded our expectations – making overpriced appetizers more appealing at each turn (it was a hotel bar afterall). She made the difference. She knew the menu, she grasped the situation and turned what could have been a very mundane experience a memorable one.
Training your waitstaff on how to serve properly is key to a successful dining experience. Wearing my “industry insider” hat, I recognized how she added to our ticket, increased her tip and made the transaction more profitable for the restaurant. She did all this while enhancing our experience so that paying more and buying more was not an issue at all for us. At the risk of sounding very cliché – it was a win win win for us, her and the restaurant. I walked away without dwelling on the price of the food, but rather the pleasantness of the experience – THAT created the branding aspect for this dining encounter.
So to wrap up branding we must keep a few things in mind. 1) Consistency and predictability in the quality and presentation of the food is tantamount to creating a successful brand for your restaurant. 2) The atmosphere and environment of your restaurant needs to breed the reputation as a destination location. You can overcome a lot with the right atmosphere. 3) Hiring quality people can create a difference for your diners that will outlive in memory the meal and the rest of experience. When you combine all of these factors, you can create that “perfect storm” feeling that can turn your restaurant into an unrivaled success story like the ones we discussed in previous weeks where all of these aspects combine into a powerful dining experience for your patrons that makes your place – THE PLACE TO BE!
Why do many diners choose the restaurants that they do? A lot of the reason lies with the feeling that it is THE PLACE TO BE. What exactly is the place to be? What are the common characteristics? Think about it. What attracts you to a certain restaurant? Why do you eat where you do? With the escalating cost of gas and the other drains on personal economies coupled with the influx of chains and other competition in the marketplace, it is imperative that you create a destination atmosphere at your restaurant. You have to create a space and a dining experience that draws both your existing clients and other new diners to your establishment.
Imagine that you have out of town guests visiting and you have to pick the place to eat. It is your money, your reputation and you don’t want to blow it. What do you choose? What are the characteristics of that place? It doesn’t have to be a dinner, it could be a breakfast or a lunch too…just imagine. What pops into your mind? Is it your restaurant? Is it another place (it’s ok if it is)? Why that place? What is special about it? Why did you choose it? How does your place stack up to that image?
In my little fantasy the places I tend to pick have the right room, the right kind of atmosphere, great service and of course a good meal. Let’s look at the room and the atmosphere. First of all it is clean. Cleanliness is a must have. No one likes to eat at a place that looks unclean. The floors, the walls, the tables, the dishes, the bathroom, the servers, what I can see of the kitchen….everything has to be clean. Thinking about this underscores in my mind what a tough task you have in keeping things up to snuff.
The room does not have to be brand spanking new, it can be dated and lacking all of the latest accoutrements. It just has to be kept up and have a cared for appearance. Some of the best places don’t have all the razzle dazzle of cutting edge fashions and trends. At the core though, it has to be clean and neat. This is the foundation for the right dining atmosphere. The atmosphere is important. Nobody wants to go somewhere that people aren’t smiling or having fun…it is very much a part of the dining experience. How many times have you walked away from the meal saying that the food was great but the person serving darn near ruined your meal with their attitude? It is an integral part of the meal. I have often eaten a very so-so meal that was served to me by someone who “got it” and I left saying that I would definitely go back for another meal. The public is not made up of professional food critics, it is made up of humans who want to feel a connection to the place and people where they dine and live.
Getting to the people part of the dining experience is opening a whole other can of worms. We all know the challenges in hiring the backbone of your crew. It’s not easy to hire great servers and bus boys – it isn’t the most glamorous job out there by any stretch. But it is very important to hire the right kind of people. It is an integral part of the dining experience. It helps create a destination atmosphere for your restaurant. Last weekend we were out at a wedding, enjoying a little time with friends before the reception. We stopped at a place for a quick drink and some appetizers. Our server looked to be a real dud at first glance. But was I surprised when she anticipated our needs, and exceeded our expectations – making overpriced appetizers more appealing at each turn (it was a hotel bar afterall). She made the difference. She knew the menu, she grasped the situation and turned what could have been a very mundane experience a memorable one.
Training your waitstaff on how to serve properly is key to a successful dining experience. Wearing my “industry insider” hat, I recognized how she added to our ticket, increased her tip and made the transaction more profitable for the restaurant. She did all this while enhancing our experience so that paying more and buying more was not an issue at all for us. At the risk of sounding very cliché – it was a win win win for us, her and the restaurant. I walked away without dwelling on the price of the food, but rather the pleasantness of the experience – THAT created the branding aspect for this dining encounter.
So to wrap up branding we must keep a few things in mind. 1) Consistency and predictability in the quality and presentation of the food is tantamount to creating a successful brand for your restaurant. 2) The atmosphere and environment of your restaurant needs to breed the reputation as a destination location. You can overcome a lot with the right atmosphere. 3) Hiring quality people can create a difference for your diners that will outlive in memory the meal and the rest of experience. When you combine all of these factors, you can create that “perfect storm” feeling that can turn your restaurant into an unrivaled success story like the ones we discussed in previous weeks where all of these aspects combine into a powerful dining experience for your patrons that makes your place – THE PLACE TO BE!
Improving Your Brand Recognition
So what is the first thought that pops into your customers’ minds when they think of your restaurant? Do you want to improve upon that branding? Have you thought about what other successful restaurants are doing to improve their brand recognition? Here are just a few things that can help facilitate consistency and predictability for your menu items.
What is one of the worst things that could happen when a group sits down at one of your tables for dinner? Two of the guests order the same meal and they look nothing alike. That is brutal. What happens if one of their steaks is bigger than the other? What is the impression that the customer walks away with? Ever had anyone say to you that this meal tasted completely different from the same meal I ordered here last week? How do you recover from that? More importantly, how do you avoid getting into that predicament in the first place?
One of the ways to avoid this situation is to use portion steaks and meats. I know many of you are throwing your hands up saying things like “we have always cut our own meats” or “I use all of the meat. We use it for our soups, stews and our meat sauce” or even “it is cheaper to buy the commodity meats.” I am not going to argue with you – you are right on many levels…that is how you have always done it, that trimmings and waste can be used for that, and it may be cheaper to buy the commodities. IF YOU ARE ONLY LOOKING AT THE SHORT RUN!
Let’s take each of these responses individually.
“We have always cut our own steaks.”
I like the feeling of nostalgia that sentence engenders. It really brings a sense of down home and the way things were. If that is the business model that you are pursuing, then by all means, cut away. Steak cutting is an art. To do it right, you need a skilled craftsman and a lot of raw material. To get 20 consistently sized 8z Filet Mignons, you have to clean approximately 6 to 7 PSMO’s. My guess, though, is that you want a more efficient process. You want to adapt and stay ahead of the game. I bet you want to be in business in another 10 years. The industry has changed. Many of the big steak houses in and around Chicago are using portion steaks. Why? Because they want to make sure that the steak you order today looks and tastes exactly like the one you ordered last month. They are working at reinforcing the good experiences you had and are trying to turn them into their brand. They would rather pay a little more up front to insure that you have a repetitive dining experience – the first step towards brand recognition for their restaurant. That way they can reap the rewards and profits of your repeat business.
“I use all of the meat. We use it for our soups and our meat sauce.”
That is great. That seems to be efficient and economical. I thought that ultimately we were in this business to make a profit. I often hear many of you saying that you aren’t making enough. I have a hard time wrapping my head around how using psmo trimmings at about $10 a pound to put into your soup, sauce or pepper steak makes sense when you can pay a heck of a lot less for other meats that are better suited for those purposes. It doesn’t add up.
“It is cheaper to buy the commodity meats.”
Up front, in the short run, you are absolutely, undeniably correct. However, if you do not cut them correctly, excessive waste and poor yields will turn your short term savings into a long term loss. When is the last time you did a yield test and weighed the commodity case of meat before trimming, weighed the waste, steaks and usable trimmings to figure your TRUE COST of the product on your plate? It may sound funny but by spending “more” up front, you may be able to save money on the back end. If you want to MAKE money, you need to concentrate on service and the dining experience in your restaurant - YOUR BRAND. One of the keys to creating your own brand image is consistency. One of the best ways to insure consistency is to use portion steaks. You WILL pay more for them on your invoice. You WILL reap the rewards and increased profits for paying a little more on the invoice by giving your diners a repetitive dining experience. As an added benefit, you have better inventory control as you know exactly how many steaks you have in your building, at all times. You are never sure how many steaks are cut from a case of commodity product. Fresh cut steaks are 100% usable product.
These are just some of the reasons why successful restaurants are using portion steaks as an effective way to build their brand recognition by providing diners a consistent, predictable dining experience. We haven’t even discussed the benefits of inventory control, food cost management, decreased labor costs and decreased injury risk / healthcare bills. All of this needs to get factored into “potential savings” of buying commodity beef.
I know there are many examples of successful restaurants that haven’t embraced portion steaks that leap to mind, but the number is dwindling as competition increases and consumers have more and more choices available to them. The skilled labor that it takes to cut steaks correctly is reaching the age of retirement, the remaining people will command top dollar to cut custom steaks in a kitchen. You don’t need a skilled craftsmen and their higher wages to open a package containing a perfectly cut steak.
YOUR COMPETITION ISN’T JUST INCREASING, IT IS GETTING BETTER.
We all need to adapt to the changing industry environment so that we can stay afloat in these challenging times.
Check back next week as we will continue to explore other methods to help cultivate your brand recognition.
Thanks for stopping by!
What is one of the worst things that could happen when a group sits down at one of your tables for dinner? Two of the guests order the same meal and they look nothing alike. That is brutal. What happens if one of their steaks is bigger than the other? What is the impression that the customer walks away with? Ever had anyone say to you that this meal tasted completely different from the same meal I ordered here last week? How do you recover from that? More importantly, how do you avoid getting into that predicament in the first place?
One of the ways to avoid this situation is to use portion steaks and meats. I know many of you are throwing your hands up saying things like “we have always cut our own meats” or “I use all of the meat. We use it for our soups, stews and our meat sauce” or even “it is cheaper to buy the commodity meats.” I am not going to argue with you – you are right on many levels…that is how you have always done it, that trimmings and waste can be used for that, and it may be cheaper to buy the commodities. IF YOU ARE ONLY LOOKING AT THE SHORT RUN!
Let’s take each of these responses individually.
“We have always cut our own steaks.”
I like the feeling of nostalgia that sentence engenders. It really brings a sense of down home and the way things were. If that is the business model that you are pursuing, then by all means, cut away. Steak cutting is an art. To do it right, you need a skilled craftsman and a lot of raw material. To get 20 consistently sized 8z Filet Mignons, you have to clean approximately 6 to 7 PSMO’s. My guess, though, is that you want a more efficient process. You want to adapt and stay ahead of the game. I bet you want to be in business in another 10 years. The industry has changed. Many of the big steak houses in and around Chicago are using portion steaks. Why? Because they want to make sure that the steak you order today looks and tastes exactly like the one you ordered last month. They are working at reinforcing the good experiences you had and are trying to turn them into their brand. They would rather pay a little more up front to insure that you have a repetitive dining experience – the first step towards brand recognition for their restaurant. That way they can reap the rewards and profits of your repeat business.
“I use all of the meat. We use it for our soups and our meat sauce.”
That is great. That seems to be efficient and economical. I thought that ultimately we were in this business to make a profit. I often hear many of you saying that you aren’t making enough. I have a hard time wrapping my head around how using psmo trimmings at about $10 a pound to put into your soup, sauce or pepper steak makes sense when you can pay a heck of a lot less for other meats that are better suited for those purposes. It doesn’t add up.
“It is cheaper to buy the commodity meats.”
Up front, in the short run, you are absolutely, undeniably correct. However, if you do not cut them correctly, excessive waste and poor yields will turn your short term savings into a long term loss. When is the last time you did a yield test and weighed the commodity case of meat before trimming, weighed the waste, steaks and usable trimmings to figure your TRUE COST of the product on your plate? It may sound funny but by spending “more” up front, you may be able to save money on the back end. If you want to MAKE money, you need to concentrate on service and the dining experience in your restaurant - YOUR BRAND. One of the keys to creating your own brand image is consistency. One of the best ways to insure consistency is to use portion steaks. You WILL pay more for them on your invoice. You WILL reap the rewards and increased profits for paying a little more on the invoice by giving your diners a repetitive dining experience. As an added benefit, you have better inventory control as you know exactly how many steaks you have in your building, at all times. You are never sure how many steaks are cut from a case of commodity product. Fresh cut steaks are 100% usable product.
These are just some of the reasons why successful restaurants are using portion steaks as an effective way to build their brand recognition by providing diners a consistent, predictable dining experience. We haven’t even discussed the benefits of inventory control, food cost management, decreased labor costs and decreased injury risk / healthcare bills. All of this needs to get factored into “potential savings” of buying commodity beef.
I know there are many examples of successful restaurants that haven’t embraced portion steaks that leap to mind, but the number is dwindling as competition increases and consumers have more and more choices available to them. The skilled labor that it takes to cut steaks correctly is reaching the age of retirement, the remaining people will command top dollar to cut custom steaks in a kitchen. You don’t need a skilled craftsmen and their higher wages to open a package containing a perfectly cut steak.
YOUR COMPETITION ISN’T JUST INCREASING, IT IS GETTING BETTER.
We all need to adapt to the changing industry environment so that we can stay afloat in these challenging times.
Check back next week as we will continue to explore other methods to help cultivate your brand recognition.
Thanks for stopping by!
Word Association
Let’s play word association for a minute. When I say your establishment’s name, what is the first thing that pops into your head? When your customers hear your name, what is the first thing that pops into their head? Is it a menu item? It is service? Is it food quality? Is it something negative? What is your brand recognition? Do your word associations match what your customers’ are? What goes into a brand development?
Let’s think of different brand successes and failures. People wait for over a half hour night in and night out at the Outback Steakhouse located in my town. Thousands of people stand in line for 15 minutes to buy an expensive fast food lunch from Portillo’s 7 days a week. I had my first Gene and Jude’s experience recently and I was floored when I realized that at 2:30 in the afternoon I stood in line 20 minutes to have a tiny hot dog served to me standing up with only 3 condiments to choose from. BMW comes out with a new car, and we automatically associate it with quality. Why do tourists from all over the world come to Chicago and eat at Ed Debevic’s just to get insulted? The Cubs (this kills me) sign someone new and we automatically assume that they will take a turn for the worse. Why? Why are these brand associations so ingrained in our minds? How did they get there? What did the brand owners do to bring about this reputation? How do these associations get started? What can you do to capitalize on this kind of marketing?
What are the qualities associated with the successful brands I mentioned earlier? What do they all have in common? Consistency and predictability. Time after time the customer is going to walk away from their meal with the same feelings about their dining experience. They don’t want a surprise. They want to know what they are getting for their money. The experience is repeated and eventually it becomes an expectation, once it becomes an expectation, it becomes branded. Once branded, the task turns to reinforcing the expectation and then it takes on a life of its own.
I was talking with a friend that travels a ton for work, and I asked him where he eats when he is out of town and why he eats there (hardly a scientific study – but I think there is still value here). He said that he eats at national chains about 75% of the time. Why? He said it exactly like this: “My steak in Palm Beach will taste exactly the same as my steak in Palm Springs.” He just wants to know that he is going to walk away from his $40 meal with the same relative dining experience that he had previously. McDonald’s Restaurants are all over the world. Why? Because wherever we are, we want to know what we are going to get. Think of your own dining habits – let’s say some old friends are in from out of town, where do you take them for dinner? Why? What is it about that place that draws you back? Is it because it is the cheapest? The closest? The biggest? Probably some combination of all of those qualities and more – but more likely because you feel confident that you are going to get a meal like the last one you enjoyed there.
Outback Steakhouse doesn’t serve Prime beef, they don’t even claim to sell all Choice cuts…..they have carved out their niche selling Select and No Roll. However, there is a line to get in every Friday, Saturday and Sunday. Doesn’t make sense does it? What do they do to perpetuate their success?
Gene and Jude’s doesn’t sell the biggest hot dog. They only have like 3 food items on their menu. They don’t give you a place to sit. They don’t even offer ketchup! Yet at 2:30pm I waited 20 minutes to get my meal. Doesn’t make sense does it? How did they take such a simple concept and turn it into a Chicago institution?
Portillo’s sells fast food hot dogs, hamburgers, chicken sandwiches, brats and French fries just like every other fast food establishment. Yet they charge a couple bucks more than the others and have us all standing in line for 20 minutes. Doesn’t make sense does it? How did they evolve from a small hot dog cart to such an impressive success story?
What does this tell us? The consumer is interested in perceived value. Period. What is the perceived value? Their brand name recognition. These establishments found the right combination of quality food, quality service, the right atmosphere and consistency. You too can have that kind of brand recognition. It is within your grasp.
Check in next week to see how to develop the kind of consistency and predictability that will set you apart from your competition.
Let’s think of different brand successes and failures. People wait for over a half hour night in and night out at the Outback Steakhouse located in my town. Thousands of people stand in line for 15 minutes to buy an expensive fast food lunch from Portillo’s 7 days a week. I had my first Gene and Jude’s experience recently and I was floored when I realized that at 2:30 in the afternoon I stood in line 20 minutes to have a tiny hot dog served to me standing up with only 3 condiments to choose from. BMW comes out with a new car, and we automatically associate it with quality. Why do tourists from all over the world come to Chicago and eat at Ed Debevic’s just to get insulted? The Cubs (this kills me) sign someone new and we automatically assume that they will take a turn for the worse. Why? Why are these brand associations so ingrained in our minds? How did they get there? What did the brand owners do to bring about this reputation? How do these associations get started? What can you do to capitalize on this kind of marketing?
What are the qualities associated with the successful brands I mentioned earlier? What do they all have in common? Consistency and predictability. Time after time the customer is going to walk away from their meal with the same feelings about their dining experience. They don’t want a surprise. They want to know what they are getting for their money. The experience is repeated and eventually it becomes an expectation, once it becomes an expectation, it becomes branded. Once branded, the task turns to reinforcing the expectation and then it takes on a life of its own.
I was talking with a friend that travels a ton for work, and I asked him where he eats when he is out of town and why he eats there (hardly a scientific study – but I think there is still value here). He said that he eats at national chains about 75% of the time. Why? He said it exactly like this: “My steak in Palm Beach will taste exactly the same as my steak in Palm Springs.” He just wants to know that he is going to walk away from his $40 meal with the same relative dining experience that he had previously. McDonald’s Restaurants are all over the world. Why? Because wherever we are, we want to know what we are going to get. Think of your own dining habits – let’s say some old friends are in from out of town, where do you take them for dinner? Why? What is it about that place that draws you back? Is it because it is the cheapest? The closest? The biggest? Probably some combination of all of those qualities and more – but more likely because you feel confident that you are going to get a meal like the last one you enjoyed there.
Outback Steakhouse doesn’t serve Prime beef, they don’t even claim to sell all Choice cuts…..they have carved out their niche selling Select and No Roll. However, there is a line to get in every Friday, Saturday and Sunday. Doesn’t make sense does it? What do they do to perpetuate their success?
Gene and Jude’s doesn’t sell the biggest hot dog. They only have like 3 food items on their menu. They don’t give you a place to sit. They don’t even offer ketchup! Yet at 2:30pm I waited 20 minutes to get my meal. Doesn’t make sense does it? How did they take such a simple concept and turn it into a Chicago institution?
Portillo’s sells fast food hot dogs, hamburgers, chicken sandwiches, brats and French fries just like every other fast food establishment. Yet they charge a couple bucks more than the others and have us all standing in line for 20 minutes. Doesn’t make sense does it? How did they evolve from a small hot dog cart to such an impressive success story?
What does this tell us? The consumer is interested in perceived value. Period. What is the perceived value? Their brand name recognition. These establishments found the right combination of quality food, quality service, the right atmosphere and consistency. You too can have that kind of brand recognition. It is within your grasp.
Check in next week to see how to develop the kind of consistency and predictability that will set you apart from your competition.
The $75,000 question
$75,000 – Who wants it?
$75,000 – Who has it to spare?
The headlines over the past week have been filled with discussion of food safety. Pet food, spinach, peanut butter and olives have all had national recalls because of food safety issues. Food safety is something we all take for granted until the worst occurs. Then all hell breaks loose. On the average the going rate for legal settlements in food poisoning law suits against foodservice operators is right around $75,000. Now that makes buying fresh meats and produce from distributors that can’t guarantee their cold chain or can’t tell you what plant a product came from look like a shortsighted cost saving measure. Not so much of a bargain, huh?
Ok, I bet many of you are thinking that it will never get to the point of a lawsuit. It may not. BUT IT MIGHT! If it does, it is devastating. To your business. To you personally. To those you employ. It is just about over for about 90% of the independent restaurant owners if something like that happens.
So the lawsuit doesn’t happen. Let’s take into consideration the hidden costs associated with someone getting sick in your restaurant. How many people will they tell they had a bad meal at your place? How many people will those people tell? How many diners will not choose your restaurant when they hear that story? All of a sudden, cheap produce delivered in the August heat in an unrefrigerated truck doesn’t look so appealing regardless of the price. Produce that can’t be traced back to the fields that it was grown in isn’t reassuring to your customer when a spinach recall occurs. A salmonella outbreak occurs and you can’t say with certainty that the food you are serving wasn’t tainted during production can have negative repercussions even if someone doesn’t get sick in your place.
What can you do to keep yourself and your customers safe? What measures can you take to make sure that nothing like that happens to you?
1) Buy your fresh produce from companies that provide 100% trace back ability. With 100% trace back capacity, you can know with absolute certainty whether or not your produce was manufactured in a tainted field.
2) Buy your fresh produce from companies that can provide a cold chain guarantee. It doesn’t take long for bacteria to grow when the food temperature doesn’t stay in the safe zone.
3) Buy your meats and poultry from purveyors that can tell you what plant the product was processed in and when it was manufactured.
4) Buy your meats and poultry from distributors that can provide cold chain integrity. Summer heat provides a fertile environment for bacteria growth.
These are just a few of the steps that you can take to help insure the safety of your customers and your business. With the temperatures reaching into the mid 80s today, I couldn’t help but think of some of the delivery vehicles I saw out on the streets and the potential hidden costs associated with using them.
Find out more about food safety by visiting www.gfs.com > resources > food safety awareness.
$75,000 – Who has it to spare?
The headlines over the past week have been filled with discussion of food safety. Pet food, spinach, peanut butter and olives have all had national recalls because of food safety issues. Food safety is something we all take for granted until the worst occurs. Then all hell breaks loose. On the average the going rate for legal settlements in food poisoning law suits against foodservice operators is right around $75,000. Now that makes buying fresh meats and produce from distributors that can’t guarantee their cold chain or can’t tell you what plant a product came from look like a shortsighted cost saving measure. Not so much of a bargain, huh?
Ok, I bet many of you are thinking that it will never get to the point of a lawsuit. It may not. BUT IT MIGHT! If it does, it is devastating. To your business. To you personally. To those you employ. It is just about over for about 90% of the independent restaurant owners if something like that happens.
So the lawsuit doesn’t happen. Let’s take into consideration the hidden costs associated with someone getting sick in your restaurant. How many people will they tell they had a bad meal at your place? How many people will those people tell? How many diners will not choose your restaurant when they hear that story? All of a sudden, cheap produce delivered in the August heat in an unrefrigerated truck doesn’t look so appealing regardless of the price. Produce that can’t be traced back to the fields that it was grown in isn’t reassuring to your customer when a spinach recall occurs. A salmonella outbreak occurs and you can’t say with certainty that the food you are serving wasn’t tainted during production can have negative repercussions even if someone doesn’t get sick in your place.
What can you do to keep yourself and your customers safe? What measures can you take to make sure that nothing like that happens to you?
1) Buy your fresh produce from companies that provide 100% trace back ability. With 100% trace back capacity, you can know with absolute certainty whether or not your produce was manufactured in a tainted field.
2) Buy your fresh produce from companies that can provide a cold chain guarantee. It doesn’t take long for bacteria to grow when the food temperature doesn’t stay in the safe zone.
3) Buy your meats and poultry from purveyors that can tell you what plant the product was processed in and when it was manufactured.
4) Buy your meats and poultry from distributors that can provide cold chain integrity. Summer heat provides a fertile environment for bacteria growth.
These are just a few of the steps that you can take to help insure the safety of your customers and your business. With the temperatures reaching into the mid 80s today, I couldn’t help but think of some of the delivery vehicles I saw out on the streets and the potential hidden costs associated with using them.
Find out more about food safety by visiting www.gfs.com > resources > food safety awareness.
Setting Your Compass
“Progress always involves risk; you can’t steal second base and keep your foot on first.” - Fredrick Wilcox, author.
There are a lot of extraneous forces that are currently affecting business – crude oil is at an all time high and the foreclosure rate on real estate has never been higher. All these elements combine to tighten up the mass’s disposable income. Consequently, things seem to be a little slow out in the food service market, and it strikes me as a great time to take a step back and do some evaluating. Are you achieving your goals? Do you have any goals for that matter? How do you set your goals? Is “MORE” a reasonable goal? More what? Profit? Sales? Customers? What are you using as a measuring stick for your own performance? Without clearly defining your goals, it is extremely difficult to set the course for action.
I have found that the highest obstacle to my achieving success is poor goal setting for myself. If I don’t know where I am going, I sure as heck won’t ever get there. I won’t know who to turn to for help, and I surely won’t achieve much. The old saying “don’t confuse activity with accomplishment” leaps to mind for me when I think of living or working without a goal in mind.
What keeps me from setting goals? Fear. Fear of failure. Unfortunately, if I don’t live my life with intention, I will unintentionally fail. I am bringing this up because I have had a number of conversations with people regarding their business and what they are trying to achieve. Without the proper goals, we will all slowly bleed out….bleed out our profits and our sales. Not a good situation to be in for any of us.
Why should we set goals? Setting goals gives us a target to shoot for as we evaluate our current state of affairs. With a clearly defined target, decision making becomes much easier. Let’s say we pick a goal of operating more profitably. This goal gives us a new pair of glasses through which we can evaluate our menu, our purveyors, and our operations paradigm. We can then look for ways to increase our tickets and decrease both our inventory and our operations costs. Let’s say we pick a goal of operating more efficiently – getting the food out to our customers quicker or under a specified time. From this perspective we can look at our operational profile – are our cooks efficient? Is our waitstaff taking additional time-wasting steps? How can we improve? What can we tweak to make things hum a little smoother? Remember, better service equals higher tickets and more customers. More customers equal more money for everyone – the waitstaff and the owners!
With goals like that in mind, it becomes a lot easier to set the course of action. You know what questions to ask your customers, your staff, and your vendors about how they can help you achieve your goals. Without a goal like that in mind, you get mired in the “just getting by” mentality that will eventually lead to the demise of your restaurant. Remember, the competition isn’t just increasing, it is getting better, and if we don’t, we will get left behind.
There are a lot of extraneous forces that are currently affecting business – crude oil is at an all time high and the foreclosure rate on real estate has never been higher. All these elements combine to tighten up the mass’s disposable income. Consequently, things seem to be a little slow out in the food service market, and it strikes me as a great time to take a step back and do some evaluating. Are you achieving your goals? Do you have any goals for that matter? How do you set your goals? Is “MORE” a reasonable goal? More what? Profit? Sales? Customers? What are you using as a measuring stick for your own performance? Without clearly defining your goals, it is extremely difficult to set the course for action.
I have found that the highest obstacle to my achieving success is poor goal setting for myself. If I don’t know where I am going, I sure as heck won’t ever get there. I won’t know who to turn to for help, and I surely won’t achieve much. The old saying “don’t confuse activity with accomplishment” leaps to mind for me when I think of living or working without a goal in mind.
What keeps me from setting goals? Fear. Fear of failure. Unfortunately, if I don’t live my life with intention, I will unintentionally fail. I am bringing this up because I have had a number of conversations with people regarding their business and what they are trying to achieve. Without the proper goals, we will all slowly bleed out….bleed out our profits and our sales. Not a good situation to be in for any of us.
Why should we set goals? Setting goals gives us a target to shoot for as we evaluate our current state of affairs. With a clearly defined target, decision making becomes much easier. Let’s say we pick a goal of operating more profitably. This goal gives us a new pair of glasses through which we can evaluate our menu, our purveyors, and our operations paradigm. We can then look for ways to increase our tickets and decrease both our inventory and our operations costs. Let’s say we pick a goal of operating more efficiently – getting the food out to our customers quicker or under a specified time. From this perspective we can look at our operational profile – are our cooks efficient? Is our waitstaff taking additional time-wasting steps? How can we improve? What can we tweak to make things hum a little smoother? Remember, better service equals higher tickets and more customers. More customers equal more money for everyone – the waitstaff and the owners!
With goals like that in mind, it becomes a lot easier to set the course of action. You know what questions to ask your customers, your staff, and your vendors about how they can help you achieve your goals. Without a goal like that in mind, you get mired in the “just getting by” mentality that will eventually lead to the demise of your restaurant. Remember, the competition isn’t just increasing, it is getting better, and if we don’t, we will get left behind.
Using the Chains to Your Advantage
Finding it hard to keep up with the ever changing tastes and desires of your customer base? Ever wish they would stop changing their minds? Do you wonder if you can fit another item on your menu? When will it stop? Just when you think you have your diners figured out, they go and change their minds! Let’s take a look at a strategy for staying ahead of the game.
Using Limited Time Offers (LTOs) is one way you can keep pace with your customers’ evolving tastes. They also offer an opportunity for you to try new flavor trends without having to redefine your whole image. Many operators look at LTOs as an audition for their menu, this way they can gauge customer response without making a wholesale commitment to a new menu item. Another underrated advantage to introducing LTOs to your menu is that they can breathe new life into a menu. LTOs help keep things new, fresh and updated.
LTOs sound simple enough – find some new recipe, make up some table tents, just throw them out there and let the diners find them. Not so fast. There has to be a little method to your madness. First, let’s remember why we are doing these – 1) TO MAKE MORE MONEY 2) TO PLEASE YOUR CUSTOMERS and 3) TO AUDITION AN ITEM TO POTENTIALLY REPLACE A MENU DOG. In order for the LTO to work (working = to ideally meet all 3 of the goals, but 2 [the first 2] will work as well), some strategic planning needs to occur.
1) Launch LTOs Strategically – holiday or seasonal themes that parallel the relevant seasons and holidays (obviously).
2) Keep LTOs Consistent With Your Brand – expand on what you do best – a new flavor twist or a different combo - don’t abandon what is working!
3) Educate Your Servers – make sure they know how long the Limited Time Offer is going to last and make sure they know what it tastes like. Then encourage them to sell the LTOs – suggestive selling has an amazing power tableside.
4) Price To Increase Profits – remember, these are special limited time offers – don’t be afraid to charge for it!
5) Gather Customer Comments – Find out what works and what doesn’t. You might just have a new permanent menu item. You might have something you should never offer again. You won’t know unless you ask!
These are just some of the major things you need to consider when you start to address the implementation of LTOs as part of your business model.
LTOs are a great way to use chains to your best advantage. The chains spend millions of dollars on both their advertising department and their research and development department. Why not use them to educate your customers on new trends and flavors that have worked well in their focus groups? They are not going to risk millions on advertising if they don’t have a certain acceptance score in their testing. So, if they are pushing a “bourbon style sauce” for a steak, why wouldn’t you use their R & D dollars AND their advertising dollars to your advantage by developing your own twist on that flavor profile? Use the chains for your benefit – don’t go to the bathroom or get a sandwich during the commercials – this is your time to do market research! This is a great opportunity to bring in an LTO that capitalizes on the money they spent doing your hard work for you.
Remember, LTOs provide operators with many benefits. They give you new profit opportunities without having to redefine your whole menu, they help you keep pace with what the chains are doing, they allow you to spice up your menu with something different and they help you bring in new customers and retain your existing diners with a new twist on what you already excel at doing.
Using Limited Time Offers (LTOs) is one way you can keep pace with your customers’ evolving tastes. They also offer an opportunity for you to try new flavor trends without having to redefine your whole image. Many operators look at LTOs as an audition for their menu, this way they can gauge customer response without making a wholesale commitment to a new menu item. Another underrated advantage to introducing LTOs to your menu is that they can breathe new life into a menu. LTOs help keep things new, fresh and updated.
LTOs sound simple enough – find some new recipe, make up some table tents, just throw them out there and let the diners find them. Not so fast. There has to be a little method to your madness. First, let’s remember why we are doing these – 1) TO MAKE MORE MONEY 2) TO PLEASE YOUR CUSTOMERS and 3) TO AUDITION AN ITEM TO POTENTIALLY REPLACE A MENU DOG. In order for the LTO to work (working = to ideally meet all 3 of the goals, but 2 [the first 2] will work as well), some strategic planning needs to occur.
1) Launch LTOs Strategically – holiday or seasonal themes that parallel the relevant seasons and holidays (obviously).
2) Keep LTOs Consistent With Your Brand – expand on what you do best – a new flavor twist or a different combo - don’t abandon what is working!
3) Educate Your Servers – make sure they know how long the Limited Time Offer is going to last and make sure they know what it tastes like. Then encourage them to sell the LTOs – suggestive selling has an amazing power tableside.
4) Price To Increase Profits – remember, these are special limited time offers – don’t be afraid to charge for it!
5) Gather Customer Comments – Find out what works and what doesn’t. You might just have a new permanent menu item. You might have something you should never offer again. You won’t know unless you ask!
These are just some of the major things you need to consider when you start to address the implementation of LTOs as part of your business model.
LTOs are a great way to use chains to your best advantage. The chains spend millions of dollars on both their advertising department and their research and development department. Why not use them to educate your customers on new trends and flavors that have worked well in their focus groups? They are not going to risk millions on advertising if they don’t have a certain acceptance score in their testing. So, if they are pushing a “bourbon style sauce” for a steak, why wouldn’t you use their R & D dollars AND their advertising dollars to your advantage by developing your own twist on that flavor profile? Use the chains for your benefit – don’t go to the bathroom or get a sandwich during the commercials – this is your time to do market research! This is a great opportunity to bring in an LTO that capitalizes on the money they spent doing your hard work for you.
Remember, LTOs provide operators with many benefits. They give you new profit opportunities without having to redefine your whole menu, they help you keep pace with what the chains are doing, they allow you to spice up your menu with something different and they help you bring in new customers and retain your existing diners with a new twist on what you already excel at doing.
A Mouthful
Hello Everyone,
I have a couple of questions to ask you. It will only take a minute.
Do you want to grow your business?
Are you satisfied with your earnings?
I am sure that everyone wants to make more money. In order to do so, we must all constantly be looking at our existing business model trying to find ways to add more to the bottom line. I want to talk a little about an oldie but goodie - word of mouth referrals.
I got to thinking about this because today I read in Chicago Magazine about one of the restaurants I serve - Blue Max Coffee in Forest Park, IL. There was a small blurb about them in the section naming the new great places to eat in and around Chicago. What a great endorsement. I know that just from being mentioned they Will increase their business exponentially. In all likelihood it didn't cost them a dime. They didn't pay Chicago Magazine to get mentioned. Instead they put together a great idea, a great room, a great products and great service day in and day out, and voila - they have enough people saying great things about their place and they land a word of mouth referral in a publication that is widely respected! Congrats Liz and Lou!!!
Advertising is great. Word of mouth referrals are better. A satisfied customer who is willing to tell someone else about it is an invaluable asset. Think about all the goods and services that we purchase based on the strenght of a referral from a friend. Insurance, cars, painters, decorators, brokers, lawn maintenance...list is endless. Your business is no different than any of those other things. The impact of high praise from a satisfied customer is almost indefinable.
I have a number of friends that get stuck in "restaurant ruts," they will call me for referrals, and they will always say, "I hate going someplace new and blowing $50 on a bad meal - HELP ME!" I ask them to describe to me what constitutes a "good meal" or what makes it a "bad meal." They will almost always answer with some variation of the following answer, "I want a good tasting meal, with good service at a fair price. I want value." They want a good dining experience. It isn't just about the meal anymore, whether it is take out, delivery, fast casual, a family restaurant or a white tablecloth place - it is always about the whole dining experience. They want the whole enchilada - great food for the price, a great atmosphere and even better service. With that in mind I am always able to steer them iinthe right direction (one of your restaurants of course!). It is amazing to hear their responses about their dining experiences. I will frequently hear "That was awesome, I told Steve and Jeannie about it and they are going to check it out this week. Thanks, I can't wait to go back." That is the best kind of advertising.
I have even had some friends go to a restaurant (at my suggestion) and have a bad experience - YIKES!!! An amazing thing happened. They had a complaint, shared it with their server and had things straightened out immediately and properly. The rresaurant didn't stop there, they even comped them a free dessert. You would think that after trying a restaurant for the first time and the order getting messed up, that they would not go back. Well, wrong again! Not only have they added this restaurant to their repertoire of eateries, they told all their friends about how great of service they received at the place. Again, another priceless endorsementhandedoutut to a number of potential new diners. restauranteurur on their toes can turn almost any negative into a positive that their customer will never forget.
At the risk of overstating the obvious - remember, consumers want value. Not just the cheapest. Not just the biggest. Just the best food and dining experience for their dollar value. When they get it - they are likely to do the best advertising money can buy for you - praise your restaurant to all of their friends and neighbors.
I have a couple of questions to ask you. It will only take a minute.
Do you want to grow your business?
Are you satisfied with your earnings?
I am sure that everyone wants to make more money. In order to do so, we must all constantly be looking at our existing business model trying to find ways to add more to the bottom line. I want to talk a little about an oldie but goodie - word of mouth referrals.
I got to thinking about this because today I read in Chicago Magazine about one of the restaurants I serve - Blue Max Coffee in Forest Park, IL. There was a small blurb about them in the section naming the new great places to eat in and around Chicago. What a great endorsement. I know that just from being mentioned they Will increase their business exponentially. In all likelihood it didn't cost them a dime. They didn't pay Chicago Magazine to get mentioned. Instead they put together a great idea, a great room, a great products and great service day in and day out, and voila - they have enough people saying great things about their place and they land a word of mouth referral in a publication that is widely respected! Congrats Liz and Lou!!!
Advertising is great. Word of mouth referrals are better. A satisfied customer who is willing to tell someone else about it is an invaluable asset. Think about all the goods and services that we purchase based on the strenght of a referral from a friend. Insurance, cars, painters, decorators, brokers, lawn maintenance...list is endless. Your business is no different than any of those other things. The impact of high praise from a satisfied customer is almost indefinable.
I have a number of friends that get stuck in "restaurant ruts," they will call me for referrals, and they will always say, "I hate going someplace new and blowing $50 on a bad meal - HELP ME!" I ask them to describe to me what constitutes a "good meal" or what makes it a "bad meal." They will almost always answer with some variation of the following answer, "I want a good tasting meal, with good service at a fair price. I want value." They want a good dining experience. It isn't just about the meal anymore, whether it is take out, delivery, fast casual, a family restaurant or a white tablecloth place - it is always about the whole dining experience. They want the whole enchilada - great food for the price, a great atmosphere and even better service. With that in mind I am always able to steer them iinthe right direction (one of your restaurants of course!). It is amazing to hear their responses about their dining experiences. I will frequently hear "That was awesome, I told Steve and Jeannie about it and they are going to check it out this week. Thanks, I can't wait to go back." That is the best kind of advertising.
I have even had some friends go to a restaurant (at my suggestion) and have a bad experience - YIKES!!! An amazing thing happened. They had a complaint, shared it with their server and had things straightened out immediately and properly. The rresaurant didn't stop there, they even comped them a free dessert. You would think that after trying a restaurant for the first time and the order getting messed up, that they would not go back. Well, wrong again! Not only have they added this restaurant to their repertoire of eateries, they told all their friends about how great of service they received at the place. Again, another priceless endorsementhandedoutut to a number of potential new diners. restauranteurur on their toes can turn almost any negative into a positive that their customer will never forget.
At the risk of overstating the obvious - remember, consumers want value. Not just the cheapest. Not just the biggest. Just the best food and dining experience for their dollar value. When they get it - they are likely to do the best advertising money can buy for you - praise your restaurant to all of their friends and neighbors.
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