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Tuesday, October 17, 2006

Selective Menu Revision

If the higher fuel prices and dropping home values are cutting your covers, you may still see full dining rooms on the traditional busy nights. Keeping the menu intact will allow a baseline business volume to be established each week. Try to use the revenue from these nights to cover all fixed expenses.

Cut fixed costs to the bone.

On the slower nights, use cost-volume-profit models to determine special prices. If your fixed costs are already covered, you could afford to offer free appetizers, two-for-one entree deals, a free glass of wine, prix-fixe menus, etc. (early in the week). You absolutely need to understand and cover any variable costs.

If you know your key cost components through standard recipes and tight flex schedules, it's easier to target your lost leaders. For example, don't choose labor intensive entrees for the two-for-one specials. Any specials should use ingredients with stable pricing which fit your menu. Avoid menu specials which require long prep times and precise forecasts (e.g. prime rib or other slow cooked roasts).

You could offer busy night customers an incentive to return during the slower nights. Special offers could be included with the check.

When I travel in the evening, I often swing by client operations on my way to the hotel. Many times I see employees at the bar late in the night consuming drinks and food. Zero patrons in the dining room should signal it's time to close the door. Cutting dining room hours on slow nights is a win-win solution. Service employees avoid longer hours for little pay, the kitchen staff gets extra rest and management saves the added labor and overhead expenses.

In summary, stable menu prices will allow you to cover overhead costs with your busy night customers. Slow night tactics (discounts, flexible cost strategies and selective incentives) will put profits in the bank.

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