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Thursday, May 29, 2008

Best of Times?

As many operators fight to make their business model more profitable, the number of operational changes is high. Companies are adjusting staffs, menus, suppliers and equipment. This is a great time to fine tune your operation. Plato stated: "...the true creator is necessity, who is the mother of invention." over 2,300 years ago.

Restaurant operators see lower check averages, lower mid-week guest counts, higher cost of sales and higher energy costs. The world is thinking green and the term "carbon footprint" has entered the lexicon. Your patrons and employees are more sensitive to the impact of energy on the environment. Take a look at deliveries. You are paying more for each trip each supplier makes to your restaurant. Their trucks are burning much more gas for those who insist on daily deliveries.

If you have one of those dining rooms where the patrons need a sweatshirt or jacket when its 90 degrees outside, turn your thermostat up. You could turn ovens off when they are not in use. This saves the energy to heat the oven and you can also save on the air conditioning bill.

A slightly smaller center of the plate portion size can translate to faster cooking times and a lower cost of sales. Fine tuning production will cut costs. Any major over-production produces waste, higher labor costs and bigger garbage bills (in the long run).

Hopefully, many of you are seeing a better sales picture. In May, we've had Cinco de Mayo and Mother's Day. June brings the stimulus checks and Father's Day. Americans have begun adjusting their driving behavior. In today's news, the local radio station quoted an economist who is projecting 10% less gasoline usage this summer (based on Memorial Day weekend 2008 vs. 2007). Urban centers may not experience the typical summer exodus this year. More people are staying in town for their vacation.

The best part about survival tactics is the long term benefit. These are the best of times for making your operation more cost efficient. Future sales increases will bring greater profits.

Thursday, May 22, 2008

Managing The Check Average

Is this a great time to push your average check higher?

For over a decade, the economy has been buoyed by cheap money and big equity gains. Now the consumer sees tight money markets and capital losses. Company T&E reports are being scrutinized. Tourists are staying closer to home. Regulars are showing up less frequently. Dining rooms have lots of mid-week tables available.

When your place is packed this weekend, do you push the expensive entrees? High check averages may attract the same scrutiny as the $75 gas fill ups. This may be the time for a complimentary cup of coffee or even a slice of pie.

These decisions are rough on the food cost percentage. A complimentary menu item on your busiest night is risky. Will the customer return next week? If the strategic move gets a repeat visit, you win. If they go to your competitor or eat at home next week, you missed some marginal profit with no immediate gain.

Playing well on the margin is more art than science. It helps to measure results. If you want to encourage a repeat peak visit, a complimentary coffee and dessert could be offered to guests who reserve a table for the following week. Policy could be changed to make this semi-permanent. There would be very little wrong if the process repeated itself week after week during this economic downturn.

Would you sacrifice a coffee and dessert sale to get a table filled next week?

Typically, the after dinner drink and dessert course is very profitable. This action will have a significant impact on your check average. You can control the cost of this promotional gambit. Restrict the complimentary items to coffee, tea, and low cost dessert options. Loyal guests are the target in this exercise.

Tuesday, May 13, 2008

Major Chain Adopts Smaller Portion Policy

T.G.I.F. has taken a leadership position in the smaller portion size issue. In an article sent to me two hours ago by Casual Dining (NRN publication) Friday's Right Portion, Right Price policy is reviewed. Personally, I believe this policy is solid. I work in many restaurant kitchens and the mounting garbage is proof positive our restaurants are serving guests too much food. With everyone trying to work through the current economic puzzle, buying less food and holding menu prices low seems like a winning strategy.

Sunday, May 11, 2008

Food Cost and Portion Size

Would your restaurant guests welcome smaller portion sizes for a similar check average? After a week on the road dining out each day, I believe the answer is yes. The weakening economy and rising commodity costs have everyone talking about costs.

Before the trip, I ran a few errands. After picking my car up from the garage, getting a haircut, filling the gas tank and picking up some groceries, I was out over $200. My mother spent the better part of $20 stopping for milk, bread, eggs and produce. Costs for gas and every day staples have skyrocketed. People across the country are tightening their budgets and cutting out many extras.

My brother likes to go out to eat each week and has shifted from weekends to mid-week. He mentioned a recent check for $93 for a simple steak dinner for 2 with a couple beers. The portion size was huge and he would have been happy with 25% less meat. The excellent bread basket and great salad (included with the meal) would have been perfect with a smaller steak.

I paid a visit to an old friend who owns a pub. One of the waiters joined the discussion with the restaurant owner. He mentioned his tip income was down. His diners are spending less and ordering fewer extras. The tip percentage is lower and the number of diners has dropped. He now works with the guests to deliver a satisfying meal within their budget.

I brought up the portion size issue at each meal. The unanimous opinion is today's portion sizes are too large. We asked one waitress if there was a smaller rib eye steak option. She checked with the kitchen and explained the meat was pre-portioned for the menu item. They could have served us 1/6 less meat for the same price. With no refrigerator at the hotel, we left between 2 and 3 ounces on our plates.

In New York's Grand Central Station, I sat next to a couple splitting an omelet at breakfast. They ordered the special with a second cup of coffee and left satisfied. A diner nearby left 1/3 of his omelet uneaten. With the heightened awareness of dietary cholesterol, most people would appreciate a two egg option.

If your patrons were served smaller portion sizes at the current menu prices, your food cost would decline for the same sales level. This strategy may achieve better guest retention than a 10% menu price increase. Timid menu planners may want to assemble these smaller portions on a single page "Value Menu" to properly gauge popularity.

Restaurant Data Pros

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