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Sunday, July 27, 2008

Make Room For Special Events

Eliminating the uncertainty of a covers forecast is helpful for everyone in restaurant management. Restaurants with a line around the block estimate with confidence their cover count on a busy night. They are less likely to over staff or miss their production requirements. The long line insures they will hit the maximum cover count.

On the other hand, operators with spotty dining room counts and no line wrapped around the building experience major forecast errors. Management typically over staffs and over produces prior to the shift. Employees know the drill. They report for work expecting an early night. They can call friends on their cell phone if they get a surprise. How long would you stay at a job if you had no way to predict your weekly income level? Certainly, these operations experience tremendous turnover.

One way to help with the forecast certainty is to include a few catered affairs at your restaurant. Caterers have contracted guest counts. They staff for a specific party size. The guests choose their menu selections prior to the event. No over staffing and demoralizing early shift exits occur for these events. The food production exactly meets the contract. Huge advantage!

If you do not have a separate party room or conference salon, consider the investment. Many of my clients receive over 50% of annual revenue from special event orders. The impact on income is quite favorable. You can groom new wait staff at these events. Since the guests have already made their menu choices, timing is easier and the staff is more focused on quality control issues.

Ordering food is greatly simplified. The chef knows exactly how much food to prepare and a very small safety factor is required. You may even be able to include some chef specials in the event offerings. These specials allow some creativity and the ability to use in season ingredients.

Arizona Republic Article-Small Portions

Cynthia Benin of the Arizona Republic called me last week to discuss the smaller portion menu options at TGIF.

Saturday, July 19, 2008

A Time To Listen To Your Guests

Whenever the economy turns down and discretionary income declines, the advantage shifts from hot new concepts to established names. The recent strike in Hollywood left many new programs without writers. These shows were just starting to build an audience. The strike put plenty of these shows out of the lineup when the strike ended too late. Previous winners survived.

Our industry is similar and the current downturn certainly hurts the hot start ups with huge recent cash outlays. Established restaurants, hotels, resorts and caterers have had years to help cover their start up investments.

Well established operators need to listen to their guests. Competition is fierce in many markets. This is an opportunity to regain lost market share. Broaden your base by listening to your loyal guests. If you know everyone by name, be sure to ask friends about lost regulars. Try to find out why you lost their loyalty.

I can remember several favorite spots I abandoned over time. Typically, I'm most sensitive to a drop in food quality or service. Some of my friends get tired of a concept due to menu stagnation. This would not be high on my personal list. I like to visit specialty restaurants with highly consistent quality.

I always encourage clients to eliminate dog menu items. However, I admit I stopped dining at a pizzeria in the New York metro area when then removed my favorite pie. This pizza was at the bottom of the printed menu and suffered from name confusion.

They decided to call a thin crust pizza with artichokes, salt cured olives, anchovies, fresh tomatoes, a dusting of cheese, thyme and olive oil - The Sicilian. We loved the pie and were disappointed when they dropped it. I'm sure they had many complaints from patrons expecting a thick crust square pizza with light tomato sauce and an avalanche of shredded mozzarella. When I told the manager he should try to revive the pie using a new name, he blew me off.

I'd go back in a New York minute if they offered this pizza again. They'll never know why I left. I am a silent complainer. Too many fantastic options are available. Many of your steady guests don't complain to management at all. They vote with their feet and go elsewhere.

The unusual nature of general ledger accounting is the inadequacy of the reports for identifying a disastrous week. Imagine your chef quits unexpectedly and you fly solo for a few weeks without a pro at the helm. The sales will not show the impact. Your books will reflect a lower management cost and a slightly higher profit.

In the dining room, patrons expecting the high quality they received in the past will leave disappointed. They may wait too long to receive a mediocre meal. A frustrated waiter informs regulars of the chef's departure. You have a major problem which will take a month or two to show up in the books. Over many years, the repeat of these bad weeks takes its toll.

People who demonstrate pure loyalty to a restaurant know the operation well. They know in advance when key staff members are on vacation. These guests know the nights of the week when their favorite wait staff member is not on duty. They know when to have a drink at the bar before sitting down in the dining room.

Now is a great time to greet and listen to your regulars when they come to your place. Find out what they order and if there is anything which could be done to improve their experience. Focus on consistently pleasing these loyal patrons.

Wednesday, July 09, 2008

Profitable Special Events

One hint I have shared with my special event catering clients is the use of cost per guest statistics (vs. a % of sales). Catering is a very different business. Using restaurant metrics is a mistake. Contract caterers say: "We take dollars to the bank not percentages."

Since the caterer's guests often buy a complete package, it is helpful to detail the list of offerings and services provided and cost each one. Many of the line items are straightforward. You can use your previous cost data to fill in the blanks. The key to success is an accurate account of paid guests (or covers).

We'll take a look at a sample company's budget process. The left hand side is the current results and the right hand side assumes we raise the price per guest $5. I use both Per Guest and % of Sales statistics. You need to use the contracted guest count since the final counts are often lower (due to no-shows). Since the fixed costs are covered by revenue per contracted guest, this is a better divisor. Many caterers expect a lower count and prepare less food. Other companies prepare enough food for 100% attendance.

(Note: Click on image to expand the size.)

The use of cost data per guest makes sensitivity analysis (what if?) easier to present to your management team. Each line item may be changed to see the impact on profit. In the example above, I assumed costs would remain constant and the entire $5 increase would make it to the bank.

Restaurant Data Pros

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