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Monday, December 28, 2009

Plowhorses or Deterrents?

Anyone who has used the popular Kasavana/Smith menu engineering model is familiar with the term "Plowhorses". A Plowhorse refers to an entree which is highly popular and has a relatively low contribution. My brother Paul is an Executive Chef at a major resort in California. We love to discuss menu engineering theory and we question the characterization of these under-performers as Plowhorses. Paul prefers to refer to the popular items with low profitability as deterrents.

Dr. Kasavana states: "While plowhorses do not help carry the restaurant's "burden of margin," they surely can be utilized to attract price sensitive buyers. These items present an opportunity to create significant price promotions." Later in the Plowhorse description, he offers a suggestion: "...try to shift demand to other, more profitable items through merchandising programs and menu positioning."

Clearly, the fastest way to higher profits would be to convert sales of these popular under-performers to Stars (highly profitable/high contribution items). Playing around with the unpopular Dogs (unpopular/low contribution) and Puzzles (unpopular/high contribution) won't have the same impact due to the relatively low number of orders sold.

My brother Paul argues these "Plowhorse" menu items deter customers from ordering a more profitable menu item. Often he finds servers promoting these menu choices when asked for help by the guest. He courageously eliminated the most popular menu item at the resort. Whether you call it a Plowhorse or a Deterrent, check averages and gross margins are way up.

We find lots of "price sensitive buyers" in the current environment. If you can't bring yourself to completely eliminate these deterrents, consider one other suggestion from the book: "Relocate plowhorse items to a lower menu profile position. Hiding these items may lead to the sale of higher contribution menu item selections." If I am interpreting this suggestion accurately, our aim is to demote these Plowhorses to Dog status.

Treatment of Dogs is straight forward in the book: "TAKE DOG ITEMS OFF THE MENU!"

If you are struggling with one or more highly popular menu items which simply do not carry their fair share of contribution, you need to take action now. You may feel the need to try to hide these items or combine them with more profitable options. Do you have the confidence to eliminate these items now? You may find more money in your bank account.

Sunday, December 20, 2009

Managing Sunday Brunch

The number one decision in managing your Sunday Brunch operation is the size of the staff for a given forecast. The staffing should include one or more people at the host stand. If your patrons know each other, you should consider seating people close to one another by opening zones in your dining room. Dining patrons will tend to spend more time in conversations thereby giving their digestive system ample time to send the "I'm full!" signal.

Generally, people will behave differently around their friends and neighbors vs. a crowd of strangers. There are no statistics to back me up but I think they will eat somewhat less if they are surrounded by people they know.

You will also staff the food stations and the dining room. In the dining room, the number of servers will be significantly lower than a typical dinner shift. Most of the service will involve drinks and condiments. One area you should adequately staff are the stations with meat and seafood selections. If you are comfortable letting patrons empty your pans of bacon and sausage, you should at least consider someone who can portion roasts and grilled items.

Some restaurants have a featured item which requires a ticket. Generally, the serving size for this one-time item is generous. The theory is twofold. First, the patron is limited to one generous portion. They will tend to build their experience around this menu item. Second, the portion is generous and will help limit consumption of other menu items.

When we were traveling with my first employer after college, our group always hit a great brunch in a hotel on Sundays. We were allowed to stay on the road vs. flying back home on the weekend. We were loyal to a hotel brunch with three drawing cards: fresh baked rolls, a great salad bar and prime rib (one serving per patron). None of us ever had any room for bacon and sausage. We paid at least 25% more than the local competition charged for the fresh baked goods and the large portion of perfectly cooked prime rib.

I'd recommend a baker in the kitchen if the volume justifies the expense. These pros can put people in your seats. Since many bakers work at night proofing the dough, you could finish the bread and rolls during the shift.

Clearing plates from the table seems to be art form many brunch operators have mastered. If someone is around to offer coffee and suggest a fresh pastry, you could save the expense of seconds at the meat and seafood stations. Placing pastries in conspicuous niches helps to get guests discussing dessert before they even begin their meals. The cost of a coffee and a slice of cake is lower than seconds on shellfish and steak.

Finally, I recommend costing each pan or plate sent from the kitchen. You need to know the cost per serving ahead of time in order to properly orchestrate the brunch in the dining room. If you have a main draw with terrific fresh baked goods, you can still charge a premium and save on mass consumption of ancillary items.

Thursday, December 17, 2009

Wake Up a Sleepy Night

I just received an email from Hotel F&B Magazine. There is an excellent article with advice for slow nights in the current magazine. They highlight the Hotel Durant in Berkeley. The chef was able to lure UC Berkeley students into the hotel on Sunday nights for a fried chicken dinner with soup and dessert for $10.

Monday, December 14, 2009

How Accurate Was the Outlook for 2009?

Last year, I posted an Outlook for 2009 on December 31st. Excerpts of this post show the following expectations:
1. Oil Prices
Forecast: Oil prices finding an equilibrium higher than $60.
Reality: They stayed between $60 and $80 most of the year and currently hover near $70.
2. Interest Rates
Forecast: Low interest rates and tight credit.
Reality: This forecast was spot on.
3. Bottled Water
Forecast: Lower bottled water sales and more tap water orders.
Reality: Absolutely correct! Tap water rules in 2009.
4. Regional outlook
Forecast: Slow economy in regions with a high banking or government weight.
Reality: This is especially true in areas where the banking and government sectors had a major impact on upscale dining operations.
5. Alcoholic Beverage Trends
Forecast: More beer and less wine.
Reality: In absolute dollars, this prediction is true. What actually happened is consumers down shifted from higher priced beverages to mid-range and budget alternatives. The downshift occurred in both beer and wine.

Many of you will get a true read out on the economic future as the holiday season ends. Expect oil prices to find an equilibrium price higher than current levels. Grain prices will continue to track oil since most gasoline now has a 10% ethanol blend. Interest rates are very low allowing many businesses and consumers a chance to refinance. Credit remains very tight. Bottled water sales are in decline and tap water is becoming a popular restaurant beverage choice.

Rather than using 2007 or 2008 as your compass, try to put together a logical forecast for your region. If you operate near a major banking center, the layoffs could completely change your business model. Anyone in the Mid-West may see an increase in economic activity as stimulus dollars reach the automobile manufacturing companies. State and local governments have less revenue. If you are located in a capitol metro area, you can expect less traffic.

Americans are consuming more beer. You may want to slow down your wine list expansion. Turn a portion of your wine inventory into cash by selling slow movers by the glass. Don't be afraid to accept a higher cost of sales on these bottles. Your shelves are filled with frozen cash.

Stay tuned for the 2010 Outlook at the end of the month.

Restaurant Data Pros

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