Growing sales? Growing units? Every entrepreneur I have ever known thinks about these things every day. And it turns out the people who sell to them are thinking about the same things on their behalf.
In the B to B world, vendors and suppliers come to know a great deal about the people they serve. For 2013 we focused our annual Restaurateur Issues and Challenges Survey on Texas Restaurant Association Allied members, the companies that supply restaurants. The survey is performed in partnership with the TRA. We asked the suppliers what they saw as the biggest challenges for restaurateurs, and what came back was:
growth of same store sales,
finding real estate for new units, and
obtaining necessary financing.
You might find this to be counterintuitive, expecting fundamental topics like training of staff, recruiting management, and preparing for the Affordable Health Care act provisions to rank higher, but they did not.
Top business people are thinking about not only growing current sales but also building more stores. They believe that they are in control of their own future despite the daily dose of negativity that is amplified by the media echo chamber. We see that with our clients, negotiating new leases, building new restaurants, and in many cases having the privilege of choosing investors and banks. Since our clients tend to be established restaurateurs, they are having an easier time raising capital than the average operator in the industry.
Some restaurateurs, especially independents, have opportunities to use all the tools the industry has perfected to grow sales within the four walls. Also, they continue to be educated about marketing, a topic that is often misunderstood. When they improve their organizations and learn how to harness this power, guest counts increase and per person averages increase. Since those are the only two components of revenue, their life becomes easier and more enjoyable as revenues increase.
For the third time in the past fifteen years, Surrender turned it’s organizational development expertise to the staff and board of the Greater Dallas Restaurant Association (GDRA). Matthew Mabel and his team applied the same methodology, tools and coaching techniques used in their hospitality consultancy for clients like Original Pancake House and i Fratelli. In fact, it was some of the same individuals who had utilized Surrender’s expertise in achieving their corporate goals who agreed that the same technique would be useful for the GDRA to accelerate many of their initiatives. Read more here.
Mabel said, “The GDRA does a fantastic job of supporting our industry on a regional level. Having been a board member and executive committee member, it is great to have the opportunity to be able to help them create a better environment for each team member and group to work at the top of their game.”
Top companies are developing precepts about what content does and does not go on social media. These guidelines are outgrowths of training and culture. Beyond the basics of decorum, restaurants with a more defined culture are much better at knowing what fits on social media vs. what will cause their brand to deteriorate. So if your culture is vague or misunderstood, the time to correct that is now.
It’s a dream of all business owners that their employees would also take to Facebook, Twitter, Pinterest, Instagram and Reddit and promote their workplace. But it’s the nightmare of all business owners that these same people could go online and damagea brand, customer relations, and for that to go viral to the point that everyone across the country is texting, tweeting and IMing about it.
I discussed the subject recently with Ron Ruggless of Nation’s Restaurant News for his article, Social Security: Employee Education, noting that social media policies are essential to brand protection. I was reminded that the best companies avoid being a viral joke by ensuring that their people know what the brand stands for and what is both permissible and consistent with their culture.
Think of social media as a big table that exists outside of a restaurant’s dining room. Just like at the tables where they serve guests every day, employees either represent the brand well, or they don’t. It’s going to be a lot easier to motivate guests to increase frequency, spending, or both when every impression is a good one – no matter where the impression is made.
ProStart is a two-year high school curriculum designed by the National Restaurant Association (NRA) to develop culinary and management talent for the future of the restaurant industry. It is a timely effort, as a whole generation is captivated by the food, chefs, concepts, and managers they see every day on their media screens. Restaurants are cool. There was a time when the attitude was “If I can’t get a job anywhere else, I can always work in a restaurant.” That has changed. Now, for a large group of younger people, it is “I’m going to do whatever I have to do to get a job in a restaurant.” ProStart is a big part of that.
As a critical-thinking judge, I got to quiz these teams of students about knowledge of their concept. Other judges on the panel focused on marketing, customer service, and workplace safety. The students were excited, knowledgeable, and some of them were so strong I would have hired them on the spot if they were of age.
Sure, many of these students were nervous as they sat in an imposing board room probably for the first time in their lives, feeling like contestants on Shark Tank. It’s natural that many compensated by being all-business and whatever version of “professional” is in the mind of a teenager. So one of the things I talked about in the feedback sessions was the art of showing true hospitality. It’s a lesson we can all learn and we can all improve upon. Even while under the pressure of business goals and tight operations, restaurant people do better to always remember the warmth and sincerity that breeds good hospitality. This applies to any business where, through no fault of their own, the customer or guest can become an afterthought.
In order to prevent them from losing sight of that concept, I have coached one of my clients to finish every statement with
“and the benefit to the guest is . . . ”
The judges panel heaped mass amounts of praise onto the high school teams for their very impressive accomplishments, team work, and presentations. In addition, I suggested to a few groups that they strive to show how much they carethat the guests and associates are having great experiences. That’s a much more compelling inspiration than simply presenting themselves as whiz kids with good business ideas.
Another issue I talked about with the students was how to stay flexible so their imaginary businesses would stand the test of time, weather inherent changes and respond well to customer feedback. More than one team did not think that was going to be a problem: their concept was great, their offerings were timeless, and everyone would enjoy them forever.
Here is what I was thinking: When you hit 20 you think you know everything. By the time you get to 30, you realize you know nothing. And these contestants had not even hit 20 yet!
Most of the work we do in improving restaurants is by taking good and great restaurants and making them even better. Once in a while we do take on a well-capitalized turnaround or an underperforming property. Things start to happen after listening very carefully to the guest about what they like, don’t like, and would prefer.
In the past I have advocated such radical change as switching a name, changing service from fast casual to full service, replacing an entire menu, or remodeling a beautiful brand new restaurant because it was not working. At other times we have made smaller shifts like changing uniforms, training, marketing or web sites.
No matter how much you believe in something, if it is not working, and the guest tells you so through their thoughts or actions, changes small or large are called for. Some people get so tied up in their creativity and supporting their old decisions that they tend to think like many of the high school teams did, “No, really, this is going to work and my vision will be validated by an adoring public. Just you wait!”
I am sure that the 12 high school management teams we worked with will be thinking about all these things, whether they made the cut and are headed to the state finals or they did not and will be plotting to get their next year. Last year, one of the teams I judged became national champions, so anything is possible.
We like to know a little history about a business. We like to think we are doing business in someplace special, with special people. The most successful businesses have great stories to tell and these stories serve to engage their associates and customers in what makes their business special.
There’s this restaurant that has a great story to tell about its commitment to quality and specialness in their specific segment. However, they have not invested the resources required to really tell that story. So as competitors have told their own stories, this restaurant has fallen behind and guest counts have declined.
On the other hand, I know of a restaurant that spent plenty to tell a story about its corporation and price point. Frankly, nobody was very interested. They had a much better, more personal story they could have told that would have been quite compelling. They are currently under performing and are now working on a way to tell the more interesting story.
In 2009, I told D Magazine that Mi Cocina had the potential to be the El Fenix or El Chico of the 21st Century. Considering those two brands have been around for a combined 166 years, that’s a pretty big deal.
What a great story! Mico Rodriguez, scion of the Mia’s Tex-Mex family, left to open his own Tex-Mex restaurant with upscale cues. With the opening of its second store in Dallas’ tony Highland Park Village, the story took a big leap forward. Mico’s late brother, Paul, who stayed behind at Mia’s used to tease, “We have better food, but he has better furniture.” There was a lot more drama later, detailed in that D Magazine article, but that’s a story of another kind which, happily for Mi Cocina, has not attached to the brand. The happy ending? Mi Cocina now boasts 20 units.
So what does this mean in Atlanta and Washington, D.C.? Well, it means real estate people are offering locations. But it might not mean much to the consumer. The new locations will succeed or fail based on the quality of their operations.
Which brings me back to those two restaurants I mentioned before. It reminds us all that you can promote your business on features and benefits, but people relate more to stories. If you doubt that the telling of your story is important, you are wrong. The best operators know how to build that story, circulate and promote that story, invest in that story and use it to their competitive advantage.
The Affordable Care Act could be the greatest thing that ever happened to your business.
Why? Because it will motivate you to grow revenue and profits in a way you have never been motivated before. You can use it as a catalyst to put yourself into action and make your business stronger than ever before.
The smartest business people are starting to realize that the Affordable Care Act looks very likely to be fully implemented over the next few years. They also realize that they had better get control of their businesses, their top lines, their bottom lines, and their product. The time is now to begin figuring out a way to generate the revenue and profits needed to pay whatever expenses or penalties occur when the employer mandate begins in January, 2014.
Let’s say you are a business owner with 50 or more employees that does not offer health insurance. You are not feeling too good. Maybe you are checking your own insurance to see if it covers psychotherapy. Your counterparts felt the same way in 1965 when Medicare started, or 1937 when Social Security started, or more recently on the eve of FMLA, COBRA, and let’s not forget ERISA. You may feel that clearly new expenses are coming your way, and there is a good chance that the world is going end and you will go out of business because of it.
But after you calm down, you realize that the world will not end and you will keep going .
Or maybe you are watching the presidential race unfold like you watched the Supreme Court deliberations about the Affordable Care Act. You are hoping circumstances beyond your control will eliminate the employer mandate. The strategy that the Supreme Court was going to rule in your favor didn’t work out. The next hope is that Mitt Romney will get elected and invalidate the mandate as he says he will. But, face it, you are not really sure how or if he would do that since he has not offered any specifics.
The best businesses are not just watching, they are taking action to build revenue and profits. They realize those profits may be required to pay for new expenses that are imposed by the health care law. Many employers are vague about the fact that they may face either increased health insurance costs or Affordable Care Act penalties. The thinking goes that it may be less expensive to just pay the penalties than to offer insurance. But penalties are not tax deductible, so they may be working with the wrong numbers.
When employers take energy out of their fear and anger about the Affordable Care Act and focus on making more money, they are truly responding to the potential burdens of the legislation. In fact, the best scenario that can come out of the Affordable Care Act, other than it realizing its controversial and disputed promise, is that it’s going to force a lot of business owners to figure out how to make their companies stronger, more successful, reach more customers, bring in more revenue, and make more profits.
You have 15 months. When do you start?
“I’ll just wait,” you say to yourself. “I’ll see what happens with the presidential election.” But, let’s say you do wait, and the election goes your way and the law never comes into effect. Are you willing to skip an opportunity to make your company stronger, more successful, reach more customers, and bring in more revenue and profits because the pressure is off? Do you, your employees and customers have too much already?
The best companies know that if their brand stands for something the consumer does not want, a lot of money is going to be spent propping that part of the business up. At some point, the company will become weary of doing so and seek another direction.
There has been a lot of talk about hotel restaurants around Dallas lately. Award-winning and engagement-inducing Nana at the Hilton Anatole has closed — to be converted to a steakhouse. Luxurious-like-a-warm-bath Charlie Palmer at the Joule is transforming to Charlie Palmer Steak. At the W, edge-cutting Craft is closing, to be replaced by a more affordable and casual gastro pub. So that’s three hotel restaurants gone, and you would have been hard-pressed to have ever had anything but a great meal at any of them.
So what’s going on here? Yes, there is a trend away from fine dining, as consumers are more interested in lower price point, more casual, and local restaurants. Sure, when a hotel is trying to increase its restaurant’s capture rate, the number of guests who stay in the hotel to dine, nothing sells like steak, especially in Texas. But there’s more to it than that. In the ’80s you could not get a local guest outside a hotel to walk across the lobby and eat in a restaurant, except at The Mansion on Turtle Creek. Flash forward 20 years and you had to have a famous chef or national concept to be taken seriously. If the Ritz had Dean Fearing, W needed Tom Colicchio, the Crescent Court had to have Nobu Matsushia, Joule went out and got Charlie Palmer before the Hyatt put Wolfgang Puck high atop Reunion Tower. Now we are entering a new period.
Why are those three otherwise excellent restaurants changing? It all points back to why they were established in the first place — branding the hotel property with a nationally famous chef as part of a hotel restaurant “arms race.” With their brands firmly established, hotels are now moving on with restaurants that are more guest friendly and require less hotel executive time to be focused on the subtleties of chef-driven restaurants. What you are going to see in place of these chef-driven restaurants are restaurants that still pique the interest of the informed diner without being extreme. So their closing — while lamented by food critics, bloggers, and some diners — is not that big of a surprise, tragedy, or trend.
The end of that particular “arms race” should remind all business owners and operators to reflect on what is really important — their product.
There is a lot of competition out there, so it’s a good idea to send a clear message to your customer. When you look around at your business, whether it’s a restaurant, hotel or something completely unrelated, what’s consistently valuable to your customer, and what isn’t?
Maybe fewer people are going to Hawaii this summer, but they are still going out for a drink tomorrow night. And the next night. They have to have something to eat and something to wear, too. There’s opportunity to make money in any economy.
Another thing that seems counterintuitive in the aftermath of the Great Recession is that bars are packed on weekend nights around here. It is that kind of awareness that keeps the most successful entrepreneurs alive and breathing every day and looking for new deals. They are not the people sitting on the sidelines, waiting for the outcome of the presidential election to dictate their economic future.
I’ve been thinking back on the recent Southwest Foodservice Expo, reflecting on the technological advances available to the industry. Which are real and which are ephemeral? Technology marches on. Who needs a buzzer to tell you table is ready when a restaurant can text you?
The manager’s log book now has online applications in the cloud. The demo site I saw from CommLog had a lot of red on it, but I am not sure if it was connected to the famous “red book.”
Another booth featured a group who will manage your social media for you from afar, you never have to come up with an original tweet again. Seems like there are a plethora of people who are setting up shop to do one thing or another along these lines. I met one familiar face who is doing the same thing. I had never met him before, but apparently we are LinkedIn.
Yet another booth featured an online comment card system that linked to social media. The good things your fans are saying about you on comment cards automatically show up where they have online influence. I asked them to send me some information, though I haven’t seen it yet. I’m curious to know what happens to the message when a guest doesn’t leave an email address. I didn’t really need an email coming back to me about my dry rice in one of their client restaurants, just wanted to let management know.
And I met Ian Jarett, founder of dangilovethat, who deserves points just for his company name. Dang… is an online comment card that is driven from a QR code through a smart phone and feeds back your comments by server name. Wow! I did it at Howard Wang’s Uptown China Brasserie and it was cool in a QR-technology-is-still-fun sort of way.
It will be interesting to see which of these are going to be ubiquitous and which will be forgotten. Feel free to share your thoughts about which are the breakthroughs and which are the also-rans.
The best operators constantly update their image, offerings and physical plant or they risk falling behind. In a market where product changes quickly, information between customers who notice anything outdated or inferior travels even faster.
Operators who fall behind eye deteriorating circumstances and think they can get by without re-investing in their product and facilities. They try and stretch the ROI on their previous investments further than it can realistically go. Then they wonder why their revenue is not keeping up with inflation, or worse.
Nowhere is that more evident than in the Quick Service Restaurant segment. Take McDonald’s, the segment leader, which reportedly bet $1 billion, (yes, Dr. Evil, billion with a ‘B’), to upgrade the look of their restaurants. It has paid off, with increased same-store sales covering the wager.
Maybe you have driven by a Burger King lately with a strange blue paint job and a roof that looked a little saggy. That is an image that will be going away as BK catches up with a new décor package, curb appeal and menu items. Here is a prediction: their sales will be increasing, too. The Burger King upgrade I noticed in Dallas was on my mind when I talked with the Dallas Business Journal’s Steven Thompson for his article, “Guillermo Perales building a whopper of a franchise empire.”
I am not known to be a great consumer of QSR food. I don’t know if there is really anything happy about a Happy Meal, but I know there is a lot every business person can learn from that segment. Re-investing in product and facilities is one of those lessons.