Starting, Owning and Marketing A Restaurant Blog|Starting and Owning a Restaurant - Construction, Planning, Marketing, Opening and Managing a New Restaurant

Prior to the recession, restaurant guests seemed to be a happy lot. They ventured into just about any food purveyor that opened their doors partly for exploration, curiosity and culinary adventure. In the last two years wallets closed up like the strings on a beggar’s purse. Consumers with less discretionary dollars to spend wanted value and “comfort”.

If you look the word comfort up in the dictionary, the common definitions include to “soothe, console, reassure, support, encourage and make physically comfortable”. That seems to sum up the average diner who walks into a full service restaurant in today’s new world. The term comfort has to be your goal for the purposes of restaurant marketing.

In the restaurant world we have bantered around the word comfort primarily to describe a particular type of food that made people feel good or brought back memories from earlier days. In fact most restaurants who changed their menu philosophy in the last year or two will tell you that “comfort” foods sell better than they ever have. That is one blessing this financial hurricane has made clear - you can be creative using lower center of the plate proteins and give the guest what they want at the same time.

However, comfort must extend beyond the plate to get more frequent visits from your guests and keep the buzz about your restaurant going. To extend your comfort factor consider these tips;

• Are you offering a comfortable atmosphere that matches your concept and guest’s expectations? Is your restaurant too loud, too quiet, too bright, too dark, too fancy, too casual?
• Physical comforts are just as important. Are your chairs too hard, too high, too soft? Is the temperature too cold, too warm? Do you smell of pleasant food odors or stale carpets and bleach cleaned floors?
• There is comforting service standards to consider. The old days of hard hitting up-selling professed by out of work “consultants” is over. You and your servers need to be less formal and more personal with the guest. Names are important. Smiles are like gold. Haste is unforgiving. Manager visits are expected. Greetings on entering and exiting should be part of every staff member’s vocabulary. The days of the pompous waiter in the tux are over.
• Value IS comfort. People want to know they are making good buying decisions. That applies to buying a car or a meal. Highlight the things that make the guest’s experience at your restaurant a value. Can you rattle those things off right now - this minute? Is it portions, prices, entertainment, friendly servers, exceptional chef, fun, easy to park and enter, quick service? Embed those comforting aspects of your restaurant in your server’s mind, your POS materials and advertising as part of your marketing plan.

Who hasn’t been to a mall? On a recent day with my grandchildren, a much dreaded trip to get something for one of them, I again found myself not only in the mall, but drawn to the food court by two things. The first thing was the tugs on my hand by my grandson and the second was the smell of cinnamon buns that was the motivation for the younger generation.

While sitting in the mall, there was another memory. The young Chinese lady who was passing out bite size pieces of bourbon chicken. The flavors were immediately recalled into my memory. Sweet, charred and savory bites of chopped chicken pieces. My real interest was the people who were in line to order food at the Chinese eatery’s location at 11 AM in the morning. The other booths were serving stragglers as they wandered through the colorful area, while the bourbon chicken samples were doing the trick for the Asian inspired venue. Too early for lunch and too late for breakfast, but they were doing business.

Over the years I recalled the number of changes that had occurred for mall food court vendors, but the Chinese eatery had prospered. Taking a slow time and building sales for the future. You may not be hungry now or be in enough of a hurry not to be able to stop, but that lingering taste will be remembered for a long time to come.

When a restaurant has a couple of servers faking trying to stay busy and a kitchen just biding their time until lunch or dinner service begins, what are you passing out? A quick restaurant marketing lesson for the future - like tomorrow!

This post may not be in perspective unless you read an article from the Memphis Daily News. The story is playing out across the country. A restaurant opened for all the wrong reasons and closed for all the right reasons.

The mistakes are obvious. A husband and wife team decide to open a restaurant with all the stary eyed passion anyone could have. They both had years of experience in other establishments - most of which failed, by their own admission, according to the article.

Why did the restaurant fail? They tend to blame competition and the economy, but the real reasons are because of the typical mistakes restaurateurs make, to wit:

• A location they thought was perfect turned out to be poor. Another restaurant failed at the same location, but they thought they were getting a bargain! No planning. No demographics. No research.
• They decided, according to the chef/owner, “I wanted to serve food that we liked, a good piece of fish, a good steak”. Cooking what you like is fine, if it coincides with what the guests want and like! “Good” food is what every restaurant says they have - right up to the day of closing.
• According to the wife/owner, she wanted to “have great service and treat people as if they were guests in our house”. Again, trite and the exact same goal every restaurant attempts to say they want to achieve. Sounds good, but not without a plan to execute properly.
• Finally, they blame rising costs and poor controls as a result. In the last thirty years, has ANY business not seen increasing costs from labor, to goods that make up their product, to every aspect of the business environment. Look at inflation over any long period in history and the same conditions have pervailed for almost every type of business. This should not be a surprise to any business owner.

The bottom line is they were a typical start-up restaurant that fails. Nine out of ten fall prey to the same errors in judgment made by this hard working couple. It’s sad, but predictable from day one.

If you are planning a restaurant venture, education, research and cash will be your best tools to beat the odds.

In a recent article the NPD Group, a statistical research company of restaurant trends, said that total restaurants in the US declined in 2009. In general, the only segments seemingly holding their own were the quick service and fast casual chains. Hardest hit was fine dining and independents in all segments. The stats should not surprise anyone.

It should be easy to figure out that chains have more resources than independents. Many of them are feeding on themselves by selling company owned stores to franchisees and building sales by loss leader promotions at the franchisee’s expense. The arrogance of the fine dining segment, who failed to recognize early in the recession the customer’s reluctance to pay exorbitant prices, have just begun to realize dining habits may have changed for many years to come. Even the celebrity driven, curiously named restaurants of famous chefs like Gordon Ramsay and many other media made restaurant “stars” have shuttered their doors.

While most of the chains will survive, although several smaller ones have filed for bankruptcy, the real disaster is the loss of the independent restaurants across the country. These are places that have seen the proprietors put their heart and soul between the walls of memento filled structures dedicated to serving their guests the best they could. Unfortunately, the guests had to endure the same economic impact as the restaurants that wanted to serve them.

Many people, even wealthy people, have been clutching their bank statements as mutual funds declined, the security of jobs were in question and the financial structure of the country was threatened with total failure. In the main stream, millions of people are out of work and many more are losing their homes to excesses of the past. Eating out has become less of a habit and more of a thoughtful experience mitigated by relative financial condition. Big spenders moved down a notch, the secure middle class went to more fast casual and the unemployed or lower income segment moved quickly to QSR’s.

For independent restaurants, many have closed. Others are digging deep in their pockets to survive and still more are hovering daily between solvency and bankruptcy. The end of the recession is not at hand. There are no quick fixes that will magically transform the world overnight.

There are the exceptions to the gloom and doom word picture. Many restaurants made the adjustments early. The owners, management and chefs came out of the kitchen and recognized their patrons were disappearing. Management listened to concerns of other customers, new and old, who were still visiting, watched their ordering habits change and reacted. Most of these restaurants are doing well and many have grown or “beat the street” meaning doing better than most.

If you are an independent, keep connected to your guests. Listen to the customer and not to media. Forget the “restaurant consultants” who believe coupons, discounts and promotions will solve all your problems. Don’t believe the the remarkable stories about social media and the instant successes - it doesn’t happen that way. If you are struggling and can make it for a few months more financially, here are a few steps that may salvage your dream:

1. If you haven’t done it, make the toughest financial cuts you have ever had to make. That may include the loss of long term employees, reducing salaries, wages and/or hours. Every expenditure should be questioned, no matter how big or how small.
2. Today, not tomorrow, talk to your suppliers. Find out what IS selling. Even more important find out what is NOT selling. The larger purveyors can help you with refreshing new ideas for your restaurant. Use them - most are looking for new business also.
3. Creatively change your menu. Look for value from a customer’s perspective, while maintaining a reasonable margin. If $25 steaks have been turning grey on your line, try the alternative grades and cuts. Let the customer know you are searching for alternative proteins to offer some relief to their pocketbook crunch. Make that menu change today and let the customer know it. In the past, restaurateurs have always focused on higher priced items. Now your focus should be better value items. If you don’t offer them, guests will migrate elsewhere.
4. If you haven’t used inexpensive marketing tools like email marketing, viral marketing, networking, word of mouth campaigns, community involvement and dozens more, start today - all of these take time to produce long term results.

Finally, if you are lost, and feel you can make it with some direction, send me a private note through the comment section of the blog. Tell me your circumstances. All comments are first directed to me before they go public. None will go public that deal with any individual restaurant. That keeps the “consultants”, spam and sellers of products and services from ruining this restaurant blog designed for the independent restaurateur. If nothing else, I will send you a copy of The Restaurant Ebook for free or at least the section titled One Hundred Ways to Market Your Restaurant. All 100 ways cost little or nothing. Maybe all you need is a restaurant cheerleader. I can be that also. One thing I can assure of - I know what you have been dealing with! My three restaurants are in the same economy as yours.

 Note: No identifiable information will ever be published!

It is sad to see independents close their doors. Let’s re-connect with the guest and keep the dreams alive.

As a general statement, social marketing using sites like Facebook, MySpace and Twitter are more time consuming for the return than most independent restaurants can afford. These sites have their dark sides as reported and discussed in previous posts. However, there are niche exceptions.

Recently I was asked to help a bar owner who felt his advertising and entertainment costs were bringing in sales, but the bottom line was suffering as entertainers demanded more money and media costs continue to rise. His venue was a popular spot in a major metropolitan area with a capacity of about 300 people. His success was evident with waiting throngs of people on Friday, Saturday and Sunday nights.

The owner was hesitant to raise prices during this economic storm, but wanted to find a way to cut costs. Social marketing using multiple sites like Facebook and others is a perfect application. By building a presence and followers, he can ween himself away from costly print media. Patrons can find out who the bands and entertainers will be on any given day - at little cost to the owner. The bonus is that he has immediate response to the type and popularity of any band or DJ he may want to feature.

To build a presence on social marketing sites was the owner’s next challenge. He could hire a marketing company to do the work for him, but the cost may equal his adverting costs he is trying to reduce. The owner’s lack of Internet savvy precluded him from becoming an immediate leader for the marketing effort. The solution - pay one or more staff members to become the bar’s emissary online. Most of his staff was in an age group equal to his client base and he was surprised to find out that several spent a lot of time on the top sites he wanted to target.

Recognizing that the transition from print media to digital would take some time, the owner created a six month plan to build his following. The goal is to eliminate 80% of print media costs (about $1300 per week) and employ staff members to create the “buzz” he needed to get started (about $200 per week). The added benefit was also his ability to hire entertainers that were popular.

The plan will work. The case is an exceptional use for an over hyped marketing tool.

Word of mouth is unequaled in the power to get new customers through your doors. Word of mouth marketing is also one of the most universally misunderstood. Just because Aunt Violet made a comment to a neighbor that she visited your operation and the food was “good”, that is not word of mouth restaurant marketing. While it was a positive sign that Aunt Violet made the comment, having “good” food applies to 75% of the independent restaurants in the country.

True word of mouth restaurant marketing includes customer training. That’s right, training the guest to be your ambassador to friends, family and acquaintances. When a customer knows what to say and how to describe your restaurant, the effectiveness of the communication is of far more value. You wouldn’t think of sending a server to a table without training — why would you send your guests into the world without the right things to say?

For instance, if Aunt Violet had told her neighbor, “ Joe’s Restaurant had great food because they used “all local citrus” from farms in the area that reminded her of what “fresh really is”. Where do you think a phrases like that came from? What if Aunt Violet had stated, “Joe’s had rustic bread that tasted like it came from a monastery in France”. Where do you think that description would come from? How about bacon that was “apple cured and thick cut”.

Restaurants communicate with guests in many ways. The common methods are through menus, servers, table POS, signs and advertising. Repetitive phrases that describe your food, your differences and the things that make the dining experience unique can be embedded in your guests mind. I call them “talking points” much like speakers and politicians use in preparation for speeches. Do your servers, menus and signs contain talking points your guests can use when describing their visits to your establishment?

Starting a Restaurant Blog was about the building, opening and marketing of a new restaurant in Belleair Bluffs, Florida. The restaurant opened on January 9, 2009 and celebrated its first year January 9th and 10th of 2010. Complimentary mimosas greeted our guests for breakfast and lunch for the two day affair.

To recap the first year in one word - challenging! We started construction in the middle of 2008 without the hint of the difficulties the world would encounter financially from October, 2008 to this day. Through all of the hurdles we faced, we ended up with sales of about $640,000, about $10,000 short of our plan created some 18 months ago.

Our challenges have been;

• assessing the expectations of our guests as they changed during the recession.
• finding appropriate methods to get our message to all parts of our demographic.
• maintaining a high level of food consistency with a new staff.

If we had a scale like the old grade card system, I would give us a B-, even in this economy.

Our year to come will see many of the same moving targets as consumers change with the financial climate. Our goal for the year will be $675,000 in sales. Watch as we compare the benchmark set last year to the coming months. We will post our restaurant marketing plan in the next few days.

As 2009 comes to an end, 2010 begins with hope and positive signs for the restaurant industry. The economy appears to show some trends that indicate the recession is loosening it’s grip. While stocks have recovered to levels of a year ago, they still show some volatility. Retail sales, consumer spending and the housing market each have some growth signals beginning to appear. The real recovery for restaurants will begin when unemployment begins to drop and disposable income is again available for restaurant visits.

While the industry hopes to crawl out of the doldrums late in 2010, restaurateurs cannot afford to wait or rely on shimmering signs of hope. The business has changed and will continue to face challenges for the year to come. That caveat begins our list of resolutions for restaurants in the new year;

• Resolve to not rely on a potential recovery to improve your sales, service and marketing. What if we have a “double-dip” recession?
• Resolve to face the new year with a solid marketing plan the fits your restaurant and demographics.
• Resolve to learn more about your guests and their eating habits that may have permanently changed for the foreseeable future.
• Resolve not to listen to “quick-fix” consultants who tout the imaginary overnight sales boost from mobile marketing, social Internet marketing and other time eating market magic that doesn’t fit the average restaurant.
• Resolve to keep butts in seats by good old customer communications through face to face contact, local network marketing and customer loyalty programs with time versus results rewards.
• Resolve to avoid big discounts that may bring short term returns, but harm your brand forever. Rely on value, creativity and resourcefulness to offer better values to guests.
• Resolve not to be drawn into the loss-leading habits of the big chains who are feeding on their assets and franchisees to keep sales and earnings positive for shareholders.
• Finally, resolve not to ruin your life by feeding a dead restaurant until your family, your friends and customers have long ago abandoned the dream. Live to fight another day, maybe a new dream down the road.

2009 will be remembered as the year that changed the restaurant industry and dining consumer perhaps forever, but at least for the decade to come. Change with the times and build your business with what exists today, not what was in the past or hopeful predictions of the future.

As the new year begins and a new decade is born, the question about the costs to start a restaurant will survive and be repeated another million times in the next ten years. In hundreds of emails, countless meetings and numerous uninformed writers querying me, I know I’ll hear it. And yet, it’s difficult to explain to the questioner why it’s the wrong question to be asking.

Obviously, each restaurant is different. The size, type, location, demographic and owner choices cannot be factored in a brief encounter. What can be determined are the things that cause financial pain and hardship for most restaurants who’s new owners don’t ask the important question -  ”What are the costs to start a restaurant that I won’t be able calculate without experience?” That is the question. It is easy to calculate and add up equipment costs, food inventory, salaries and fixed costs, but what about the things you didn’t think of?

Below is just a partial list of costs generally forgotten or not factored into those starting restaurant budgets;

• Deposits - While these may not be carried on your financial statement as a cost (or expense), they are a cash outlay that be in many thousands of dollars. There are lease security deposits, utility deposits, bank deposits for starting cash and even possible retainer deposits for professionals like attorneys and accountants. Collectively, these could total $5000 to well over $10,000.
• Licenses - The cost to start a restaurant has grown significantly in the last few years as local, state and federal agencies have turned licenses into a method of taxation. Examples include licenses for occupancy (from $200 to $1000), cafe permits for operating on sidewalks or streets, liquor license fees for inspections, forms and filing fees, franchise fees for registering your business, fees for state and identification numbers and fees for federal filings and tax ID numbers. These fees can total thousands of dollars depending on your location.
• Professional Fees - No one should start a business today without competent advice from both an attorney and an accountant. While their fees can total as much as $250 per hour, they can save you tens of thousands of dollars in taxes and problems as your business grows.
• Impact Fees - Many communities now charge start-up “impact Fees” that are supposed to be the cost of your usage of community services such as gas lines, water lines, streets and infrastructure built by the local government. In the last restaurant we opened, I had a $10,000 surprise during construction!
• Cash Flow Requirements - Of all the cash needs, this one can put you out of business in a hurry. Without getting into a whole accounting class on cash flow, let it suffice to state that a profitable restaurant can go bankrupt profitably (with negative cash flow) just as easy as a slow to develop restaurant can run out of cash. If you do not have the cash to survive for six months in a worst case scenario you and your accountant calculate, don’t open a new restaurant until you can.

These are the things that are commonly missed on restaurant business plans. These items can turn a great concept into locked doors very quickly. Food and service are still the biggest factors in buiding your restaurant, but cash needs can bring you to your knees no matter how great the food is.

When the Tampa Bay Buccaneers hosted the Green Bay Packers for many years, one of our restaurants always had a banner welcoming the Green Bay fans for the game. Many of them stayed nearby at hotels also advertising their welcoming hospitality to the traveling Packer fans. Over the years the game became a friendly rivalry that brought annual guests that enjoyed the verbal exchange about who would win the game.

If major event promoters get their way, this form of so called “ambush” marketing will be prohibited in any form of advertising - unless they pay for the rights. Sound crazy? Do a little research online and you will find that by 2010 the NBA, NCAA and Olympic games are starting to negotiate with the host cities to require a ban on using the event name within a preset distance from the event. That means if you have a bar, restaurant or any other business, you could be fined for using the event name in your advertising!

Besides the fact that the expression of hospitality is warming to visitors, our tax dollars are used to provide support in many different ways for these events. Some tax dollars even build the venues where the events are played. Now you may have to pay for the right to advertise your support for the event - what’s missing in this picture? The “hoopla” and excitement that keeps fans coming back would be gone.

Ambush marketing is a term probably created by promoters who want a bigger slice of revenues generated from taxpayers support. Could these sporting events be done without the support and investment of tax dollars? If not, then the public, including businesses should have the right to advertise and encourage visitors to utilize there service or product as part of the event attendee’s experience.