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

Restaurateurs spend many hours confined within the walls of their restaurant locations. We become slaves to our masters, the customer. We also become stale like day old bread - still good for some things, but the creative juices are harder to get flowing. Traveling, or visiting multiple restaurants locally, gives us the opportunity to get the mind open for a rush of new ideas.

Rarely have I eaten a dish in a restaurant that I wanted to copy. On the other hand, rarely have I visited another restaurant without coming away with flavor combinations that worked, presentations that caught my eye and customer service thoughts that were good (or bad).

On a trip last week to a major metropolitan area for a few days, I came away with;

• A sauce idea for chipotle sweet and spicy mustard. The flavors worked.
• While consuming a better than average pizza at a local popular pub I detected a smokey flavor that lead me to believe the pizzas were cooked in a wood fired oven. I came to find out they only had a standard deck oven, but used a smoked provolone cheese as part of the ingredients. That gave me the idea for an oven braised brisket sandwich that would be topped with the smoked provolone cheese that could add a new dimension of flavor.
• While consuming a horrible hotel breakfast, there was a yogurt sauce comprised of frozen blueberries and a touch of maple flavoring that topped fresh fruit. It worked!
• A house salad that was served in a giant martini glass tuned upside down at the table onto a plate. It had everyone oohing and awing at the sight.
• In a virtual zoo of restaurants along a mile stretch of commercial roadway, there had to be 60 restaurants, independents and every national chain imaginable. Visiting a couple of the independents that were exceptionally busy was my goal. They were surviving quite well in the midst of one of the most competitive markets I have seen - with ongoing construction that will lead to more potential competitive conditions. I wanted to know why they were full on a snowy weekday night. An un-scientific, quick survey showed three things. One, the two independents I visited both had food that matched the demographic for the area. Two, service was on target, friendly and not scripted like many chains. Three, the atmosphere was cozy and locally themed versus the clinical look of many chains.
• Two other notes I made in this beehive of restaurants was that half empty parking lots at five big name Italian chains in this mile long stretch showed that over building in any market can be a silly venture. Finally, the burger wars were evident. The big names were there including stalwarts McDonalds, Burger King, Wendy’s, White Castle, Rally’s, Sonic and expanding chains like Five Guy’s, Red Robin, Steak n’ Shake, Dairy Queen and WhataBurger. Nestled in between all of the big names were a couple of local favorites that seemed to be able to find their niche with long lines that exceeded the chains during the dinner hour. The second note I made was the number of sub shops that were tucked in every corner of the area. There were two Subways, Quizno’s, Grinders, Blimpie’s and a Firehouse Sub Shop being constructed. The mental note I made was the potential for a local sub shop to produce a better product than any of the cookie cutter franchises. I have yet to see a sub franchise be able to compete with a good product produced by an independent in a local market for subs.

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!

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?

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.

The independent restaurateur has been at the point of a big economic shotgun for almost a year and a half. One wrong move and the deadly blast of pellets pummels the body and soul of the restaurant. Food costs, labor costs, lower consumer spending, increased industry regulation and changing guest eating habits have faced the independent restaurants across the country.

While there are signs of an improving economy, restaurants cannot plan on the consumer returning to pre-recession habits for a long time to come. Many diners have changed their eating habits and others continue to face an uncertain jobless recovery that will keep restaurants at the tail end of the recessionary curve.

What should the independent be doing? Here is a list that may help your planning for 2010:

• Don’t wait for the economy to rebound and bring customers crashing to your doors. Long term marketing efforts shouldn’t be ignored, but short term results need to be your focus.
• If you are struggling now, it isn’t going to get better tomorrow by doing the same old thing. Change is difficult, but failure is worse. You may have to do things you have never done. Coupons, discounting and lower prices may be the difference between saving jobs and generating enough cash flow to pay bills. Most “experts” think discounting may hurt your brand, but not as much as closed doors.
• Stop any impulse you have to listen to restaurant marketing gurus who have the answer to sales results overnight. It ain’t gonna happen. Mobile marketing, social marketing and other tools are aguably useful over a long period of time, but for the average restaurant they don’t deserve the long hours and cost to implement when the battle for survival is imminent.
• You must become mentally in tune with your guests. Who are they? Where are they? What do they want? How have they changed? What drives them to your door or your competitor’s door? Will they increase their restaurant visits if you …..? You finish the line!
• Even if you could afford the cost of big newspaper and TV advertising, don’t be so sure it will produce for you. Consumers are turning to the Internet for news and entertainment. Newspaper sales are declining. TV audiences are declining. Grass roots, personal marketing may be the least costly and most productive form of getting your message out.

There are no quick fixes, but there are ways to build your business the way it has been done for decades. Provide a consistent product at a value to the guest. Get that message out and capture new guests one at a time.

If you are starting a restaurant now, there are big potholes in a long road. In a “normal” year like 2007, there were about 72,000 restaurants that opened and 60,000 that closed. While statistics for subsequent periods are difficult to produce, everyone agrees that there are more closings than openings. In fact, bankruptcy records may give some idea of the numbers. There were 43,500 business bankruptcies in 2008. Through June of 2009, there have been over 30,000 cases filed already.

Is it all doom and gloom? Absolutely not. If you are paying your bills, seeing some head count growth year over year and finding ways to keep costs going down, you can easily survive with a smart reaction to ongoing economic woes. Even a few new restaurants will make the grade if they have done their homework, planned properly and have sufficient resources to withstand any planning mistakes.

2010 will be just as challenging as 2009, but at least we know what to expect and how to react to the recession imposed environment.

One of the hiring strategies at our restaurants over the years is to avoid employing people from the hotel industry. Before I have a dozen nasty emails, read on! Generalizations are never good. The exceptions are quickly and easily pointed out. However, hotel trained staff do not think like independent restaurant entrepreneurs.

It’s not their fault! Hospitality and lodging personnel are forced to live within budgets, percentages, rules and performances based solely from numbers dictated by corporate managed food and beverage operations.

Are they successful at what they do? Most are until the situation requires thinking and acting outside the lines. Many hotels and travel based food operations have found in a recession they no longer had captive restaurant visitors where service was sometimes an afterthought.

The difference between hotels and large upscale chains and independent restaurants is the ability to operate and adapt quickly through a clear path directly to the restaurant guest. As the recession closed in on the consumer and restaurants across the world, independents had to find new ways to keep butts in the seats of our restaurants. All restaurants had to change quickly and menu strategies had to be re-thought. Hotels, white table cloth chains and high end corporate dining facilities have been hit the hardest with some major names seeing sales declines exceeding 25%.

One reason for the hotel and high end restaurant revenue declines was their inability to move away from just numbers and connect with customers. One thing is for certain. Guests want value. That means they need to perceive that every dollar spent can be justified as reasonable in these hard times. Hotels and the big ticket chains thought, at first, they were just going to lower that prime New York Strip from $49 to $39 ala carte and the problem would be solved. It didn’t happen. Justifying $39 for a 12 ounce piece of meat and little else won’t work anytime soon.

Menus had to be re-designed to give the customer more for less. The numbers game became less about margins and more about plate cost versus selling price in real dollars not percentages. For instance, a surf and turf with filet and lobster may have a price tag $50 on a menu. The cost to produce that plate may be $25. Not bad if you can get it. But people quit spending $50 or $40 - they wanted to avoid being extravagant while the financial world crashed and burned.

Recession Restaurant Menu Lesson One- High priced anything won’t work! Even the wealthy downscaled their eating regimens. Price points become critical. When the consumer defines the term “value”, they mean a well rounded bargain for their buck. It could be just food. It could be the combination of food and service. It could be food, service and entertainment or ambiance, or convenience, or almost any combination of attractions.

A positive example would be the restaurants that focused on improving service, increasing customer loyalty programs and re-thinking their menu by being creative. Instead of serving that $15 per pound fillet, they moved to chicken, pork and lower priced proteins, but served them in new ways. That big plate of chicken Marsala on a large bed of fettuccine noodles became attractive particularly with a price tag of well under $20 for a complete dinner. It sure looked better to the consumer than the lonely 10 ounce fillet at $30 dollars or more. Even the QSR chains quickly discovered that offering those 99 cent specials while raising drink prices by 30 or 40 percent didn’t fool the consumer very long. They just quit buying the drinks!

Recession Restaurant Menu Lesson Number Two- Forget trying to lure the consumer with low priced offerings that require expensive add-ons to complete a reasonable meal. Plate cost versus selling price must become part of your restaurant menu planning strategy. Creativity will survive, but ruthless discounting may hurt brands for years to come.

Forget trying to price based on margins. What does it cost to produce a dinner entree before adding center of the plate proteins? If you offer a salad, potato (or other side) and bread, what is the cost? Let’s assume it’s $3. If you add to that a lobster tail at $6, the old mentality may have been to triple or quadruple the combined cost for a total of $27 to $36. The recession has forced us to look at minimums for plate production and work from there, while having a price target in mind.

For instance, if you want to keep entrees below $18, and you need a $12 production minimum, $3 plate cost before the feature item, that leaves $3 maximum for the center of the plate.

Now you can adjust prices and menu items using this philosophy. Impossible, you say! If you can’t buy into  that theory,  you are probably struggling in this economy or are just plain lucky with a perfect location that has lots of captive business. If you think $3 (or other number you calculate) is too little of an amount to allocate for the center of the plate, that is where creativity and self bargaining come into play. Creativity begins with knowing your food costs. An 8 oz. chicken breast probably costs you around $1. A bone in 8 oz. pork chop will cost you about $1.90. Pollock, tilapia and catfish will all fit into that range. All of these leave room for a creative sauce and presentation.A reasonable portion of shrimp, mussels, clams and much more will also work.

Self bargaining is another creative tool. Hypothetically, you could be shooting for an AVERAGE production profit of $12 per plate, that $17 shrimp scampi won’t make it. Then create another dish that makes up the difference by using much lower proteins like pasta, rice, sausages, ground meats. A Tuscan sausage fettuccine may make up the extra dollar you spent on a seafood grill that went over your target. The goal is to balance your menu to keep prices down and seats full, while keeping positive cash flow. An empty restaurant that insists on the status quo won’t make payroll, pay supplier bills and cover fixed costs.

Recession Restaurant Menu Lesson Number Three - Margins won’t work. Know your costs. How many covers do you need to break even? What is the average per plate production cost you will need to break even? What is your per plate production cost? What proteins can be offered to give value and profit an equal share of the menu item? It’s amazing how many restaurants report they are running the same number of covers, but at average tabs of 10-15% less in sales. That means you have to put profit back into the picture on a per cover basis.

If you don’t know your costs, menu pricing in a recession will be dangerous. Many of the casual chains are running big promotions the franchisees pay the price for.  They may drive traffic, but profits at the corporate level are based on sales, at the expense of the franchisee’s profit. Trying to duplicate this pricing tactic as an independent may be tempting, but your costs and ability to survive are immediate. Driving traffic through loss leaders will leave you looking for real dollars to make payroll.

Keep an eye on commodities. What is coming down? What is going up? Focus on proteins that have a sustainable pricing outlook. Work with your suppliers closer than ever before. Get advice about what items and menu ideas may fall into your price points.

When will the recession end? Whoever has the crystal ball to foresee that could be very rich - but they won’t be in the restaurant business. It is very likely our industry will feel the effects of the economy for several years to come. Even as economic health returns, people have changed their habits. Returning to the free spending consumers that used a great deal of their disposable income on dining out, may be a long time off.

In the middle of 2008, we decided to open another restaurant. The new restaurant would be a larger version of an existing concept in Clearwater, Florida, specializing in breakfast and lunch. To chronicle the challenges we created this blog so other entrepreneurs could follow the daily hurdles that face the independent restaurateur today.

As we constructed the restaurant detailed accounts of negotiations with the landlord, contractors and regulatory entities were posted. The process of opening a new restaurant culminated with our soft opening in the second week of January, 2009. Followers of the blog saw the fruition of many long hours and the many hats you must wear as a restaurant owner. The opening was successful and we have enjoyed growth throughout the year with estimated sales at year end to be about $650,000.

Now, the newness has worn off. It’s like a car that no longer smells new. We must operate the restaurant like our other restaurants. Maintaining growth, meeting customer expectations, withstanding the economic climate and building a solid business.

Our focus and subject matter for the blog will be operating a restaurant rather than starting a restaurant. Everything that goes into keeping a restaurant viable and popular will be covered. Marketing, managing and continuing growth will, hopefully, be conveyed to those readers who may want ideas and help with their operations. In some cases the blog may be a place to see that few problems are isolated to their restaurant. Many readers may find business solutions as we document the planning and future of our three restaurants.

Follow along. Comments are encouraged. We learn new things every single day. It’s going to be a blog for Starting and Managing a Restaurant!