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

Every restaurant owner and manager knows that food prices can sneak upward. In fact, in 2008 prices were rising so fast on eggs, grain products and plastics that by the time you could change your menu, it was already outdated. Most of us would have paid dearly for a crystal ball that could forecast the future to stay ahead of the upward spiral.

Fortunately prices have begun to moderate. Many have come down and others fluctuate more frequently than ever before. It is a balancing act to keep reasonable menu pricing that allows a profit margin. Below are a few things that may help with your costs for re-sale items;

• Many major suppliers have a weekly or monthly commodity report that shows trends and predictions for the immediate future. Ask to be placed on the mailing list for these regular communications.
• Key item prices must be watched closely. Do you know what 20 items you spend the most money on? If not, you should! Take that list and create a spreadsheet that lists the items and change your cost weekly or monthly for all 20 items as your invoices come in. At the bottom of the spreadsheet have a total for each week or month. Is that total going up or down? This is a simple, but effective way to view immediate price trends and alarms for your major ingredients.
• If you are in the middle of a menu change, factor in the seasonal and regional price fluctuations of your restaurant’s biggest selling items. If you are steak house you know that beef is going to increase around the holidays and come back down in the early spring. Vegetables cost more (in general) during the winter than in late spring. Restaurant menu pricing is an art, not based on just today, but the life of your menu.
• Crude oil prices affect a major part of your overall costs of doing business. If crude is high, so is the cost of gasoline and diesel fuels that lead to higher delivery costs (surcharges, too!). Delivery costs filter through the entire restaurant industry, since trucking is the major source of product moving. Oil prices also affect the costs associated with plastics and packaging materials.

Projecting costs as you revise your restaurant menu can also be moderated by adjusting portions, garnishes and side dish offerings. Creativity can keep your margins in check between menu adjustments.

Find a system that works for you. It can make the difference between a profit or loss. The other option, doing nothing, won’t work in this economy and perhaps ever again in the future.

Of course, there is always that magic crystal ball that may someday appear on Ebay or Craig’s List - but I am not going to wait on it!!

New or old, restaurants generate huge amounts of trash and garbage. There are receptacles in the kitchen, dining areas and usually outside the doors. Each of the different cans usually have plastic liner bags that cover the inside areas. These thin layers hide each restaurant area’s waste that are easily distinguished if opened.

While I cal it “Dumpster Diving”, the issue is really about cutting restaurant costs. There is no better method than seeing what is thrown away. Over the years here is what I have found while performing this miserable task resulting in a shower and subsequent savings:

·         Customer waste that lead to changes of uneaten side dishes and entrees that were half eaten.

·         How about a half pan of mashed potatoes that cooks threw out from the previous evening? We could have made many things from them. Or that half of a red onion the prep guys didn’t need.

·         The celery tops, onion skins, parsley stems, green pepper centers and tomato ends would make an awesome vegetable stock.

·         While you are in the trash digging around, you might as well pick out those cocktail forks you keep replacing, the ramekins and butter knives too.

·         Seafood restaurants need those shrimp shells, fish bones and lobster heads for a soup base.

·         Oh yes, then there is that quart of tuna salad that someone let spoil.

·         What about those half dozen empty Corona bottles in the bottom of the kitchen prep bag of trash? Was someone pilfering beer and, worse yet, drinking while working?

There is no end to discoveries and assumptions that can be made. How well is your kitchen being managed? Are there far too many broken glasses, plates and smallwares? Are you serving far too much side sauces, extra sour cream and salad dressings? Is your bread coming back in it’s original unused condition that indicates customer disatisfaction or over use by the servers?

Now if I can find the rubber gloves, dishwasher’s apron and old tennis shoes ready to be thrown away, I’ll see how well we are running this retaurant and keeping costs down.

A new restaurant operation is like bringing a puppy home from the dog pound. Everybody loves it, but you are the one who is up all night with the crying and yelping, cleaning up the messes until trained, picking up the chewed new pair of shoes and tripping over the ball of fur with every step.

From the outside, the puppy is cute and cuddly - just like a new restaurant. No one sees that you are scrambling to train staff, get the food out of the kitchen perfect, adjusting schedules, paying unforeseen invoices and hoping there is enough cash flow to make at least your break-even point. It’s a nightmare.

The first 30 days of any restaurant operation cannot be evaluated. Sales are driven in many cases by the curious who just visit because you are new. Costs are escalated due to extra staff, over ordering of product and the usual smallwares you need that were not in the plans. Throw the first thirty days out. Don’t try to judge your future based on your first month.

The days that count are the 100 days that follow the opening month. These are the days when reliable and predictable trends begin to develop. The “Big 100″ (100 days following your first month) are the days that can tell you what you need to do and set the tone for further growth and profitable enhancement. Here are some things that should emerge with your analysis;

• You should be able to accurately discover what your exact daily break-even number is.
• You should see a trend of lower operating costs that should be going down due to tweaks you make as you age. Food costs should be concise as compared to sales.
• There should be a clear picture of what your marketing has done and the demographic draw of existing business.
• The Big 100 should have produced the numbers that allow you to go back and compare to your plan. Are there adjustments necessary to the plan or your operation? What were the biggest surprises? What were the biggest disappointments? What new goals do you need to establish? Is your menu where it should be?

The Big 100 is the platform for you next 6 months of planning. What marketing changes do you need to make? What food trends do you want to expand? What internal changes need to be made to reduce costs or waste? Staffing changes? Hours of operations? Does the seating, lighting, decor and customer areas need adjustment? All of these questions and many more become the basis for your new business plan.

After a little more than 60 days of business, it’s time to start looking at tighter cost control. In the initial stages we focused on the food, customer service and marketing. We costed out our menu and knew that projected costs were in line at the time we opened. Since that time we haven’t done much to look at operating costs.

We will look at these areas:

• Scheduling and better management of time in the kitchen and front of the house.
• Food costs as the market continues to fluctuate (up and down) for commodities like meats, eggs, dairy, cheeses and wheat based products.
• Elimination of services, menu items, fixed costs, maintenance, and general administrative costs that may not be needed.

While sales are holding up well, we can focus on the cost to do business as a long term operational basis.

It’s 5 AM on February first. A Sunday - Super Bowl Sunday, in fact. Yesterday we set a new restaurant sales record for a single day since opening of almost $2800. That’s great news, but getting a handle on how our sales each day keep growing is just as important for continued growth.

Based on initial customer conversations, the vast majority of our guests are coming for the first time as the result of referrals to the restaurant. Someone visits us and tells their neighbors, family and friends. You can’t buy advertising, run promotions or offer coupons that would be this productive.

Studies have shown that people react sooner and more often to a word of mouth recommendation of a restaurant than any other single motivating factor. Customers take the assurances of someone they know before relying on the hype in an ad, coupon or promotional device, no matter how attractive.

The fact that we are getting personal recommendations tells me several things:

• Our message of quality food is getting out. Our prices are 20% higher than our competitors, but we sell our ingredients and quality to each guest.
• We must be meeting and/or exceeding what the customer expected when they walked in the door.
• Our consistency must be better than I expected in these early stages (three weeks).
• Our location is as good as we expected with plenty of parking, road exposure and good ingress and egress.

While pleased with the initial sales and response, we still have a lot of work to do. Our break-even number is about $1500 per day and we need $10,500 per week (without owner compensation). This will be our second straight week of hitting those numbers, but other costs are involved as we buy more smallwares, small equipment and other items to support the growth. Break-even is great, but profits are why we are ultimately in business.

On the very positive side, we are meeting our sales goals. On the other hand, we clearly need to work on staff training, kitchen routines and turning tables. On the proverbial ten scale, we are an eight and very pleased.

When you open a new restaurant with a relatively soft opening, you hope sales grow through word of mouth. This is the strongest form of marketing you can do. If your product and value is acceptable to the customer, plus you meet service expectations, increasing sales will be the reward.

As I indicated in the previous post, the weekend would tell the story if our message was spreading throghout the community. On Saturday we reached a new plateau with $2000 in sales, despite the season’s coldest weather and no seating outside. Happy we are, but the work isn’t done.

As sales increase, both good and problematic things occur. The good outweighs the bad in our case. Here is a list of things we will continue to work on:

• At several points during the day, we were on a wait. We have to subtlely find ways to turn tables a little quicker. Things like pre-bussing, slower coffee refills after guest has finished eating and quicker table setup will help.
• Notably the new servers are having a few problems ringing correct descriptions of the food they want. Better menu knowledge and consistent input into the kitchen will help ticket times.
• Any restaurant strives for consistency. Servers need more direction on the items they prepare at their station. Salads, topping waffles and plate garnish was inconsistent.

The good part of the day was the kitchen’s ability to meet reasonable ticket times, even at the peak of business. While we have potentially another 25 seats outside during pleasant weather, it appears we have the capacity in the kitchen. Another busy day will confirm that.

Another positive was relatively few problems with any returned food, customer complaints or server errors. That means training and diligence in policing each ticket is paying dividends.

As business increases, so does the need for inventory. We have been trying to keep our Inventory Form up to date as product came in the door. The link above shows an Excel spreadsheet that is color coded based on various items we want to note. One color may be for a particular supplier. Price highlighting means a date when last price confirmation was made. Your form can be modified according to your needs.

Your ability to maintain inventory levels is important because:

• Your restaurant cannot  be out of menu items on a regular basis to avoid customer disappointment.
• Over ordering can lead to waste and spoilage.
• Ordering the proper quantities negotiated with suppliers will keep costs in check. Make sure your supplier has a copy of your inventory sheet for their records when placing an order. It will simplify the process and reduce order mistakes.

Overall, the first eight days of operations have been very gratifying and helps to alleviate some of the reservations we have had about opening a restaurant in this economy. We still have a lot of work to do, but we feel we are on the right track.

The opening of Maggie Mae’s on the Bluffs in Belleair Bluffs, Florida has been a six month rocky road. The many posts on this blog have detailed the problems, hurdles and emotions of trying to open a new restaurant. The last thirty days have been intense in terms of time committed and concentration of resources to accomplish flipping on the ”OPEN” sign.

The new facility officially opened on Friday, January 9, 2009, more than six weeks beyond our projected opening date when the project was started.

Below is a day by day recap of the first four days of operations.

• Day One —  We turned on the open sign at 6:30 AM on a Friday. Our first customer didn’t come through the door until about 7:30 AM. It was a long hour with the entire staff waiting and wondering if we were ready and if anyone would come in at all. By the end of the day we had managed $550 in sales. However, it was clear the new servers had to do more training on the menu and the kitchen needed some procedural changes. The breakfast and lunch business parts were about equal in the number of customers.
• Day Two — Saturdays are the second biggest day of the week for breakfast guests. We had spent the overnight hours adding some enhancements to the kitchen such as shelves, moving the order printer and getting some utensils that escaped our initial inventory. The photo in this post is the kitchen line. Barely shown is a double oven followed bt the stove and salamander combination, the griddle and fryer. You can see a portion of the server window in the middle right of the photo. Second day sales were a respectful $850. The procedural and kitchen modifications clearly helped food delivery. However, the servers were still not trained well enough on the menu despite our request to study it closely overnight.
• Day Three — As usual, Sundays start lowly. People get up later and eat breakfast as a treat they may not enjoy during the week. Overnight we had compiled a new server menu test to force familiarity with the menu. The questions were based on what had been experienced in the last couple of days. The servers each took the open menu test before starting their shift. By the time customers finally showed up, the apprehension about the day was shown by servers, staff and management. I had been confident that we would have a good day, but the minutes between orders were starting to wear on me. Watch what you wish for! When guests started coming in after 8:30 they didn’t stop. At one point we filled every seat and ended the day with good sales of $1650. The kitchen, servers and procedures went extremely well. Ticket times were good with only minor anticipated problems.
• Day Four — A Monday. This day would tell the story. If our word of mouth opening had been successful, we would have a decent day. Of course, we didn’t expect a repeat of Sunday, but customers did respond and we ended the day with $900 in sales. A a business day as opposed to a weekend, we had a good business lunch crowd that exceeded breakfast.

Overall, we are extremely pleased with the results of our very “soft” opening. Part Two of this post will recap how we got this far from a marketing perspective. Marketing for a new restaurant is always a challenge, but our plan was in place and working so far.

It is difficult to believe I haven’t written a post in over a week. The week is like a whirlwind that never stopped. To detail all that has occurred will take several posts to explain the details and activities that lead up to the opening day photo on the right.

Besides the holiday immediately after receiving our restaurant license, many of the suppliers were not delivering on their scheduled days. To complicate matters even further, both sister restaurants had about tens days of exceptionally high sales.

Fortunately we were prepared to hire and train employees, test menu items and get the doors open.

A day by day log and activity detail will be posted soon. Right now our exclusive goals are to work out the “kinks” that always creep up on you on opening day.

We are officially a statistic. A licensed restaurant in Florida. After 5 grueling months of construction, delays, inspections and all the emotions that went with the daily hurdles, we received our Certificate of Occupancy from Pinellas county on Tuesday, December 30, 2008 and our state restaurant inspection and licensing on Wednesday, December 31, 2008.

Now the real work starts! Our tasks in the next few days before the doors open include:

• Hiring and training staff.
• Finalizing menu.
• Ordering smallwares, food and dry goods.
• Testing recipes.
• Implementing our marketing plan (some of which started weeks ago).
• Developing procedures, recipe manual, POS materials and forms.

There is nothing more difficult than marketing your operation and putting butts in seats. New restaurants are a dime a dozen with an average of over 55,000 started each year in the United States. Unfortunately, an equal number close each year. While the many details listed above are necessary to open the new restaurant, the priority is to make certain we start communicating our message to potential guests.

Choosing suppliers, pricing menu items and organizing storage and focusing on each step to create maximum efficiency for staff will reduce waiting time for customers and increase table turns on a busy day.

Each plate of food must go through the line in an orderly progressive manner without retracing steps as menu items are produced. The end of the process is the server window where food is ready for delivery.

On Wednesday, December 24th, we had four inspections that went very well.  Electrical, plumbing, chemical and HVAC are all done and passed by the county. Tomorrow, Monday December 28th, we have our hood inspection, fire suppression system inspection and building inspection. After all three of those are done and passed, we can get our Certificate of Occupancy.

The final step is to have an inspection by the state of Florida, Hotels and Restaurant Division, which issues the license to operate as a restaurant. We will schedule the state on Wednesday. At that point we need a full week, minimum, in the kitchen perfecting recipes, procedures and prep work.

Its hard to believe that the last six months have gone by so quickly in retrospect. However, it seemed very slow at the time. We are six weeks behind our projected opening date.

Opening a new restaurant is no easy task. If possible, always buy an existing restaurant if remotely possible. You can save time and money in most instances. Of course,  the mitigating factors such as location, amount of remodeling and type of structure must be considered in the equation.