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

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.

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!

One of the most difficult tasks as a restaurant owner is to keep managers and senior staff focused on problems and potential problems. Many supervisory personnel tend to treat the reporting of inadequate service, inconsistent food or other problems like a shooting gallery at the state fair. As the problem balloon is raised, shoot it down by looking at the source of the report (the balloon), rather than the message inside.

It’s common to hear a server and manager having discussions that go like this;

Example One

Server to Manager: “Mrs. Smith at table 22 says the soup is too salty.”

Manager to Server: “She complains about everything. I had to comp a tuna sandwich last week.”

Two things happen here. Mrs. Smith gets ignored. The complaint is disregarded and the server is discouraged from reporting future complaints from regular guests. The only issue really - is the soup too salty or not? Mrs. Smith may be a frequent customer who knows when the soup is properly prepared. She may be a habitual complainer, who still visits everyday, but she cannot be treated like a fairy tale creation who cried wolf too often.

Example Two

Owner/General Manager to Supervisor/Manager: “There is a note in the operations log that Joe was late again. It also says that Joe clocked in and immediately ordered his shift meal before checking with his supervisor.”

Manager Response to Owner: “That note was written by Nancy. Nancy was having problems keeping up with her own tables to be worried about someone else. Conflicts like Joe and Nancy keep creating issues.”

The conversation turns to Nancy when the real problem is a matter of fact. It is a simple matter to determine if Joe did clock in late and if he went on to eat a shift meal during a busy service time before taking tables.

If Nancy is a problem, then deal with that as a separate issue, but reporting a lag in customer service is part of her responsibility if she cares about the restaurant and guests. No one really likes to hear a complaint, but it’s part of the business. How quick you respond and reinforcing the necessity to keep communication lines open between guests and management and management and servers is imperative to improving the dining experience at your restaurant.

A “shoot the messenger” management style can extend beyond the customer service arena. A manager who doesn’t listen to kitchen staff may be in for some costly future maintenance problems. A troublesome complainer in the kitchen cannot be ignored when reporting an issue with a piece of equipment. Employees who complain about workloads at various times of the day can’t be ignored if there is a real scheduling problem that affects service.

Managers have many responsibilities, but none are more important than solving problems. The solution can’t be taking aim on the person who points out the problem.

The majority of money invested in the stock market looks at the long term rather than overnight profits. Yes, there are day traders that try to bet on trends that impact some stocks on a short term basis. They get in and out quickly, but the big investors, mutual funds, pension funds, institutional investors and most wealth accumulators look at years and months rather than days or weeks.

Restaurant marketing is an investment that can return short term returns and long term results. You have to choose what motivators you use according to the results you want to achieve. There are extremes that are common in both short and long term investments. For instance, if you look at Denny’s breakfast giveaway program in the first part of this year, they gave away their food and had lines around their operations waiting for a free meal. Traffic was driven to their stores, but long term results haven’t stopped their same store sales from declining.

On the other extreme,  long term marketing programs take months and/or years to effectively get results. An example of a long term strategy may be email marketing. As your email list grows, so do the customer responses to simple programs. If you offer a birthday dinner as a motivator, your guest will bring in his birthday party of four or more people to celebrate, but the real return takes constant list building that creates loyalty to your brand.

Somewhere in between the long growth approach and the quick freebie schemes are marketing programs like community involvement, direct mail, special events and social marketing through Internet sites.

When developing your marketing plan for a new restaurant, you should try to look at all the options, but remember there is a price to pay in real dollars and time to implement many strategies. Restaurateurs generally wear so many management and time eating hats that time becomes as precious as any other asset.

In the case of our new restaurant, we can see our long term strategies just now beginning to pay big rewards as the industry has struggled in this recession. Couponing and discounting has had a very low priority for us. Building quality and customer service along with guest loyalty has been our restaurant marketing program from our January opening. We are on target to meet our goal of $650,000 in sales by year end.

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!!

A welcome reward was received on Wednesday this week when we were informed we were chosen as runner-up for the Best Breakfast in Tampa Bay in a local reader’s poll. The magazine has an annual Best of the Bay for all different types of restaurants and entertainment venues. First place went to a chain competitor called First Watch which operates in about 11 states with numerous locations in the area.

While the competition had the usual nominees like IHOP, Denny’s and other big guys, we were most pleased that we had made an impact by being ranked over many local independents that have a great product and long history.

If there is a message here, it shows that in our 9 month operating history, you can compete and make an impact. The second lesson is that email marketing helped us achieve this award. It is a powerful tool to communicate with your guests. In our case, we merely made our email subscribers aware of our nomination and asked them to vote for us. We didn’t really believe that we could beat out all the chains in such a broad market, but we did!

If you are starting a restaurant now or next week or next year, start your email list now. Restaurant marketing is a challenge that is rarely planned on a long term basis, but here is an opportunity for your marketing to begin now. If you are a seasoned veteran of the business and struggling through this economy, how is your email restaurant marketing plan working? Don’t have one - begin it today.

A couple of months ago we began building a blog. The purpose was to become a central place in the community to find information about events, reliable suppliers of products and services, important municipal contacts and a format for the restaurant to be interactive with all segments of the business and residential target market. After much procrastination, we have launched the blog. The result can be seen at www.maggiescitycenter.com.

Pretty or fancy the blog may not be, but relatively easy to construct, simple to edit and functional it is. As a tool to market our restaurant we are trying to achieve:

• a communication vehicle with all parts of our demographic from residential to commercial elements.
• interaction with our guests that can provide feedback on our food product, service and experience.
• customer loyalty instilled by use of the site, traffic building as businesses and groups bring their news to us.

Above all, we are building our brand to become a key component of the community. Our competitors may choose coupons, newspaper advertising and lowering prices, but we want to focus on value that extends beyond just a price and a product.

We will report the responses and experiences as the blog ages and content is built. Blog followers of Starting a Restaurant Blog are encouraged to offer comments.

OK, I have decided to be a tall, dark, handsome, virile, young, intelligent, rich, witty man! I can do that on the Internet. I might even steal a picture of one of the football quarterback brothers in the Manning family and use that on any profiles I fill out. I can do that too - on the Internet. Of all this flattery, I am tall and a male……

Of course, I can also be a nasty competitor, a disgruntled employee well disguised,  a jealous suitor of one of my employees or even someone I have offended in some way over the years. All of these are possible, while totally concealing my identity - on the Internet.

The freedom the Internet allows can have a dark side. A restaurant owner friend recently relayed a story to me about an experience on Twitter. He had a growing following for his four south Florida restaurants. The hype about “social restaurant marketing” motivated him to commit to building a presence and encourage feedback “tweats” about his operations. In the beginning he was encouraged while gaining several hundred friends.

Then it started. Negative comments started to come in. At first the restaurant owner responded with apologies and forthright answers. The nasty comments increased. He started to suspect one person was responsible for most, if not all, the bad reflections on his operations, staff and food. The “tweats” were strangely similar in use of terms, language and mis-spellings. Each used email addresses from one of the  free services such as gmail, yahoo and hotmail and others.

After a month he felt like a bear swatting bees while raiding the honeycomb. The time and effort trying to not only respond, but figure out who was creating this havoc wasn’t worth the effort. He abandoned Twitter. It could have been Facebook, MySpace or any of the other social marketing sites.

The Internet has a dark side, just like real life. The only difference is anonymity.

Even after removing his Twitter account, he had another problem from customers who enjoyed the good aspects of the communication. They wanted to know why he stopped and why they couldn’t “tweat” with the restaurant any more. Explaining wasn’t easy.

Remember the chains can have a few negative comments (they always do), but they use the social sites for coupons and promotions. Negative issues are discussed, but they are used to a few disgruntled guests. Independent restaurants have a much smaller following and rarely have to deal with a lot of negative comments unless you irritate an Internet terrorist who floods the social marketing sites, restaurant review sites and anywhere they can make a small business respond to false, derogatory references. Small restaurant owners don’t have an IT staff to handle Internet restaurant marketing.

Bottom line is if you own a new restaurant and are looking for ways to market your product, be careful about committing to the time and effort Internet social restaurant marketing requires to maintain your presence. The revelations about the horrors of social sites are beginning to emerge. Do your research to make certain you have the time to keep up with your communications. Is it worth the effort? In my opinion, there are much more productive ways to communicate with your guests without the risk and time commitment.