Monday, December 31, 2012

The Value of Quality & Training

If quality food is a value, stick to the products that your restaurant can deliver with the highest quality. If training is a value, never cut back or eliminate a training program. Both of these values will stimulate sales. Not performing these values will cause your customers to go elsewhere.
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Sunday, December 30, 2012

Effective Listening as a Tool

Owners and operators who want to be effective in communicating with their employees need to develop the ability to listen. Listening to another person’s account of feelings and problems requires concentration to grasp the attitudes and thoughts behind what is being expressed. Listening means showing genuine understanding and concern. If the listener indicates doubt, surprise, disagreement, or criticism, this at once places them in the undesirable role of judge or critic and impedes the communication process.

Restaurant owners/operators face numerous responsibilities and distractions. When an employee is speaking, they may feel that circumstances prevent them from concentrating on what the employee has to say. Or, the owner/operator may not be paying sufficient attention to interpret the employee’s feelings accurately or objectively. Thus, they may arrive at a false conclusion.

To avoid this, the owner/operator must focus and connect with what the employee is saying and must avoid any distraction. If the employee gets the impression that what they have to say is not important enough to require full attention, resentment and distrust may occur. And in the long run, employee moral will suffer which will directly impact your customers.
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Thursday, December 27, 2012

Major Points to Consider When Selecting Menu Items

1.      The menu item must be of superior quality.

2.      The raw materials used must be readily available year-round at a relatively stable price.

3.      The menu item must be affordable and demanded by your customers.

4.      The menu item must be acceptable to the preparation and cooking staff system.

5.      The raw materials must be easily portioned by weight.

6.      All menu items must have consistent cooking results.

7.      All menu items must have a long shelf life.

8.      All menu items must have similar cooking times (approximately 8 to 15 minutes).

9.      The storage facilities must accommodate the raw materials used in preparing the menu items.

10.  Menu items should be creative and not readily available in other restaurants.

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Wednesday, December 26, 2012

Scheduling - The Basics

The overall objective in scheduling is to place the most efficient employee at the job and time where he/she will achieve maximum productivity at minimum expense. The greatest tool you have in controlling labor cost is scheduling, and yet it is most often so poorly done that it becomes more a part of the problem than the solution. So often, the employee’s schedule is scribbled on a piece of paper, or worse verbally communicated with little though of what is actually needed.

Properly preparing a schedule for a restaurant must take into account different factors, such as:

·         The number of covers and large parties expected each day.

·         At what time maximum production must take place.

·         The skill and productivity of each employee.

·         The employee’s desired schedule. Days off, availability, etc.

One other thing….don’t get caught short on trained personnel.

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Food Cost and the Popularity of Menu Items

The popularity and price of each menu item will impact the amount spent by your customers…..and, as a result, influence the average check and daily sales. Furthermore, the sales mix will determine what overall food cost will be. If it becomes necessary to reduce food cost, you must change one or more of the following elements:

·         The menu price.

·         The portion size or number of accompaniments.

·         The food cost of the ingredients.

·         The menu mix.

Simply stated, you can raise or discount prices, increase or decrease portion sizes or accompaniments, shop for better ingredient prices; or attempt to alter sales mix by emphasizing higher-prices or lower-cost menu items through internal advertising and suggestive selling.
A properly designed menu can direct the attention of your customers to specific items and increase the likelihood that those items will be order more frequently than random chance consideration. When those items are low food cost, high in gross profit, and increase the average check, the profit picture brightens and food cost improves. The menu clearly does have a significant impact on food cost, and if used properly it can be an important cost-control tool.


Thursday, December 20, 2012

Presence and Service

The difference between a customer leaving a 10% tip or 30% tip depends mostly with the personal connection a server makes with the customer. Presence increases the personal connection between people. In fact, without presence, there is no personal connection at all.

Just as a distracted state  of mind creates irritation, presence makes people feel more positive. What do you think the impact of presence (or lack of it) might be on how well-served your customers feel in your restaurant?

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Tuesday, December 18, 2012

The Do's and Don'ts Of Handling Guest Complaints

1. Do emphasize resolving the problem instead of finding someone to blame.
2. Do act positively and use positive language. For example, use the word concern instead of problem.

3. Do respond quickly.

4. Do respect the guest and treat him/her accordingly.

5. Do speak to your manager when in doubt about what to do.

6. Don’t make excuses like “we’re short.” This does not help solve the problem or make the guest feel better.

7. Don’t blame anyone. This also does not help solve the problem, and it reflects poorly on the restaurant and you.

8. Don’t ask for sympathy or understanding. Remember, it’s the guest who has the problem.

9. Don’t argue. Nobody ever wins an argument with a guest. Keep in mind that the guest may not always be right, but he/she is never wrong.

10. Don’t get defensive. If you remember not to take a guest’s comments personally, you won’t get defensive.

The Top 10 Interviewing Mistakes Restaurant Operators Make

  1. Failing to Create a Job Description: How can you hire the best person for the job if you haven't defined what "the best" is? In addition to listing tasks and responsibilities, job descriptions should spell out the skills, attitudes, and personality traits that are key to success.

    (While a librarian and a waiter both need to have good customer service skills, only one of them needs an outgoing personality.)
  2. Asking Illegal Questions: Write out your interview questions, review each one, and ask yourself: "What does this have to do with the person's ability to do the job?" If it's not job-related, don't ask it.

    (If you need someone who will be on time every day, don't ask: "Do you have a reliable daycare provider?" Ask: "Other than personal illness, how many days were you late for work in the last six months?")
  3. Relying on First Impressions: A study by the University of Chicago found 90% of interviewers make a hiring decision within the first 14 seconds of meeting the applicant.

    (No wonder so many bad hiring decisions are made.)
  4. Forgetting Who Needs to Make an Impression: Applicants today are picky about where they'll work. Interviewers need to sell applicants on the job and the company.

    (Applicants report major turnoffs are interviewers who are not prepared and being kept waiting.)
  5. Hiring Based Only on the Interview: Another study concluded that hiring decisions based on inter-views are only eight percent more reliable than flipping a coin!

    The best predictors of success on the job are testing (53%), a temporary job assignment (44%), and the reference check (26%). Experience is reliable only 14% of the time and age is the least reliable predictor of success (-1%).
  6. Positive Biases: A bias is the instant bond you feel when you find out someone is from your home-town - even though its population is over 500,000 and you've never met before.

    Biases cause us to hire who we like best instead of the person who is best for the job.
  7. Not Asking the Right Questions: Every unprepared interviewer in the world says: "Tell me about yourself," and then asks: "Where do you see yourself in five years?" And every job applicant has rehearsed answers to these questions.

    The best questions to start with are: "Tell me about your first paying job. What three things did you learn from it?" Use the same questions to take the applicant through all of their subsequent jobs. The answers paint a vivid picture of the person's work ethic, commitment, and drive.
  8. Talking Too Much: Most interviewers forget that they can't learn anything while talking. Rule of thumb: The applicant should do the talking at least 80% of the time.
  9. Interviewing from the Application or Résumé: When you conduct interviews with either of these documents in hand, you tend to simply confirm the information the applicant has already provided (instead of learning what you need to know).
  10. Emphasizing Experience & Education: Harvard Business School determined that the combination of information, intelligence, and skill account for only seven percent of business success. Attitude alone accounts for the other 93%.

    Far too few interviewers ask attitude questions like: "I know you would work harder or longer hours if asked, but, just in the course of your normal workday, what have you done for an employer that is more than what was expected of you?

When To Change Your Menu

The frequency with which new menu items are introduced depends on one or more of the following factors:
  • The type of restaurant
  • The capability of the kitchen personnel
  • Competition
  • Frequency of visits by regular customers
  • The number of covers served each day
While restaurant operators would like to limit the number of menu items because it makes ordering, preparation, employee training, and cost control easier, aggressive competition and an exacting dining public demand that new menu items be introduced to keep them coming back.

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Sunday, December 16, 2012

Observations - Part 2

Another client of mine is the opposite of the one I discussed in Observations - Part 1. Even though he has some operational challenges, he understands the importance of customer loyalty.

His customers not only come to his restaurant to enjoy a great meal, but they also come to see him. They ask for him by name. If he's not in, they ask how he is doing and to tell the servers to make sure they let him know they asked about him. His is a restaurant where many of the regular customers seem to know each other. You can visualize them calling each other saying, "lets meet tonight at "_____'s."

Very few of the restaurants I have consulted with over the past 18 years have this type of following. To be successful in this business requires you have a love of people. They don't refer to it as "the hospitality industry" for nothing.

This owner/operator loves people and he passes on that love of people to his staff.

It's infectious.

Wednesday, December 12, 2012

Menu Variety

Quick Tip #7 - Menu Variety

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Menu Variety

Menu variety isn’t just a simple numbers game. Offering 10 choices of entrees or salads does not itself equate to variety if five of the choices don’t appeal to your customers. That situation will result in waste from unsold ingredients.

Listing too many items on the menu may be contributing to your inability to forecast accurately. And having to carry dozens of items in inventory that is not turning over quickly will result in higher food costs.
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Monday, December 3, 2012

What Is Your Objective?

What is your objective? This is the first question I ask anyone seeking consulting help.
What is the client’s objective should be the focus of the client/consultant relationship. In order to achieve the desired outcomes of any project (big or small), clear and concise objectives and outcomes must be agreed upon.

Reducing food or labor costs is not an objective. It is nearly a means to an end. Increasing cash flow so I can send my kids to college or take that long sought after vacation sitting on a beach sipping margaritas is the objective. Objectives can be business or personal; they usually overlap in one way or the other.
Maybe you want to start a new restaurant. My first question would be “why?”  Maybe you have always dreamed of owning a restaurant. By discussing your objectives it is important for us to understand what success will look like. Visualize it….How will it improve your life? What advantages will a successful restaurant have on you or your family? Your long term objective may be to develop a chain of successful restaurants…maybe franchise your concept? What will that mean to your financial future?

These are the discussions I have with all of my clients before we begin any project. It is important that clear objectives and outcomes be discussed, established, and agreed upon in order to achieve maximum outcomes and values.
Call me at 866-903-5875 today so we can discuss Your Objectives.

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Thursday, November 29, 2012

10 Reasons Not To Hire A Consultant

1. You are inherently a risk taker. Starting a restaurant business is risky. But maximizing the risk makes the process much more exciting.
2. Yes, your restaurant is losing money but……….maybe somehow it will all just work itself out.

3. Sales are down! Must be the bad economy.
4. Food Costs are up! Must be the bad economy.

5. Labor costs are up! Beacuse sales are down due to the bad economy.
6. Check average is down! People are spending less because of the bad economy.

7. You have always believed in trial and error…..even if it costs you money.
8. All new restaurants lose money in the first six to twelve months. (Really?)

9. No pain no gain!
10. Sooner or later you’ll just figure it out.

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Wednesday, November 28, 2012

Observations - Part 1

I recently had an opportunity to visit a former clients restaurant. We were discussing some of his marketing ideas when he asked me, "what is the most important thing about starting and managing a restaurant?"

I stated, that in my opinion, the most important and challenging issue is recruiting and motivating employees. He strongly disagreed with me and stated that the most important thing was "getting sales."

Fair enough....but you just don't go out and "get sales." I went on to explain that increasing sales requires the proper execution of the concept. You also need to give people a "reason" to want to visit your restaurant over and over again (frequency). With competition being what it is, you must provide great food at a good value, and you also must create and maintain an atmosphere where people feel comfortable and appreciated.

I went on to discuss that his employees were a direct reflection of him. His priorities had become their priorities. His lack of enthusiasm was contagious and his employees were just going through the greetings....nothing but surly looks on their faces. Walking into his restaurant was like walking into a morgue! No amount of marketing can change the personality of that restaurant. Only the owner/operator can do it.

Remember the song from the sitcom "Cheers?"...."You want to go where everybody knows your name."

What is the personality of your restaurant? Is it a direct reflection of you?

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Friday, November 23, 2012


The actual level of productivity of most restaurant employees never comes close to their true capabilities, but they still complain when asked to do more. Some for the bad habits they develop may prevent them from improving their productivity. In addition, having too much time or manpower to complete a task contributes to inefficiencies because employees tend to slow down and develop an unhurried attitude, even during rush periods.

Consequently, begin by staffing lean. Later, if you find that your employees are working at close to maximum productivity and still falling behind on qualitative and quantitative standards, you can schedule more employees to minimize the work load.

Tuesday, November 13, 2012

The Monthly Inventory

I am amazed whenever I hear that a restaurant does not take a fiscal inventory each and every month. By fiscal inventory I mean counting what is on hand at the end of the month and extending the value. In order for the monthly income statement to reflect accurately the cost of food consumed and sold, you must take a complete food inventory. There is no substitute or shortcut for taking a fiscal count of food, beverages, and supplies if you expect your cost ratios and percentage to show what is actually taking place in your restaurant.

You wont know if you don't count.

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Friday, November 2, 2012

Why Standardize Your Recipes?

A standardized recipe has several advantages. It will produce a known quality and quantity of food for a specific operation. It specifies the ingredients to be used---brands, grades, and varieties; the preparation and cooking procedures; the yield and potion size; and in some cases, the equipment, utensils, pots, pans, and evenn the flatware require for service.

But contrary to what you might believe, standardized recipes are not those previously used in other operations or found cookbooks. "Standardization" refers to recipes that are "customized" to your operation. They might begin with with ideas you took from another restaurant or cookbook but then adjusted for your operation's equipment, ingredients, and serving procedures.

If you don't have standardized recipes, or if their not being followed, you won't have consistency in in cost and quality. If the recipes have changed, let your standardized recipes reflect those changes. If you permit deviations from your recipe standards, you will lose both cost and quality consistency.


Thursday, November 1, 2012

What Should Your Food Cost Be?

A cost control problem is when there is an unacceptable difference between the ideal and actual cost for a given period. A 2 percent varience for a restaurant that does $30,000 a week in food sales amounts to $600 a week. That's more than $30,000 a year. However, if the targeted cost is inaccurate, then you'll be left scratching your head looking for a cost problem that doesn't exist. Below are some tips to determine your ideal cost.
  • Accurately cost out each menu item
  • Make sure each menu item has its own POS key so you can track the unit sales of each item.
  • Create a spreadsheet that calculates the cost of each menu item times the number of items sold from the POS report to give an "ideal cost."
  • Compare the ideal cost to the actual cost calculation from your P&L.
  • For many operators who compare their ideal versus actual food cost, a varience of more than 1 percent of sales indicates a food cost problem.

Monday, October 22, 2012

The Restaurant Menu

A well designed menu can make things a lot easier for the operator. It can help keep costs in line and even help distribute the workload in the kitchen. A menu can be designed to influence the amount a customer will spend and generate a check average needed to achieve daily sales projections based on seating, customer counts, and hours of operation. being able to "guide" a customer's selection will improve the accuracy of sales forecasts, purchases, preparation quantities, and even labor scheduling.

The product and worker flow will be driven largely by the menu-sales mix. A menu will dictate the skill levels of the employees in both the kitchen and the dining room. The information the menu provides will help management select specific equipment and the best way to arrange that equipment for efficiency of production.

Whether you are looking to improve the operation of an existing restaurant or planning a new restaurant, the menu design plays a critical role in your success.


Friday, October 19, 2012

Protecting Your Profits

Employee theft is such a major problem that it is a leading cause of restaurant failure. There are several reasons as to why the restaurant industry is susceptible to loss from employee theft.

They are:

There are several ways employees can combine house receipts with tips.

High employee turnover.

Access to cash.

Food and liquor are highly desirable items.

In order to combat the problem of the theft, you must learn to recognize the symptoms.

Some of those symptoms may be:

1. Become familiar with the warning signs of substance abuse. In most instances an employee will need the extra money to finance a habit. 

2. Refuses to take a vacation. Employees who refuse to go on vacation may be afraid that their substitute will discover their dishonesty. 

3. Condoning dishonesty in others. Employees who steal tend to have a different belief system when it comes to theft. Rather than believing theft is wrong, they may condone the acts of dishonest employees as, "It’s no big deal. It was only a few bucks." 

4. A change in behavior. Employees who suddenly exhibit an unexpected change in their behavior should be a warning sign to management. Watch for sudden mood swings, nervousness, hostility, and other emotional changes. 

5. Over protection of work records or files. Employees who are reluctant to give up custody of records or files may be keeping incriminating facts and documents close to them. 

6. Violating the work rules. Employees who rebel against company policies and procedures should be watched. 

Additionally, employee embezzlement can put you out of business. Employee theft is far worse than all the theft committed by your customers. You need to take the right steps to protect your cash. 

Note: I cannot tell you how many times a client of mine has refused to believe an (I thought they were so honest) employee would steal from them. Whether it's an issue of complete denial or a distaste for confrontation. 

Don't let yourself become a victim of theft. Unfortunately, it's a very distasteful part of being a business owner that must be dealt with.


Friday, October 12, 2012

High Food Costs?

There are hundreds of reasons why your food costs may not meet your cost standards.....reasons that encompass the entire range of business activities in both the front and back-of-the-house. One cannot automatically assume that the causes of high food costs are the fault of the kitchen and ignore what is taking place in the dining room. The problems driving high food costs could be in place even before the food is delivered to the restaurant. If any weakness exists within the entire cycle of ordering, receiving, storage, preparation, service, cash receipts, and accounts payable, your food costs might not be as low as it could be.

The first step in correcting a problem is to recognize that you have one. Once the problem is discovered, you can prevent it from happening again.


Wednesday, October 3, 2012

Operational Systems Create Consistency

Restaurant systems create consistency. A system makes it possible for your employees to repeat a performance that creates a consistent experience for your guests.

Consistency is the key to creating a great reputation and hosting repeat customers

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Friday, September 28, 2012

Five Basic Steps To Developing Teamwork

  1. Spend Time with your employees and lead by example.
  2. Listen to your employees
  3. Keep employees informed
  4. Include employees in solving problems and making decisions
  5. Create an atmosphere of support and cooperation

These five basic steps will engage your employees in your day-to-day operations and will substantially improve your profits.

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Wednesday, September 26, 2012

15 Keys To Operational Success

The manager is the single most important position in your restaurant. Managers influence the attitude and behavior of all restaurant employees. In order to ensure a successful operation, it is imperative to select a manager that possesses 15 Key attributes.

Key #1 Be a role model: What you do speaks louder than what you say. The manager must demonstrate to the staff the components of excellent service.

Key # 2 Hire Competent Staff: The manager must possess "people sense" and make the right hiring decisions. According to Elton Statler, the three most important factors to a successful restaurant are "location, location, location". Using this approach, the three most important factors in successful service are "Selection, Selection, Selection". In addition to role modeling, managers must identify individuals that possess people skills and hire them. No matter how much modeling or training is provided, a service person that does not enjoy people, and cannot demonstrate enthusiasm for them, will be unable to give hospitable service.

Key # 3 Respect Employees: Managers must be fair in all their actions and, most of all, demonstrate a deep-seated respect for their team. It has been said, "All employees come with a brain at no extra charge, so why not use it."

Key # 4 Communicate with StaffManagers must know that employees must understand exactly what is expected of them and have the linguistic ability to affect the right behaviors.

 Key # 5 Train Employees: Managers must be able to train employees so they are unconsciously efficient in the necessary functional tasks. Outstanding service personnel have their tasks so "sanitized" that they can focus more on the individual needs of their guests. Managers explain, demonstrate, let employees try (and make mistakes), redirect their behavior, and "habit" employees' skills so that they may perform their duties in such a way to exceed guests' expectations. 

Key # 6 Coach from the Dining Room Floor:  Successful managers spend time in the dining area where they can provide moment-to-moment feedback on employee service. They set a standard decorum for the rest of the staff, greet guests, and remember and use their names when they enter the restaurant. The manager's job is to assist the service crews in creating a bond of loyalty with the guests. Coaching means that managers provide positive reinforcement. They tell people when they have done "it" (good service) right.

Key # 7 Give Constructive Criticism: Managers know that employees cannot remain enthusiastic about a task unless they are challenged by it. In order to assist their crew in becoming better workers, managers must make the staff aware of their mistakes and help them change. Do it in a positive manner!

Key # 8 Get the Most out of Your Service Staff. Managers recognize employees as individuals and credit those who excel at providing memorable service.  

Key # 9 Facilitate Service by Supervising and Adapting Systems and Procedures so the Staff has no Obstacles to Providing Good Service: Competent managers are aware that well-designed systems are vital to achieve the company's service philosophy. However, no system is perfect and even the best of systems must adapt with change. Managers need to recognize that their systems should be, "Designed for the convenience of the guest rather than the convenience of the organization." 

Key # 10 Maintain Clarity of Purpose:  Managers must remind employees in words AND actions that guests are the operations first concern and that systems and procedures are not the end-all; they are the methods used to achieve/exceed guest satisfaction. 

Key # 11 Schedule for sufficient coverage: Managers must not focus on keeping labor costs down. Rather they must focus on keeping service standards high, which translates into higher profits.

Key # 12 Pay Attention to Details: A manager must recognize that it’s the smallest details that make a restaurant great. 

Key # 13 Recognize and Develop a Relationship with Your Regulars: A savvy manager knows the value of recognizing and welcoming “The Regulars.” The guests appreciate the fact that they are recognized for their patronage.

Key # 14 Established FLEXIBLE Complaint Procedures: Errors occur. It’s the nature of the business. But how a manager handles a guest complaint can be an effective marketing tool. Guest’s complaints are opportunities to show how much you care about guest satisfaction. A manager must enforce and establish procedures that empower staff members to correct errors immediately.

Key # 15 Observe and Evaluate the Operation: An effective manager knows the importance of continually evaluating the operation. Managers must remain flexible in order to accommodate change when it’s called for.

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Why You Need A Weekly Budget

1. Provides hours worked guidelines for staffing.

2. Provides Short-term and long-term guidelines for purchasing.

3. Provides a quick method of evaluating management.

4. Assists in detecting possible employee theft.

5. Establishes a basis for implementing discounted sales programs.

6. Provides quick financial results for evaluating any new discounted sales programs.

7. Monthly and/or annual budgets are difficult to quantify into useful information for managers.

8. A One-week period is a natural accounting in a restaurant.

9. Because of the high volatility if restaurant sales and costs, you need to have budget information weekly to accurately monitor results.

Thursday, September 13, 2012

The Best Advice I Can Give

The best advice I can give any restaurant operator/owner (after they have chosen to be a restaurant/operator) is to calculate your Ideal Food Cost.

I am amazed at how many restaurant operators/owners have no idea what their Ideal Food Cost is. If failing to do the basics in a restaurant was a sin, this one be mortal.

Ideal Food Cost, also known as Theoretical Food Cost, is the cost expected for a given sales mix over a period of time, assuming proper portioning, zero waste, and proper yields.

In order to determine Ideal Food Cost you must know the the portion cost for each ingredient of each menu item. As food costs fluctuate, so will your Ideal Food Costs.

Make a concentrated effort to analyze your Ideal Food Cost. It is one of the most important tools you have to Improve You profitability.

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Some Rules of Thumb

The development of any restaurant requires a careful look at the financial projections. With that in mind, here are a few Rules of Thumb:

Sales to Investment
(Annual Sales/Start-Up Costs)
Lease Hold Improvement - at least 1.5 to 1
Own Land & Building - at least 1 to 10

Food Coat
Generally - 27% - 32%
However, some very successful restaurants have food costs as high as 40%

Prime Cost
Full Service - 65% of total sales
Limited Service - 60% of total sales

Occupancy & Rent
Rent - 6% or less of total sales
Occupancy - 10% or less of total sales.

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Friday, September 7, 2012

Focus on the Guest Experience.

Successful operations focus all of their energy on the guest experience. Anytime the attention focuses away from the guest, the chance for a return visit is diminished.

Some servers place their focus on the amount of money people are spending in order to maximize tips. The danger of this is obvious. It interferes with the server establishing good rapport with the guest.

Focus on the guest experience......and everything else will magically fall into place.

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Saturday, September 1, 2012

The Importance Of Knowing Your Trade Area

"The belief that populations change slowly in times past is pure myth. Or rather, static populations staying in one place for a long periods of time have been the exception to the rule. In the twentieth century it is sheer folly to disregard demographics. That basic assumption must be that populations are inherently unstable and subject to sudden sharp changes—and that they are the first environmental factor that a decision maker, whether a businessman or politician, analyzes and thinks through."—Peter F. Drucker

The above quote from the late Peter Drucker re-enforces the need for analyzing you local trading area. Do you know what demographic changes are occurring, or have occurred in the area in which you conduct business?

When you are developing a marketing plan, focus on what changes may occur. When changes do occur (and they will), it may signal the need for a new direction in your marketing efforts. It may also indicate the need to develop a new product / service mix.

Use demographics as an additional tool. It can help you to improve sales and your profitability


Sunday, August 19, 2012

How Much Does It Cost To Start A Restaurant?

This is the number one question I get asked. Unfortunately, there is no easy answer. It’s just like asking a car dealer, "How much does it cost to buy a car?" The answer is…it depends…

There are many different types of restaurants; quick casual, full service, take-out only, you get the picture. Are you going to lease or purchase? Are you building from the ground up? Is the space you are considering "restaurant ready" (that is, was it previously a restaurant?) Is the landlord offering a TI allowance?

The major expenses in any tenant improvement on a leased space includes, HVAC, exhaust hood, electrical, plumbing, and grease interceptor/trap. Next you need to consider the interior finishes that are available. This includes counter tops, flooring, wall coverings, furniture, ceiling treatments, etc. All of these can increase the cost of construction considerably. Another cost to consider is furniture.

What about equipment? Are you purchasing or leasing? Are you purchasing new or used? What about the POS system? Are you going to purchase or lease?

What is the size of the space you are considering? Does it meet your seating requirements?

You also need to factor in a contingency (construction cost overrun), working capital, initial food and beverage order, uniforms, insurance, workers comp binder, payroll training expensess, and many other miscellaneous expenses such as office equipment and supplies.

Don’t forget about lease and utility deposits.

You will also need to allocate funds for interior and exterioe signage.

Marketing expense is smoething you also don't want to overlook. You will marketing expenses prior to opening, and you should also develop a comprehensive marketing plan for the first 12 months of operation.

These are just a few of the questions you need to ask yourself and have answered before you can determine, "How much does it cost to start a restaurant?"

Based on my 30 plus years in the restaurant industry, I would estimate start-up costs to range between $50.00 to $225.00 per sq. ft. Once again, let me reiterate that these costs can vary greatly based on many factors. An average 1,500 sq. ft. restaurant can cost upwards of $275,000.00.

Before you start any restaurant development project, you must complete a comprehensive Feasibility Study. Our studies include Start-Up Capital Requirements and a complete financial projection package

Be sure to read our booklet, “How to Start a Restaurant.”

Thursday, August 16, 2012

Knowledgeable Suggestions

Skillful salesmanship helps your customers know what great choices your restaurant has to offer. Selling should never be considered a dirty word if your intent is to help ensure your customers have a great dining experience. Remember, people don’t go out to save money; they go out to have a good time. They certainly won’t take you up on every suggestion. Still, you want to make sure they are aware of everything the restaurant has to offer. If you know what your customers want, you can go a long way to ensuring they have a memorable dining experience.

Thursday, August 9, 2012

Too Many Choices

An enjoyable and effortless dining experience creates the good time your guests want. Logic says that the more choices you give a guest, the more likely they are to get exactly what they want. This could be true, but the process of making all the choices can be cruel and unusual punishment. Giving people unlimited choices does not enhance their dining experience. In fact, it may allow them to eat what they would eat at home and restaurants ought to be more special than that.

Even limiting choices leaves a lot for your servers to recommend; a unique house dressing, signature soups, and distinctive side dishes, Minimizing the menu makes it easier on the kitchen, faster for the service staff, and more enjoyable for the guest.

Tuesday, August 7, 2012

What! No Signature Items On Your Menu?

What are you going to be famous for? What are your guests going to tell their friends about? Signature items create an identity for your restaurant in the minds of your market. Advertising bombards people with hundreds of slick advertising messages every minute of every day. Not surprisingly, they tune most of them out. Signature items help you create an image in people’s minds and help them remember you when they make a dining decision.

Signature items do not have to be your most expensive menu offering. They do not even have to be related to your main menu theme. They just have to be special preparations that you do better than anyone else…..and that your guests will rave about.

What are you famous for?

Monday, August 6, 2012

Ten Steps - Taking Inventory

1.      Organize the storeroom

2.      Use pre-printed inventory forms

3.      Inventory Forms should be arranged in the same sequence as the storeroom

4.      It is easier for two individuals to take inventory together

5.      Food inventory should be taken at least once a month

6.      Bar inventory should be taken at least once a month

7.      In some smaller operations, you can inventory major items and estimate the rest

8.      Inventory the back bar in tenths of a bottle

9.      Inventory expendable items quarterly, or when expenses are high

10.  The more you take inventory:

·         The quicker you become

·         The easier it is for the chef and kitchen staff to find items

·         Purchasing becomes easier

·         You can better reduce/control thievery.

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The Pricing Decision

Of all the business decisions a restaurateur must make once a operation is up and running, pricing the menu can be the most difficult. Rational pricing methodologies traditionally have employed quantitative factors to mark up food and beverage costs. But what seems at first to be a quantitatively based process actually requires consideration of a number of subjective factors, turning the pricing process into more of an art than a science. If pricing were a simple markup over cost, any calculator or computer program could set menu prices. Logically, price must cover your cost and return a profit.

There is a tendency to rationalize price as a means of returning an amount that will reflect a fair profit for the time, effort, and risk involved. Costs serve only as a starting point for the pricing decision. In order to remain in business, you must cover your costs. So if an item costs $3 to prepare and serve, your selling price must cover that cost.

The task of menu pricing is marked by doubts and uncertainties. Pricing decisions will be determined, in part, the clientele and the amount of business the restaurant will generate. Charging too much for a product or service will discourage purchases, while charging too little will reduce profit. The consumer sometimes sees price as an indication of quality of the product or service. A high price tends to imply quality, while a low price may be inferred, not as a bargain, but as low quality.

Business people are more comfortable using logical and objective criteria in the pricing decision, which is why we always want to begin by determining our cost to produce a product or service. While the cost process is objective and absolute, the pricing decision is not. Many indirect cost factors influence the price you can charge and how much the customer is willing to pay.

Sunday, July 29, 2012

You Must Forecast Accurately How Much You Are Going To Sell

Advanced planning is an important step in any business strategy. Being able to predict within 5 percent of what you are going to sell can improve the quality of your decisions significantly. When it comes to food-cost control, it’s necessary to estimate what and how much you are going to sell of each item listed on your menu. You don’t want to run out of something, and you don’t want to be left with excessive leftovers and waste.
Knowing what you are going to sell enables you to be better prepared. Armed with an estimate of the number of covers to be served, your sales-mix sales history is used to forecast how many of each menu item is likely to be sold. You then base the purchases and preparation forecast on those numbers so that you do not run out of an item in the middle of a meal period. At the same time the process will keep you from preparing too much and finishing the day with too many leftovers that cannot be sold a second day.

Remember: Being forced to work with leftovers will result in higher food costs and impose restrictions on your menu offerings. Early run-outs not only disappoint customers but can also disrupt the smooth production on the cooking line because demand may switch to a station that is not prepared for the additional volume.

Your chef or kitchen manager will determine the amount of food to prepare based on the projected number of customers that are expected at a particular time of day or day of the week. Employees must be scheduled according to the number of customers expected.

If your forecasts are off by more than 5 percent, note your actual sales and adjust upward or downward in the future. Managers and chefs come and go, so it is imperative that you keep good records of your sales history in order to forecast accurately.

Thursday, July 19, 2012

Establishing Standards In Your Restaurant

Before attempting to develop any standard of employee performance or productivity, you must possess a clear and detailed perspective of the operation. That involves defining quality standards for food and beverages, the level of customer service, and the demographics of the customer base.
Once the products and services to be offered have been described, it will become apparent which jobs need to be filled and the skill levels required. The regular assignment of work can be ascertained and schedules developed. You must conduct that analysis for your own operation; industry standards or those of a competitor will not work for your operation. Review schedules and hours worked for each employee-job category. Break down the information by days of the week and meal periods. Observe employees on the job and grade their productive efforts throughout their shift.
Observation of workers in action will enable you to identify the employees with the best and poorest productivity. The most productive employees serve as the standard of productivity for that position. An efficient measurement must be made of both the amount of work that must be accomplished within a time frame and the number of employees who are required to accomplish that work at the minimum qualitative level of performance. Those activity levels become the standards of performance for manpower requirements for each job classification.
Ask such questions as, “What makes an efficient cook or dishwasher?” “What is it that makes Sue a more productive cook than Bill?” “How many covers can Tom handle before he needs help?” In essence, what you’re conducting is a form of work analysis utilized by human-resource engineers to determine the number of workers needed at the different levels of business activity. The number required will depend on the quantitative output and the qualitative standards expected.
That information serves both as a basis for writing job descriptions and establishing staffing guidelines. It also may reveal inefficiencies and opportunities for including labor saving equipment, present a better way to arrange the work center, identify time-saving equipment and utensils, and even target those tasks that could be accomplished by another employee or job category.
Standards must be established based on actual on-the-job conditions and not measurements in a controlled environment. Each standard must be general enough to account for the varying abilities of employees and actual circumstances of the task and work environment.

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Friday, July 13, 2012

The Successful Manager

The success of a restaurant manager depends greatly on the willingness to adopt a leadership philosophy that calls for a belief in people...their worth, their abilities, and their growth potential. This type of philosophy will build a strong foundation for building sound relationships with your people...relationships that will lead to personal growth and success for them, you, and your restaurant.

Thursday, July 12, 2012

Four Faces Of Food Cost

Embrace food cost not as a single percentage, but from four different perspectives.
In order to appreciate the full value of food-cost control, you must examine it from “the four faces of food cost”. The four faces are maximum allowable, actual, potential, and standard.

Assume you’re opening a new restaurant and preparing a pro-forma income statement. What percentage should you run? The answer to that question is partially answered by the calculation of the Maximum allowable food-cost percentage, or MFC.
The MFC is the high-water mark for your food cost; if it exceeds the percentage that percentage of sales, your profit will be diminished by that percentage amount. Remember: Each operation will have its own unique MFC because it has unique expenses and sales.

The second food cost is the percentage that appears on your monthly income statement. It is a reflection of the food cost you actually ran during that accounting period, thus the name Actual Food cost percentage, or AFC.
The third perspective is referred to as potential food cost percentage. It is also called Theoretical food cost percentage because it is calculated by dividing the total or potential food cost by the total or potential food sales (PFC).

The fourth and final face of food cost answers the management question, “what should my food cost be at the end of the accounting period?” That percentage is referred to as the Standard Food Cost Percentage, or SFC. The SFC is compared to the AFC to assess the effectiveness of the food cost control during the accounting period. It is calculated by adding employee meals, and management allowances for unfavorable waste and quality control to the PFC percentage.
The four faces of food cost represent the highest food cost can rise and still return a minimum profit; what food cost percentage the operation actually incurred; the food cost percentage based on the menu-sales mix and zero waste; and what the food cost should be, given all known allowances for food consumed but not sold. Only then can you fully comprehend the true purpose and value of food-cost analysis.

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Wednesday, July 11, 2012

How To Sollve Problems In Your Restaurant

    • Focus on cause, not blame. The former provides an objective search, the latter provides emotionalism and recriminations. Don't seek vengeance.
    • Problems usually DO NOT go away by themselves. Face the issue, and deal with it. Procrastination exacerbates problems and builds stress.
    • Ask yourself immediately, "Is this important?" If the answer is "no," then live with it. Not all problems need to be fixed. (All of my cars have imperfections somewhere that don't merit my time to eliminate.)
    • Look for comparisons. If a door isn't closing, look at other doors and determine if you can spot any distinctions. These will often lead you to the cause of the problem.
    • Ask yourself "What's changed?" Virtually all new problems are caused by some change (else nothing would have gone wrong). Find out if the nature of a relationship has changed, something new has been installed, or someone made an alteration.
    • Use only empirical evidence. Focus on what you can see and prove, not what you suspect or are told. Validate assumptions. ("Yes, she has been late each morning," or "No, we aren't having poor responses to the offer.")
    • Be aware that to solve a problem you must remove its cause. Otherwise, you're adapting to it, which may be appropriate, as well. Putting additional air in a slow-leaking tire is adaptive, but plugging the leak (or replacing the tire) is corrective.
    • Interim actions can buy you needed time. Covering a hole in the roof with a tarp is an interim adaptive action which saves the furniture until a permanent patch can be installed. (Asking someone to "sleep on it" and talk in the morning when you are both calmer is an interim action to create a better environment for reconciliation.)
    • Make your process transparent. Let others know what you're doing and why. Unlike decision making, problem solving is basically an objective, logical pursuit and the more people sharing, the more positive suggestions and the less suspicion as to your motives. ("What do you mean by that?" is one of those emotionally pregnant accusations which often follow what was thought to be a rational suggestion but the intent of which was not shared.)
    • Validate to ensure success. Test your thesis on paper (it's easy to turn buttons on a machine and reverse them, but far more difficult to take back what you've said to someone in error or confusion). After you take your corrective or adaptive action, check to ensure that the problem is either removed or accommodated successfully.

Monday, July 9, 2012


Whether your job training program uses on-the-job training or group training, or both, the most important component of your program is not the actual training, but what happens after the training is completed. Through coaching your employees and setting the right example, you can make their training stick.
So what is coaching? Coaching is a two-part process involving observation of employee performance and conversation between the manager and employee that focuses on job performance. The overall goals of the conversation are to evaluate work performance, and then encourage optimum work performance by either reinforcing good performance or confronting and redirecting poor performance. Coaching therefore provides employees with regular feedback and support about their job performance, and lets managers know exactly what their employees need to know.
If coaching employees is so beneficial, why do managers often avoid it? Following are some possible reasons:

  • Lack of time
  • Fear of confronting an employee with a performance concern
  • Assumption that the employee already knows he or she is doing a good job
  • Little experience either doing or observing coaching
  • Assumption that the employee will ask questions when appropriate and does not need feedback
The first step of coaching is to observe employees doing their jobs. If the employee is doing the job well, don’t hesitate to tell the employee. Everyone likes to be told that they are doing a good job, so praise employees as often as you can. Work on catching your employees doing things right, and then use these steps:

  1. Describe the specific action you are praising.
  2. Explain the results or effects of the actions.
  3. State your appreciation.
  4. Ask the employees how they feel about doing a good job.
  5. Say thank-you.
  6. Write a letter of thanks and make sure a copy goes into the employee’s personnel file.
If there appears to be a problem with some aspect of the employee’s performance, answer the following questions before talking with the employee:

  1. What is the difference between the employee’s performance level and the performance standard? Is it significant?
  2. Is the performance standard realistic?
  3. Does the employee know what is supposed to be done?
  4. Does the employee understand why it is supposed to be done?
  5. Does the employee know how it is supposed to be done?
  6. Are there any hindrances to the employee’s performance that the employee can’t control, such as inadequate equipment?
  7. Has the employee received feedback on this before or has this problem been ignored?
The next step is to confront, not criticize, the employee’s poor performance. Confronting is a positive process used to correct performance problems, gain the employee’s commitment to improvement, and maintain a constructive supervisor-employee relationship. Criticism, on the other hand, is a negative process that, instead of concentrating on performance, blames the employee personally for not doing a job properly. It tends to be general, rather than specific, in nature, and generates excuses, blaming of others, and guilt on the employee’s part. Managers who confront employees are more interested in helping them feel confident about improving future performance, rather than making them feel inadequate and guilty about past performance.
When confronting an employee with what is perceived to be a performance problem, follow these steps:

  1. Speak in private with the employee without any interruptions or distractions. Make the atmosphere as relaxed and friendly as possible.
  2. Explain the reason for the meeting and express in a calm manner your concern about the specific aspect of job performance you feel needs to be improved. Describe the job performance concern in behavioral terms and explain its effect. Also, explain that you have not made up your mind yet as to the cause of the performance problem.
  3. Ask the employee for his or her thoughts and opinions, using the seven questions just listed as a starting point to get employee feedback.
  4. If the employee is the cause of the performance problem, work on getting his or her agreement that the problem exists. Next, ask the employee for some solutions to the problem. Discuss together some possible solutions and mutually agree on a course of action and time frame. Ask the employee to restate what has been agreed upon to check on understanding. State your confidence in the employee’s ability to turn the situation around.
  5. Lastly, schedule a follow-up meeting to check on progress.