A New Restaurant

Let me clue you in on a little secret that many people in the business world seem to forget.

Life is supposed to be enjoyed!

OK.  It’s not really a secret, but so many people miss that point, I felt like I had to bring the subject up.  Sometimes we all need a little reminder of things that should be obvious.  The problem is, we often get to busy to be aware of the obvious.  We go-go-go, and do-do-do, and we miss out on the fun that life has to offer us.

If you’ve been in the restaurant business for more than a day or two you know how hard you have to work at it.  Especially for owners and managers, the hours are long, and customer and employee complaints can just wear you down.  The stress can sap the energy out of you.

So what can you do about it?  Sometimes it’s not possible to get away long enough to really relax, and when you do get away, you spend your time worrying about what’s going on at the restaurant while your not there.  Not so relaxing.

Do you exercise?  If not, you should.  Even if it’s taking some time to step out and walk for a mile or two.  Exercise is a great stress reliever, and as you get in better shape, your energy level increases and makes it easier for your body and mind to handle those long hours.  And as an added bonus, it helps you work off those burgers you’ve been eating for lunch.

Look at your staff.  Are they having fun?  With wages as low as they are in the restaurant business if your employees aren’t enjoying their work, they won’t be your employees for long.  The first time they get a better offer, they’ll leave for greener pastures.

Find a way to inject a little fun into the operation.

If you’re a yeller, stop yelling and start coaching.  Create an environment where fun is possible.  Allow your staff to enjoy themselves, and maybe even build a little comradery.

I once worked for a restaurant manager that didn’t allow his wait staff to talk to each other about anything that wasn’t related to the dining room operation.  Even during very slow periods the servers would have to spread out and not stand too close to anyone else.  When the dining room was hopping, that made perfect sense, but there were times that the manager should have lightened up a bit.

Needless to say, there was a constant turnover of servers, and customer service suffered because the servers didn’t stick around long enough to develop any relationships with returning customers.

Think about coming up with some contests or incentives that will encourage your workers to have a little fun.  Be creative.

Life can be fun.  If you’re not having fun, you need to take a close look at where you are and what you’re doing.  If you’re not enjoying your restaurant, your customers aren’t either.  It may be time to move on to something else. 

Grab life by the tail and hang on for the ride.

It’s a mixed report from the International Foodservice Manufacturers Association and Technomic Inc. Their forecast for 2008 does predict growth in the restaurant industry, but that growth will be slower than in past years. They say the reason for the slowed growth is rising fuel, labor, and commodity prices.

The forecast for sales growth is 1.4% in 2008, compared to a 1.9% prediction for 2007. This is a continuation of the slowing trend over the past several years. In 2004 the real growth rate was 2.4%.

This news is actually worse for full service restaurants. While limited service and fast food restaurants are expected to see an average 1.9% growth in 2008, the full-service sector is only expected to see a 0.8% growth.

The group says that rising fuel prices are still the biggest concern. As fuel prices continue to go up, it increases the cost of getting product into the restaurant, and causes customers to not go out as often, and not be as willing to travel as far when they do decide to go to a restaurant.

This creates a real challenge for restaurant owners. You need to figure out ways to entice customers into your business while at the same time facing rising costs. One of the biggest things you can do is renew your commitment to excellent customer service.

If someone is going out to eat less often, having a good experience at the restaurant becomes even more important. They will be less tolerant of poor, or even average service. Make sure your staff understands that it’s not just another customer; it is individuals looking for a good experience. Your customers are people wanting to spend quality time with their family, or couples on a date, it’s their time out, and they want to enjoy themselves.

If you and our staff can make the customer feel welcome in your restaurant, they are more likely to come back again. If you don’t do a good job in this area, they will be visiting your competition the next time out.

While it’s a restaurant owner or manager’s job to point out areas that need improvement, it is possible to carry that too far.  If you go overboard pointing out what is wrong with your restaurant, you run the risk of your employees tuning out your comments.  They hear you say the same things every day, and your words begin to loose their impact.  The trick is to get your staff to start to find these weaknesses on their own, and come up with ways to correct the problems.

Last week I wrote about looking at your restaurant from the customer’s point of view, and seeing your operation with “new eyes”.  It’s helpful to get your employees to look at the restaurant from a customer’s point of view as well.

One great exercise for improving customer service is to challenge your staff to come up with a list of 10 reasons your customers might leave and not return.  There are two ways to do this, you could do it as a group brainstorming exercise, or you could have each employee do it from their own personal point of view.  If you go a step further and allow them to turn in their list anonymously, you will find some very interesting answers.

Everyone looks at his or her job from a different perspective.  Different personalities and different jobs within the restaurant cause us to form differing opinions on many issues.  Your cooks will see things much differently form the server.  You might look across the same dining room as your hostess and see a very different set of issues.  By tapping into those varied perspectives, you can gain a lot of insight into what is really happing inside your restaurant.

A word of warning about this; expect some brutally honest answers.  Your staff be able to come up with some areas in your restaurants operation that you may have missed.  There may be some parts of your operation that you are in love with, but your staff and customers don’t think are such a great idea.  They may also point out some areas where you are the problem.  Get ready to face some criticism with an open mind, and to do a little self-examination.

Great customer service is such a critical piece in the successful operation of your restaurant that you absolutely have to find a way to get your staff involved.  There are only so many things an owner or manager can do.  Customer service may start at the top, but it’s your employees that will show it to the customers.

Think about the organizations and groups you’ve been a part of.  Is the true leader always the most noticeable person in the group?  Sometimes they are; they’re charismatic, thrive in the spotlight, and people love them.  But that’s not always the case.

My son plays soccer.  There is one young man on the team who is very vocal.  He spends the game telling his teammates what they should do, where they should play the ball, and what mistakes they just made.  He yells, and tries to vocally intimidate his teammates while on the field.

The second young man decided that he deserved to be the team captain, so he stepped up and started playing the part of leader.  He called the team together to start practices, and lead the team in warm-ups and stretches, but when it came time to practice he was more interested in socializing with his fellow seniors.

There is another young man on the team that doesn’t say a whole lot.  When it’s time to practice, he buckles down and practices hard.  Come game time, he plays hard.  He his on-field communication is more game related (ie. Calling for the ball, pointing out open spaces, etc.), and it is always encouraging.

While the first player has a good knowledge of the game, and what he yells to his teammates is often correct, when it came time to select captains, guess who was chosen?  That’s right, the quiet encourager.

While player #1 had the knowledge of the game, he didn’t have the kind of care for his teammates that makes for a good leader.  He was more interested in giving orders than he was about building his teammates up.  Everything he said on the field reinforced the fact that he felt his teammates would never measure up to his standards.

Player #2 merely played the part of leader.  He wanted the prestige that came from being able to say he was the team captain.  When he was passed over for the title, he lost all interest in trying to build his team up.  He began coming to practice late, and was more interested in having fun than he was in being a good teammate.

Player #3 was the true leader, and rightly deserved the role of team captain.  His attitude, work ethic, and humility made him the perfect choice.  He was even a little surprised that the honor was given to him.  He certainly wasn’t working toward that as a goal.  If one of the other players had been given the role, Player #3 would have continued on like he always had, and title or not, he would have stood out as the true team leader.

Customers – the life blood of any business.  This is the areas of your business plan where you can show potential investors that you have considered who will be going to your restaurant.  You’ll show who the customers are, how many people there are in your customer base, and how much money they have to spend at your restaurant.

Customer Identification

The first step in this process is to identify who your customer is.  Be sure that you can differentiate between the population in your area and your businesses customers.  Not everyone in the neighborhood will go to your restaurant on a regular basis.  You need to be able to identify what your customer looks like.

If your restaurant appeals to a more affluent crowd, families in a lower income range probably won’t become regulars, nor would families with younger children.  So when you talk about the demographics of your area, you need to be able to focus in on the people that are likely to find your restaurant appealing. 

Chances are there is more than one target in your customer base.  A reasonably priced family restaurant might also appeal to older couples looking for an inexpensive place to eat.  Your customer could also be young couples for the same reason, or high schoolers looking for a place to go on Friday evening.  Show all of the smaller target groups, and be able to show how many people fall into each group.

By segmenting your customers into smaller groups, you can be more specific about how your restaurant will meet the wants and needs of that segment.  If your target is too broad, you end up using generalities when talking about your audience and some of what you say will not apply equally to all of your customers.

Demographics

One thing your investors are going to want to see is the growth trend of the customer base for your restaurant.  Your businesses ongoing success depends on a thriving customer base for years to come.  If you see that your customer base is shrinking, you may want to consider a different area for your business.  If, on the other hand, there is growth in the area, that will strengthen your restaurants position when you go before investors.

Part of your demographics will be to show the income level of the people you are trying to appeal to.  Your investors like to know that there is enough money in your area to support the venture.  Even the best idea will fail if your customers don’t have enough money to keep your restaurant in business.

Luckily, the US Government has made getting this information a lot easier.  Go to www.census.gov, click on the FactFinder link, type in the zip code, and you’ve got the demographics of the area right on your screen

By getting to know your customers, you’ll know whether the area your considering can support your restaurant.

New York Cities Department of Health and Mental Hygiene recently passed a law that would require chain restaurants to post nutritional information on their menus and menu boards.  Although a federal appeals court overturned the law, saying it conflicted with existing federal regulations on nutritional disclosure, it’s still something that is a concern for restaurant owners.  There are currently 14 other states that are considering similar legislation.

Here’s the rub; the law was enacted against restaurant chains that already make nutritional information available to their customers.  Many of the major restaurant chains have nutritional information available in brochures and posters in their restaurants, but NY felt that the information should be displayed more prominently.  The law basically said, if you don’t provide any nutritional info, this law doesn’t apply to you.

Opponents of the law argued that the legislation not only singled those restaurant chains out, but that it was also an infringement on their first Amendment right to free speech.

Some restaurant chains are more than willing to comply.  Subway has already rolled out their new menu boards with calorie information listed, but Subway has been marketing the lower calorie benefits for years, so this isn’t anything new for them.  For other restaurant, this law was seen as costly and unnecessary.

Many chain restaurant owners feel that the law is not only invasive in their businesses, but that is impractical to try to list that much information on menu boards.  That much information on a menu board would only make it more difficult for customers to read.

So far, the laws have only been targeting chain restaurants because they have nutritional information more readily available, but once that door is opened it will only be a matter of time before other restaurants will be required to provide similar information.

Do you ever look at your restaurant like a new customer?

Too often we enter the restaurant thinking about all we have to get done, and starting the preparation for today’s service that we don’t take the time to really notice how the customer perceives our restaurant.  That’s not to say we’re oblivious to our surroundings.  We noticed the dust in the corner that didn’t get swept up, or the stack of dinner menus that weren’t put away.  We look at the operation as a series of tasks to be accomplished.  It’s only natural.  There are a lot of things that need done on a daily basis to keep things moving forward.  If you don’t stay on top of them, who will?

One of the dangers of being task oriented is we loose some of our “big picture” perspective.  It’s not as bad in a new operation, but the longer you are in business, the worse it gets.  We see the dust in the corner without noticing how faded the paint on the wall is getting.  We no longer notice that the décor that was trendy five or ten years ago is now outdated.

Here’s something I want you to try.  Go outside and clear your head, then come back into your restaurant as if you were a new customer.  The term I like is looking at it with “new eyes”.  Try to see your business as if you had never been there before.  What is your first impression?  Does the layout make sense?  Does it look fresh and inviting, or tired and worn out?  Take in the whole scene and see how it makes you feel.

If you don’t feel like you can be objective, ask a friend or family member to do it for you.  One caveat – if you ask for someone’s opinion, accept what they say with an open mind.  You don’t have to agree with their assessment, but you do need to listen.  If you get defensive on them, they won’t give you an honest opinion the next time.

Have you ever noticed that in some restaurants you never see the manager unless there’s a problem? I’ve been to some where I have not seen a manager the entire time I’m there. The other thing I’ve noticed is, these restaurants don’t usually impress me. I see mediocre service, longer waits for food, and meals that are average at best.

There’s a term in management practice called “Management by Walking Around” (MBWA). What is means is, instead of spending your time secluded away in your office, you need to get out amongst the workers to see what’s really happening with your business. For restaurant management, that means spending time in your dining room and kitchen, talking to customers, coaching employees, and keeping an eye on how your restaurant operates.

You and I both know that the majority of the time, if there are problems, the customer will not complain, at least not to you. They will complain to their family and friends, and they show their displeasure by not coming back to your restaurant. Wouldn’t it be better to head off that problem by catching it and fixing it before the customer leaves? You can’t do that by sitting in your office. You need to be out where you can catch small problems before they become huge issues.

Another benefit of MBWA is that your employees are more on their toes if they know they are being watched. This doesn’t mean hovering over them waiting for them to screw up. It’s more about developing a culture where the people in charge are visible and active in the operation, and all of the employees know it.

There are times when you have to be in the office. The paperwork has to get done, but you need to schedule your time in the office so you are available during your restaurants peak business times. Give it a try, you might be surprised by what you see.

Your customers are the most important part of your business.  It may seem like a no-brainer, but there are a lot of restaurant owners that loose sight of that fact. They focus on the food and presentation, or on the ambiance, but they leave the customers wondering of they are really important.

You already know how much effort is takes to attract new customers.  The truth is, it’s a whole lot easier and less expensive to keep the customers you have than to try to find new customers.

The restaurant business is very competitive.  If you don’t take care of your customers the way they feel they deserve to be taken care of, they’ll go down the street to your competition, especially if your competitor treats them better.

You need to remind yourself constantly that if it weren’t for the customers, you wouldn’t have a business.  You might have the best food in town, but without customers buying the food, being the best is meaningless.  It’s your customers that pay the restaurants bills.  It’s your customers that pay the staffs wages (and yours too).

Make sure your staff knows this simple truth.  Without the customer, there is no business.

When we went through the overview of a restaurant business plan, I listed the parts as : Executive Summary, Company Analysis, Industry Analysis, Customer Analysis, Competitive Analysis, Marketing Plan, Operations Plan, Management Team, and Financial Plan.

Last week I posted a more detailed look at what all went into the Company Analysis. Today, I’ll continue on with the business plan series by looking at the Industry Analysis.

Market Analysis

Start your Industry Analysis with a look at your market as a whole. While it’s important to segment your market when you’re looking at your customer make up, right now you want to describe what the total market looks like. Make sure you do this in a way that makes sense. If your opening up a small bar and grill, it wouldn’t be very helpful to run your market data on the whole city. Set a realistic distance that people would reasonably be willing to travel to get to your restaurant. That’s your market.

Gather any information that you think would be relevant to your restaurant. The US Census Bureau keeps a ton of information, and it’s all free to use. Go to US FastFacts, type in a zip code, and you’ll get information on population, age makeup, number of households, median income, education level, and much more. You can even get maps that show how the population is segmented within the zip code area.

Trends

While national trends are helpful when you look at restaurant industry trends, it’s also important to be able to show what the trends are like on a more local level. Restaurant trends differ drastically between markets. The trends in Los Angeles will be very different than the trends for restaurants in Little Rock, AR, which would be different than restaurants in Cleveland, OH. Some areas of the company have seen decreases in population and income levels, while other areas have seen phenomenal growth. Some trends may hold true on a national level, but some of the trends and tastes are much more localized.

For instance, the other day I saw a special on “The Best BBQ in the US.” What was interesting was that every region had a different opinion of what made good BBQ.

You should be able to discuss not only what the trends are, but what is influencing those trends. Be able to tell your investors whether the trends are short lived, or wheter the trend will continue.

Customers and Competition

While this may look like it should be two separate sections, they are related. What do you and your competitors have in common? The customers!

This is where you segment your target market. You have to be able to break the target market down to determine who the customers for your restaurant are likely to be. If you are opening an upscale, fine dining restaurant, the lower middle-class blue-collar family probably isn’t your primary target. Think carefully about what your customers will probably look like, and then determine how many of them live in your area.

Once you’ve figured out who your customers are likely to be, you can start to figure out who your competition is. Don’t fall into the trap of thinking that because nobody is exactly like you that you don’t have any competition. Everyone has competition, and just because you refuse to acknowledge them doesn’t mean they don’t exist. Look very carefully at anywhere your potential customers might spend their entertainment dollars. That is where your restaurants competition is. Being different does not make them any less of a competitor. Is McDonalds competition for the full service family restaurant down the block? Very much so. If the family has a choice, and they choose McD’s, your family restaurant has lost the sale.

Data Sources

When you collect the data for your Market Analysis, be sure to get it from credible sources. The internet has made it easy to find information on many different topics. The danger is that many of those sources are not accurate, or are out of date. Building your analysis and projections on information that was true 10 years ago isn’t going to do you much good. I mentioned earlier about using US Census data. No investor is going to question the accuracy of the US Census. Keep track of where you got all of your different pieces of data s you can back up what you’re claiming with credible sources.