A New Restaurant

Do you use one method of advertising to point to a different advertisement you’ve run?  You should.

Do you know why businesses use coupons?  Because they work.  They are a reminder of whatever deal you are running.  It may be a great deal, but without a tangible reminder, people tend to forget.  With a coupon in their hands they will be get a reminder about your restaurant, and the current specials your restaurant is running.

The down side is, people don’t always see your advertisements.  This could happen for a number of reasons; they didn’t look at the paper that day, or they might not have read the section or page that your ad was placed.  If they never see your restaurants ad, they’ll go about their lives oblivious about what they’re missing. If you want to catch their attention, you have to let them know what they’re missing.  

You may have noticed other businesses doing just that in a radio or TV commercial.  Somewhere in the commercial they say to look for the coupon or flyer in the newspaper.  When you do this, be specific.  Tell your customers exactly where to look.  Give them the section and the page number 

If your going to run an ad in the newspaper, you need to make sure people see it.  If they don’t see it, it’s just a waste of your restaurants advertising dollars.  By cross referencing your ads, you not only let them know your restaurant is running a special deal, but you remind them of where to pick up their little reminder.

I’ve posted before that marketers have shown that it takes multiple “touches” before most customers will respond.  You need to do what you can to get as many contacts with your customer as you can.  Take advantage of the opportunity to send people to your advertisements.  Once the coupon is in their hand, you’ve greatly increased the odds that they will respond.

When everything is going well in your restaurant, this can be a fun job.  You know the kind of days I’m talking about; food is coming out on time, everyone that was scheduled actually showed up, and the customers are happy.  On those days, it’s easy to feel relaxed and able to joke with your staff, and in general, have a good time.  On days like that, being a restaurant manager is a good job

What about those other days?

Anyone who’s been in this business for more than a day knows that no matter how good things are right now, that high pressure situation may be just a moment away.  How do you handle that pressure?

I have seen otherwise pleasant managers turn evil when the pressure is turned up.  They turn their venomous tongue loose on unsuspecting staff, causing a stressful situation to get even worse  I’ve seen good employees who really enjoyed restaurant work turn in their notice and quit because their relationship with the manager was never the same after one of these attacks.

If you are that evil manager, you need to take a step back and think about what you’re doing to your restaurant.  If the pots getting ready to boil over, turning up the heat is the last thing you want to do.

Before you go off on your crew, take a deep breath and think about how you need to handle the situation.  Remember, your team is trying to do the best they can.  Even if their best isn’t good enough, they’re probably not trying to mess up on purpose.  The best thing you can do is to try to calm your staff down.  If you don’t do that, the mistakes will just get worse, and the customers will start to feel the stress from the servers.

If you can help the situation by lending a hand, do so.  If not, give your staff the chance to work through it.  That may mean running interference and acting as a buffer between the servers and the the customers.  Anything you can do to help reduce the stress will help.

Your job as a manager and a leader is to help your staff do their jobs better.  After the moment has passed you can go back and look at what went wrong, and come up with a game plan to make sure it doesn’t happen again, but that comes later.

Encourage your staff.  Help them through the hard times.  In the long run, you will build a more loyal staff that will work extra hard not to let you down.  If you just add more heat, the pot will boil over.

Mary Sullivan at The First Year blog at AllBusiness touched on an issue I’ve mentioned before, in her article “The Entrepreneurial Curse”.  The gist of her article is that it is hard to be married to your spouse and to your business at the same time.

Yes, it’s hard, but it’s not impossible.  If something is worth doing, then it is worth the time and effort to do it well.  If your marriage and your family are important to you, it is worth doing whatever it takes to make sure you leave enough flexibility in your business day to be there when your family needs you.

Part of avoiding the curse is to go into your new restaurant venture with your eyes open to the time and energy requirements.  It’s not just you that needs to know.  Your family needs to know what to expect.  At some point, you are going to feel tired, cranky, and emotionally drained.  The last thing you need is to go home and walk into a hostile environment.  These are the times you most need the support of an understanding family.

Stephen Covey talks about an Emotional Bank Account.  His point is that you need to make regular deposits into your relationships, or there will not be anything there to withdraw from when you need it.  This means that you need to be there for your family on a regular basis, or else they won’t be there for you when you need them.

You have to decide which is more important, your family or your restaurant.  If it’s your family, you need to tell them, and more importantly, to show them.  You can have both, but not if you neglect one for the sake of the other.

Make time for the things that are important.  It’s hard, but it’s worth it.

Several years ago Tim Zagat of Zagat Surveys proposed a Diner’s Bill of Rights to help protect the public from bad restaurant service.  These rights were:

1. The right to courteous service.
2. The right to be seated within 10 minutes of the reservation time.
3. the right to clean, sanitary facilities, and fresh healthful food
4. The right to make special dietary requests.
5. ….

You get the picture. 

My initial reaction is that these are expectations, and if a restaurateur wants to stay in business, he should deliver on these expectations, and then some.  But rights???

How’s this for a right:  Customers have the right to leave a restaurant and not return for whatever reason they so desire.

I am a big proponent of freedom.  As a business owner, there are certain freedoms that should not be taken away.  You should be free to run your business the way you see fit, as long as you are not violating the law.  That being said, there are consequences that come with that kind of freedom.  If you make bad financial decisions, you will lose money.  If you make bad customer service decisions, you will lose customers.

Don’t get me wrong, I’m not opposed to anything Zagat said, other than to call them rights.  The customer expects to be treated with respect, and to receive safe, properly prepared food.  They expect a clean facility.  They expect that someone in charge will be available to complain to if their expectations are not met.

I also believe that as a restaurant owner you should make sure everyone that works for you understands what the customers expectations are, and that they understand that they are all responsible for seeing that those expectations are not only met, but exceeded.

If you don’t do that, you can expect a very short life in this business.

How many different ways do you get your restaurants name in front of your customer’s eyes?

Too many people get trapped in an advertising mindset that limits the ways they market their businesses. They hit the newspapers and radio spots, but they miss a lot of other chances to get noticed that could have a lot longer lasting benefits.

Market research has found that it takes multiple touches to get a customer to act on your message. They’ve found that you need to have your ad seen an average of 7 times before your customers really start paying attention to what you have to say.

Ron McDaniel at Buzzoodle Buzz Marketing talks about leaving footprints in the sand. The more footprints you leave behind, the more people will notice your presence. The key is to get people to hear your restaurants name enough that they will remember you. Even if they don’t know why they heard your name, the fact that they remember you is enough to make them curious enough to stop in and check you out.

Don’t limit yourself to the traditional advertising channels. There are a lot of opportunities to get your name out there that may be more effective in reaching your target. Leave coupons and flyers everywhere. Sponsor youth sports teams. Offer to cater a Chamber of Commerce meeting. Write press releases. Be creative in how you reach out to the community with your message.

The majority of your customers are going to come from within a couple of miles from your restaurants location. Make sure you really focus your efforts in blanketing that area.

Get your name out in as many different ways as you can. Make sure when your customers think about going out to eat, they think of you.

When someone asks you about your new restaurant, what do you tell them?  Do you have a short and sweet answer, or do you drone on about every detail of your business?  While some people may be truly interested in all the ins and outs about how your restaurant is run, most of them just want the Readers Digest version.

Business consultants call this an elevator speech.  The thought behind it is, you should be able to give a brief description of your business; something short enough that you can get through it in the time it takes an elevator to get from one floor to the next.

Unfortunately, some people are so into the details of their business (and rightly so), that they don’t know how to stop talking about it.  If this is you, you need to learn that people are interested in what you’re doing, but they may not be that interested.

You need to be able to get to the point quickly.  Make sure you hit the highlights, like you restaurants name, the location and what your concept is.  After that, you run the risk of losing the interest of the person you’re talking to.

As a customer, I always like when a company that got it wrong the first time goes out of there way to make it right.  A couple of weeks ago my wife and I bought a couple of recliners for our family room.  We decided to save a little on shipping, so we picked them up ourselves (not realizing they would come unassembled).

When we were getting the first one put together, I noticed several cracks in the wood along one side.  We set that chair aside to start assembling the second chair.  When we opened the box and looked in, the chair was the wrong color.  To put it mildly, we were not amused.  Two chairs, and there was something wrong with both of them.

My wife immediately got on the phone to the company to get the problem corrected.  When it was all said and done, the company came by to pick up the two chairs, and delivered the replacement chairs fully assembled.

Did the company get it wrong initially?  Yes.  In a big way.

More importantly, they went out of there way to make it right.

Every business has competition.  That is guaranteed.  Show me a business owner who says he doesn’t have any competition, and I’ll show you a business owner who is either lying, or is delusional.  Whether they are willing to admit it or not, the competition exists.
Part of the problem is that many new business owners try to define their competition so narrowly, that they filter out many businesses that really are competitors.  As a restaurant, your competition may not even be another restaurant.  In reality, your competition is any business that competes for your customers limited entertainment dollars.  If the customer has a set amount of money to spend on entertainment, and he has to decide between going out to eat or going to a movie, then the theater is your competition.

Many restaurant owners try to exclude too many other restaurants.  When I was working for a new Italian restaurant, the owner kept discounting the completion of the other restaurants in the area because the type of food they served was different.  He just didn’t understand the concept of limited resources.  Families only have a given amount of money to spend.  They make choices about how and where they send that money.  So what if the other restaurant is a burger joint and you serve Italian cuisine.  If the burger joint is taking money that might have been yours, they are your competition.

When you’re writing your business plan it’s a good idea to separate your competitors as direct and indirect competition.  Your direct competition would be the other restaurants in your area.  They are the ones that you are competing with for a dinner crowd.  Any other business that competes for the customers entertainment dollars, like movie theaters, roller skating, and even miniature golf, is the indirect competition.

Don’t be afraid to talk about your competitors.  It really is a good thing for a couple of reasons.  First, you want to show investors that you are aware of your competition.  You need to show that you have given some thought about how you will compete.  If investors feel like you’re wearing blinders about your competition, they may feel that there are other important areas you’re ignoring as well.

Second, competition is not a bad thing.  Have you noticed that restaurants seem to clump together in the same area, especially in high traffic/high volume areas?  Experts have learned that restaurants in the same area actually help each others business.  Customers that aren’t sure where they want t go to eat many times will head to a location where several restaurants area located and not make a decision about where to go until they get there.  Restaurants that are located by themselves do not have that drawing power.

Take advantage of this opportunity to learn all you can about your competition.  What are there strengths and weaknesses?  What can you do to win customers away form them.  That knowledge can be useful not only for business planning, but also in refining your marketing message.

Don’t be afraid of your competition.  It doesn’t matter who you are or what kind of restaurant you are opening, your competition exists.  Learn who they are, and what they do, and craft a plan to defeat them.

It is a challenge.  You want to be able to attract good talent, especially in key positions.  You want good chefs and restaurant managers taking care of your business, but being a startup puts some real limits on what you are able to pay them.  If you commit too much of your cash flow to your payroll, other areas are going to suffer from it.  Less money for advertising, less money to handle upgrades, less money to… well, you get the picture.

So how do you make it attractive enough to get talented people to commit to your dream without breaking the bank in the process?

More and more companies are going to a “pay for results” business model.  Instead of a set salary, you might consider paying your manager and chef a smaller base salary, with bonuses and incentives built in that are based on the performance of the restaurant.  If the restaurant does well financially, some of that success is shared with your key employees.  The great thing for you as the restaurant owner is that your weekly payroll is smaller, and you only have to pay the bonuses if your restaurant is succeeding financially.

Besides helping your cash flow, there are several other reasons many businesses are moving away from set salaries.  The first is a matter of motivation.  When you are paying a straight salary you really have to rely on the personal motivation of your managers and your chef.  As long as the restaurant is doing reasonably well, they are being compensated for their work.  If the restaurants performance improves, their compensations stays the same; there is no real incentive to work harder to improve.  Performance-based bonuses provide that extra incentive that will motivate them to try to take things to the next level.

I mentioned the second advantage earlier: you only pay if your restaurant is doing well financially.  One of the difficulties with paying a traditional salary is that it doesn’t matter if business is good or bad, your payroll doesn’t change.  Once you’ve committed to paying a certain rate, you’re stuck with that decision.  If the weather turns bad and your customer count drops…too bad.  You still have to pay the same amount.  If you do want to reward your staff, once you give them a raise, it doesn’t go away.  You’ll be paying for that raise every payday.

With a bonus structure, it is a one-time commitment of money.  Just because you gave them a bonus this quarter is no guarantee that they will earn the bonus next quarter.  And if they do earn a bonus, it may be less or more than last quarter’s bonus.

The final advantage of this model is that there is a natural “weeding” process built in to it.  If your managers aren’t as strong as you had hoped they would be, it will be less likely that they will reach the bonuses needed to keep them happy.  After a couple of quarters of missed bonuses, they will more than likely leave to go where the grass is greener, and the money is a little easier to get.

The tricky part is to get your leadership staff to buy in to your model.  Besides having limited cash flow, startup restaurants also have limited history of success.  In order to convince your managers or chefs that this is a good idea for them, you need to give them a reasonable expectation that they are going to profit from this set up.  Unless it’s a family member, chances are you’re not going to find someone so interested in your success that they are willing to sacrifice their own financial well being.  They want to make sure that they get their’s.

You have to be able to show them that there is a good probability that they will make out on this deal in the long run.  It has to be structured in a way that makes it worth the risk; that if the restaurant succeeds, they stand to make more than they would have in a tradition salary structure.

It comes back to a solid business plan.  If your plan is good, you can show them how and why you believe the restaurant will succeed.  It’s not just you talking off the top of your head.  You can show them that you have it all planned out.  From marketing, to business philosophy, to customer service, you can sell them on your dream, and how they can profit right along with you.

Realize that not everyone is going to be thrilled with this set up.  Some people do not like risk.  They would be willing to sacrifice a certain amount of earning potential in exchange for a guaranteed income.  Also realize that it could end up costing you more in bonuses than it would have if you just paid a straight salary.  The good news it, it only cost you more if your restaurant is succeeding.

Consider working bonuses into your pay structure.  Make your success worth your managers efforts.                 

Are you excited to be working with your restaurant business plan?  You should be.  If not, why not?  Working with your business plan should be something that gets your heart rate going.  After all, a new restaurant is something that is going to be taking up a great deal of your time going forward.  If your heart isn’t into doing opening a new restaurant, it could make for some long, miserable days.

It amazes me the number of people that enter into the planning stages with a sense of dread.  They treat it like a homework project for a class they hate.  It’s not supposed to be that way.  It is supposed to be fun.

For most of us, our business is a dream that started as a small spark of inspiration.  We fanned it, and fed it, and it grew to a blaze that we couldn’t ignore.  If that’s true for you, why do you spend the time planning like someone just threw a bucket of water on your fire?

This is supposed to be a time of hopes and expectations.  It is a time to look toward the future and see the possibilities.

As you work through the business plan process, you get the chance to examine your dream, and for the first time, you get to see the nuts and bolts of how it all is supposed to work.  Your idea moves from being just a fire burning out of control to a force that can change the course of your life.

If your business plan does not excite you, you may need to do a little soul searching to find out why it doesn’t.  Is this the business you really want to open, or is it an old dream that you just haven’t let go of.  Maybe it wasn’t really your dream at all.  It’s possible that the dream was someone else’s dream that they tried to convince you to pursue.  Maybe it’s the right dream, but the wrong time to go after it.

Whatever the reason you’re struggling with it, you need to get it resolved now before you commit all of your time and money for a business you don’t even care about.  That’s a recipe