A New Restaurant

Todays post is from Greg McGuire at The Back Burner blog.  I hope you find it as interesting as I did.

Small independent restaurants have been dropping like flies over the past year.  Chances are, if you’ve made it this far through the recession, the worst is behind you.  That doesn’t mean tough days aren’t ahead, but hopefully you’ve at least stopped just trying to stay above water and have started swimming a little.  The waters out there are still dangerous, but if you’re not thinking about growth, you’re setting yourself up for decline.

Restaurants are a business like any other, and as an entrepreneur, you’ve already taken the plunge into the risky but potentially rewarding world of business ownership.  Growing a business is never easy, and trying to grow that business in the current economic climate is even harder, which is why a few key principles for small business ring more true today than ever: (more…)

This is a guest post from Erin at MustHaveMenus (http://www.musthavemenus.com), an online company that provides
restaurants with high quality menu designs. She blogs her thoughts on menu design trends and restaurant marketing strategies at ttp://blog.musthavemenus.com.Thanks Erin.  It’s great to get some insight from othersabout what it takes to succeed in the restaurant business.

Think a menu is just for ordering food? Think again! A menu communicates much for than just your food; it sets the tone for your customers’ dining experience.

Unfortunately, many new restaurants design their menu almost as an afterthought. I’m here to tell you that your menu should get as much attention as your dishes, the physical layout of the restaurant and your staff selections. (more…)

I heard a quote recently that was attributed to Sam Walton, the founder of Wal-Mart: — “I was asked what I thought about the recession and decided that I did not want to take part in it.”

I thought the quote was interesting, because it really goes after the issue of attitude when your restaurant is faced with difficult times.  (more…)

Do you offer combo discounts?  A lot of major chains are now bundling items as a way to increase their sales.  They are promoting combos that encourage their customers to buy more in an effort to take advantage of the discount.

It’s the “Value Meal” idea that fast food restaurants have been using for years.  Add fries and a soft drink to the sandwich, and price it at a discount.  Now instead of just getting the sandwich sale, you are also increasing the sale of the add-on items; items that typically have a high profit margin.

Think about it: What is the highest profit margin item you sell.  For many restaurants it is fountain drinks.  If you can convince people to ad a fountain drink on to their order you make more money.  Even with a big discount on the price, it is still profitable.

I’ve written before about “perceived value.”  If the customer thinks they are getting a deal, they will see it as a value.  If the value is great enough, they will spend more in order to take advantage.  If the value as seen as being better than your competition, they will come to you instead of going elsewhere.

Take advantage of the chance to beat your competition by offering better value combos.  Bundling is popular because it works.

I write last week about rising prices, and how that can have a negative affect on your business.  That does not mean that it is time to panic.  They say every dark cloud has a sliver lining.  For you, that means that even in a down economy there is opportunity for growth for those that are prepared.

There is the potential to gain new customers as struggling restaurants close their doors.

It is inevitable that there will be a slew of restaurants closing in the near future.  They do it often enough when the economy is good.  The upcoming price increases will force many of them to close.  As they do close (more…)

Another sign of the struggling economy is Starbucks announcement that they are scaling back their new unit projections for the coming year.  They don’t feel that current sales justify continuing with the new locations that they had planned.

Understand, coffee is a huge business.  Worldwide it is the #1 beverage after water.  Despite mixed health reports (caffeine is bad for you – caffeine good for you), coffee sales in the US remain fairly strong.  Specialty coffee, however, is a luxury item, and those tend to get cut from the budget when times get tough.

In order ot try to boost sales, Starbucks is once again going to give the breakfast market a shot.  The plan is to focus on proprietary baked goods and chilled items.  If that works for them it will help to offset slumping beverage sales.

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.