There was a story in NBR today called Tough Winter for Restaurants. I left a comment, but it appears to have been moderated, perhaps someone thought it was self serving, just a guess.
I’m actually in the middle of a series of blogs, as you may be aware about location based services, but am going to take a quick break from this to share a few simple reminders about the basics of running a business in the hospitality sector.
What gives me the credentials to make comments on this, you may ask? Here’s a few:
- I completed a Hotel Motel Management course many years ago and assisted and lived in a busy Auckland motel for 18 months.
- I have attended hospitality conferences and exhibitions around the world.
- I started playing guitar and assisting in cafes and restaurants from the age of 14.
- I ran the Casio distributorship for cash registers in New Zealand and assisted with Australia and held around 70% market share in the industry segment for around 7 years and during that time keynoted for conferences including HANZ, Retail Merchants Association and others.
- I was technology editor for a retail magazine.
- I was involved in the development of the first electronic waiter pad systems in NZ, which were subsequently sold through Casio dealers in other parts of the world.
I could go on but I think that will do. So here are a few elements of Restaurants 101 for 2012.
There is an oversupply of restaurants and fast food outlets for the population of the country in most parts of New Zealand. Very few of the people running the restaurants have business training, many do it because they love food and they love people and entertaining and have passion for their business. Once that was probably enough. Having said that, even 30 years ago, a large percentage of these businesses changed hands every 18 months and having gone broke, trained the people who took over from them.
Table turn. The more times your tables are occupied within a dining session, the more profitable, subject within reason to what they are buying. Entrees and desserts are more profitable than mains. Make the mains too big and people won’t buy dessert. Dessert’s tend to generate around 80% gross profit margin.
If people are in for a night, keep coming to see them, ask if they are happy, offer them drinks. Alcohol offers large profit margins. Develop a relationship with them. A restaurant with a maitre d’ or person who remains in the dining area all the time, separate from the people who bring food in from the kitchen and take away the plates and cutlery, will make more profitable sales.
Ask guests what their expectations are, do they need to be served quickly because they are going to a movie or a show, or would they prefer to relax with drinks before and between courses. Show them that you care about their business and experience. People don’t mind paying if they are enjoying themselves. Be sincere, don’t give fake smiles and say enjoy and have people see your smile turn into something else before you have even turned away.
When a restaurant is empty or quiet, people walk past and wonder what everyone else knows that you don’t. If it is busy, more people will want to come in, but that doesn’t mean keep people hanging, waiting for service, because it will empty pretty quickly.
Have a business plan and understand what your model is, understand who your target market is and what they are looking for. There are lots of smart things you can do using social media and location based technologies and you will find plenty of them if you search through my blog, BUT if you don’t have the basics right, they won’t help you.
Many people still haven’t figured out that daily deal sites won’t bring you good business. Very few people who come to you through those sites will be back. They will cherry pick your profits and then do the same to the next business.
If you have the basics right and you know what your KPI’s are then I recommend you start with something like a combination of Foursquare and other social media. Have a really good look through Foursquare and the types of deals you can do with them for free.
Location based services and proximity based marketing are really good tools for distressed inventory. Fill empty tables when you need to fill them, not by discounting before you even know if you will. Get creative, remember Death by Chocolate? If you have desserts left, its getting late, look for people who might come in for coffee, Irish coffee and dessert, you’ll make as much profit from them as some of the people who stayed for an hour or more and just had a main and wine.
If you have any questions, please leave them here or if you disagree, I’m open to that too.
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