This post orginally appeared on Foodable TV Network, August 25, 2016
By Donald Burns, Foodable Industry Expert
Things move quickly in the restaurant industry, seemingly changing overnight. Faster and better seems to be the key for a lot of up-and-coming concepts. Adaptability ranks right up there with consistency for top-performing brands. If you don’t have your finger on the pulse of the consumer, you will quickly find yourself left behind. Improvements in technology and state-of-the-art equipment pushes our industry forward into the future. Yet, what about management techniques? Why has the industry not put in the same energy into improving its management skills?
If you read the current headlines, they say that restaurant turnover is high and the prospects to fill those openings are low. Maybe it’s because we cling to outdated management styles that our current workforce (Millennials) have a difficult time understanding or accepting. Times are changing. Let’s...
Menu items that are very similar fight or cannibalize each other for sales. When Steve Jobs returned to Apple in 1997, the first thing he did was ask his team one simple question, "What products would you recommend to a friend?" When he did not get a very clear answer he reduced the number of Apple products from 350 to just 10!
Think about your menu. What items are your "hits"? Those dishes that your team just knocks out of the ball every time? That is what your menu should consist of! Too many items leads to what psychologists call "the paradox of choice" is when too many choices leads to anxiety about our choices. So when your menu has too many items, guests get frustrated and tend to go for the "safe" choice. The bad news is that your safe choice might not be a big profit maker.
Sometimes what you do NOT put on your menu is more important then what you do.
Here are some key questions to ask about your menu:
The majority of restaurants have not a clue as to why their customers are their customers. Most restaurants make assumptions about what really drives their business. Many think that price drives sales, and for some segments this is true. The problem is that when you constantly drop the price of your product you start a dangerous trend.
By reducing the price consistently you have now devalued your brand and simultaneously created price junkies. It's hard to get customers to pay full price when you set the precedent of lower pricing for similar items.
When you operate your business from the mindset of "fear". Fear of losing customers to another restaurant, then you set the stage for a spiral of bad decisions. You drop prices more often to drive sales and the thing is that IT WORKS...on the surface. Behind the scenes is that those price drops eat away more and more at your profits. Yes, more people are coming into your restaurant, yet less and less is going to your bank account. Combine...
When you work with over 400 restaurants a year you see patterns of success and patterns of failure. Just based on observation I am pretty dead on accurate to the chance a restaurant has of making it. Other times it's the Profit & Loss Statement (P&L) that confesses to me the real situation as to how bad things are. Looking at so many P&L statements and the numbers start to pop out at me like how Keanu Reeves' character Neo in The Matrix could see the code embedded in everything.
Running restaurants is relatively easy. It's the human element that makes things complicated. Some people have a hard time getting excited about numbers. Especially in the restaurant business which is for the most part comprised of extroverts. Now do not fret. If you are a people person and not a numbers person, have no fear because you can hire someone with the opposite strengths of yours.
You just need to be able to extract the data hidden in your restaurant reports and pull out the figures that...