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April 14, 2015

5 Questions Every Restaurant Owner Should Ask

Clients and prospects tend to ask me the same questions over and over. How can a website help my restaurant? What type of social media marketing should I be doing to get new customers? Should I be using a loyalty program? Is Groupon worth it? And don’t get me wrong. These are all good questions that need to be asked. But there are deeper questions that need to be asked and answered before these.

Today I want to look at these fundamental questions that I wish restaurant owners/managers would ask me or themselves before moving on.

1 – Is our customer service top-notch?

There are thousands of restaurants for any diner to choose from and more restaurants are opening every day. Most of these restaurants consistently put out delicious food.

So how do you differentiate?

Yes hopefully your menu and concept set you apart but that can only do so much. One of the best ways you can set yourself apart from other restaurants is your customer service.

Case in point.

The gas station/mini market space is highly competitive with little differentiation. At the end of the day 7-11, Circle K, QuikTrip and others all offer the same services/amenities/prices with little variation. But for my wife and I (and many people who I have unofficially polled) we will without fail choose QuikTrip over its competitors given the opportunity.
The reason for this is simple. QuikTrip’s stores are almost always impeccably clean and the staff is friendly and helpful. They always have enough help to move their lines along quickly and efficiently. In the end their customer service is head and shoulders above their competitors.

Your restaurant should aim for this level of service. Floors, tables and restrooms should be impeccably clean. Your staff should be courteous, happy ane helpful.

2 – Is our menu as efficient as possible?

Do you look at your menu performance on a regular basis? If not you should.

QSRs (or fast food restaurants) are constantly looking at menu performance. When I worked collecting and analyzing data for a national franchisee we looked at menu performance at least monthly and more often than not weekly. We tracked performance of specials, performing and underperforming items. We tested new items and pricing strategies. We were constantly looking for ways to optimize our menu.

You should be doing the same. Some of the things you should be looking at are:

  • Top selling items – Look at what sells the best and then figure out what the reason is (price, taste, value, etc.) and then try to apply what you learn to other items.
  • Bottom selling items – Look at the items that have the worst sales. Why are they at the bottom? Are they too expensive or too exotic? Maybe they just need a new name or a new placement on the menu.
  • Upsells/Add-ons – Do you have upsell and add-on items with a good food cost/price ratio? If you do are they being sold. Items like drinks (especially specialty drinks), sides and desserts are perfect to upsell.
  • Overall menu balance – Do you have a balanced menu that caters to different tastes and needs? I’m not talking about making a menu that looks like the Cheesecake Factory’s but your menu should have different prices points and different palettes in mind.

3 – Are our costs being controlled effectively?

Food cost, labor cost and controllables are something that every restaurant has to deal with. Do you know what your costs are? If so are you doing everything you can to keep them as low as possible without hurting the customer experience?

Controllables (rent, electricity, water, permits, repairs, etc.) are for the most part set in stone but you should be actively monitoring your food costs and labor costs and adjusting them as needed.

At a minimum you should be looking at your costs on a monthly basis to assess them and see if changes need to be made. Let’s look at some quick strategies for food costs and labor costs.
Food Cost

While it’s true that the cost of the food you buy is controlled by your vendor this doesn’t mean that you can’t have control over your total food cost. You need to know what the cost is for each item on your menu so that you can monitor that cost. If the price of one of the ingredients changes drastically then you need to know how that will affect the total cost of the item or items.

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If a main ingredient begins to increase in price (say chicken) then you may need to make adjustments to your menu. This can mean decreasing portion sizes or increasing prices or a combination of both. I know that raising prices is scary but some times that is the only way you can keep in the green. Remember also that if a staple goes up that you can increase prices accross the menu instead of just the items that conatin the staple.

Labor Cost

Scheduling, scheduling, scheduling. Good scheduling is the best way, hands down, to control your labor costs. You (or your managers if they do the scheduling) need to have a good understanding of when staff is needed. You need to know what the busy/not busy times are. You also need to know if outside events (weather, sporting events, holidays, etc.) will affect business.

You also need to watch your overtime hours. Effective scheduling means decreasing or eliminating overtime for your employees. Not only is overtime expensive but it can also effect your employees performance which can hurt the customer experience.

4 – Do people like our food?
Notice that the question wasn’t “Is our food good?” There is a difference between good food and food that people like. My wife and I like a lot of the same foods but there are also quite a few foods that I like (ie. Sushi) that she cannot stand. Sushi is good, but it’s not to her taste.

Your chef/kitchen staff need to understand that at the end of the day they are cooking for the customers and not for themselves. They may love item x but if people don’t order it—or only order it once and don’t like it—it doesn’t matter if you think it is delicious. Countless restaurants have been sunk because the owner/manager/chef/cook knew that the food was delicious no matter what the customer said.

The best way to combat this is to talk to your customers. Ask them about what they really think aobut the food. If the response is mostly positive (it will never be 100%) then count it as a win. But if you consistently hear criticisms (especially the same ones) like it’s too salts, underseasoned, overcooked, whatever then listen and adjust.

5 – Does our concept work?

In theory this is the question that should be asked before a restaurant even opens. Hours of research should go into seeing if a concept works and if that concept is in the right location (a high end sushi bar may work as a concept but not in a lower income, inner city area). But even if you asked this question before you should be constantly assessing your concept and see if it still works.

Watch your sales, your customer counts and your average check amounts. Look for long term trends. If your customer counts are staying flat or dropping it may be time to re-asses your concept. Maybe what seemed like a great location isn’t or maybe the demographics in the area changed making your concept irrelevant. If your concept doesn’t fit or work no amount of marketing or websites or loyalty programs will fix it.

Just because a concept isn’t working doesn’t mean its a bad idea and the same goes for a location. Maybe you need to re-image your restaurant to fit the location…or maybe you need a better location for you concept. Whatever the case may be you don’t want to keep throwing money/time at it if it just isn’t going to work.

Conclusion

So there you have it. The 5 questions that restaurant owners should be constantly asking themselves. If you take care of these then the other things, the websites and marketing and social media and loyalty programs and everything else will be able to help your restaurant grow.

4 Comments on “5 Questions Every Restaurant Owner Should Ask

Jane
July 7, 2015 at 7:45 am

Very pithy. No meat in this article. These things have been said over and over. An article that expanded on one of these ideas would have been helpful. For instance… marketing research to determine if concept is valid for area. How does one do this? Most people who want to own businesses are not trained in business. This would be excellent info for this group of people.

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John
July 7, 2015 at 7:49 am

Jane,

I’m sorry you didn’t find this article helpful…the idea here was more of some basic things that every restaurant owner should be constantly evaluating. It is true that these things have been said over and over yet I walk into restaurants all of the time that obviously aren’t asking these simple questions. In the future there will be more in depth articles on each of these subjects along with many others. I hope you will come back and check them out.

Cheers,
John

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mj
July 7, 2015 at 9:24 am

I like the article – I think we all need to be reminded of these things. What you set out to accomplish, 5 questions, not all questions, but these particular 5 were good. Especially for those that get very complacent in their stores. Everyone can benefit from being reminded about things that others might feel are old news. I hope it is ok to add to our newsletter – thanks for your time and effort. It is appreciate. MJ

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John
July 7, 2015 at 9:34 am

Thx MJ. I subscribe to the KISS (keep it simple stupid) methodology as much as possible. There are of course many, many more things that you can an should focus on at your restaurant but if you aren’t doing these five things right…then ultimately those other things aren’t going to matter.

John

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