Making it Big in Hospitality Strategies for Growing Your Restaurant By David Eagle
Table of Contents Introduction A written amuse-bouche for your reading pleasure, to whet your appetite for what’s to come. Chapter 1: Be Yourself-ier Your restaurant is a success, so whatever you’re doing, your customers must like it. This chapter covers ways to find out exactly what your customers love so you can give them more. Chapter 2: (Check) Size Matters The simplest way to start earning more money is to get your customers to spend more money. That part is obvious: this chapter details the methods you can use to make that happen. Chapter 3: Marketing Marketing is that thing that no one feels they do enough of. Here are some strategies to use that are more than enough to retain customers, and convert new ones. Chapter 4: Come On, Get Happy Happy Hours aren’t just for bars anymore. Learn ways to create demand and drum up business during those slower periods. Chapter 5: It’s Getting Mobile Out There Mobile technology gives customers more ways to find and buy from you, wherever they are. But it also enables you to take your show on the road and meet them where they’re at.
Congratulations! Your restaurant has made it through its first year, or maybe its second. Maybe its third or fourth. Maybe I could keep going like this indefinitely, but you get the idea. You’re in a zone. Everything you spend on inventory, employees, and overhead has become predictable, you’re bringing in enough income to provide some breathing room. Or, maybe you’re the type to look at breathing room and you see space to fill: you want to grow. Perhaps you’d like to offer more on your menu, expand your hours, add space or even another location. And then maybe the thought of that makes you feel a little claustrophobic. How will you do it? What kind of paperwork is involved? If you’re in New Jersey, who will you have to pay off to make things happen? Like any enterprise, it’s sure to be fraught with decisions. In all cases, it helps to have as much data as possible—the ability to track trends in peak hours, to understand how much of your inventory goes to waste, to know who your customers are. These are vital to the growth of any restaurant. You can’t build your audience if you don’t know who they are to begin with. In its 2014 report on corporate insolvency, the Australian Securities and Investments Commission (ASIC) identified the top two reasons businesses went broke. The first was “inadequate cash flow.” Let’s all pause for a moment and reflect on this: a group of people studied the data, and determined that the number one reason a business ran out of money was due to its not having enough money.But let’s not let that cloud our judgment on the second reason, which is far more enlightening; business failure is linked to poor strategic management.
It’s a general enough statement to sound obvious on face value, but don’t dismiss it out of hand. If you’re not pausing to unpack what it means to have good strategic management you’re probably not managing things so strategically. That doesn’t mean you’re mismanaging, either. You’ve made it this far and looking to take things further, so you’re doing something right. But starting a restaurant is lot different than growing it. It’s not that you didn’t start with a solid plan, but when reality hits there’s a lot of coursecorrection that happens. A little something you didn’t foresee here, a complete bolt from the blue there. It happens. Now that you’ve been operating for awhile, you should be able to know who your customers are, know when to expect them, what they’re going to order, and how they’re going to pay. You’ve got all kinds of data—not projections—and the power to keep surprises to a minimum. There’s no reason you can’t be strategic about your growth. The rest of this guide will operate under the assumption that you’ve already taken the first step towards your restaurant’s future by implementing a modern, open, and scalable point of sale system. This not only makes running your business easier, but a good one will do more than just take orders and payments. It helps to view a POS for your business the same way you’d look at an operating system for your computer or smartphone: you need the OS to make the device work, but you’ll still want to add more apps. Your point of sale is your business’ OS. It’s making things work, and now you want to do some more with it. Inhouse or third party addons can be connected to your POS, and sharing the data between the two apps allows you to use it in better ways. Scheduling shifts for employees, marketing to customers, online ordering, loyalty rewards, automated account: all these things are possible when your business runs on the right operating system.
Chapter 1
Be Yourself-ier
So, if you haven’t researched and found a good POS yet, stop here. The first step to planning strategically is having the evidence on which to base your decisions. Without a good POS, nothing else that follow this introduction will help you. There are other guides out there, like this one, that do a good job of explaining what to look for in a restaurant point of sale so go ahead and do that—research, try, buy—and I’ll meet you back here. In the meantime, the rest of us are going to move ahead to Chapter 1 for the first method.
If you’ve made it this far, it’s probably safe to assume that you’ve succeeded in creating some sort of unique identity that sets you apart from your competition. That’s good! But don’t get complacent and rest on your laurels, especially if you grow laurel plants in your herb garden. No one wants the flavor of a bay leaf you’ve slept on. What your customers do want, though, isn’t necessarily more of the same. The things that excite people at first can become commonplace after a while; this is why divorce rates are so high. But that doesn’t mean you should preemptively become something you’re not, or diverge from your original plan/concept. It does mean that you ought to switch up your menu now and again, adding new dishes, subtracting others, and putting something extra into promoting your most popular dishes. And when you do that, do it with an eye towards refining your brand or image—that central concept of the restaurant that makes it yours. What does that mean in practical purposes?
Let’s use the fast food chain Taco Bell as an example, because in a bout of laziness I took my kids to eat there the night before I wrote this and the indigestion today makes it hard to think about anything else. But they started with a concept—cultural appropriation with cheap, tasty food that resembles Mexican cuisine—and have really run with it over the years. Even though there are dozens of items on the menu, they all rely on some combination of the same 15 20 ingredients assembled in various ways. That kind of concept can get old quick, and so they’re constantly experimenting with ways to keep the menu fresh (while somehow not worrying so much about keeping the food in the same condition). Large companies like Taco Bell (or whatever multinational behemoth now owns it) have long had access to advanced reporting and analytics that help them to understand what their customers like. Decisions about what stays, what goes, what’s added aren’t the result of a temperamental chef in a creative rut, much as we all believe. The menu is the result of data driven, focus group tested market analysis. The world didn’t love the Enchirito as much as I did, and so it’s off the menu, replaced by other items that jibe even more with the central concept of the place.
One of their biggest recent successes, the Dorito Loco Taco, is an item that is so quintessentially Taco Bell it’s kind of a wonder it took so long for anyone to think it up. They understand their market, their image, and their brand, and were able to dream up a concoction that reinforce every notion we have about the chain: quasiMexican Frankenfood that is irresistibly delicious. Now, I’m not suggesting you go out and hire a team of marketers and food scientists to refine your menu. But you can follow this model of success, and with minimal investment. Your POS ought to have a reporting mechanism, and it shouldn’t take you too long to get detailed reports on how the items on your menu are selling. You might be able to retire an item or two that isn’t selling well, and you’ll get an idea of your customers’ favorite dishes, which should help inspire you to create something new that you’ll be confident people will appreciate. Beyond that, you might also notice some trends that can help shape changes. Perhaps you’ve noticed that an overwhelming number of people like for you to add gravy to go with the their cheese fries. That’s a good time to add Poutine to the menu. Use the data you get out of your POS to identify what it is your customers like about you, and find ways to double down on those things.
Chapter 2
Increase the Average Check Size
OK, so this method sounds downright tautological. How do you increase revenue for your restaurant? Get people to spend more money. “Excellent problem solving, Sherlock,” I hear you saying. I think this is why so many people nowadays say things like “Increase your customers’ average spend.” Because what I said sounds self-evident. But when they change a verb to a noun like that, it has the subtle effect of making people listen. Clearly this person has a business background, because he is using words in ways I never heard before, the masses will say. But really, the opposite here is true. Anyone who uses spend as a noun should be automatically dismissed, while I should be taken more seriously because I’m not insulting your intelligence. Besides, advising you to get you customers to spend more money is one of those concepts so obvious we tend not to even think it, not unlike the Dorito Loco Taco. Now that we’ve got the basic concept out there, we can look at some ways that you can achieve this goal. The classic upsell. “Would you like fries with that?” is more than just the punchline to a joke about a Fine Arts degree. It’s an effective way to get people to buy stuff they might not have ordered on their own. It’s one of those human behavioral things: people might be embarrassed to order too much, but if you’re the one offering—Hey, I didn’t even think of that! Good idea!—it’s easier to go for it. Sometimes, though, the decision not to go for a side dish or a beverage is a monetary one. People might buy one or the other to save a little money. These are the people you can convince to buy both, and it’s easier than it sounds.
Combo meals didn’t become the norm because those nice mega-chains want you to save money; it’s because they boost revenue like mad. And fountain drinks, as you probably know, carry huge profit margins—leaving you lots of wiggle room to knock down the price as part of a combination. If your customers have incentive to spend a little more money, they will. Offer coupons to your regulars. Sounds counterintuitive to expect more money per check if you’re offering coupons; if you’re just sending blanket offers out to everyone through an ad or storewide promotion, this strategy isn’t going to work. But you’ve been entering your regular customers into your POS’s database right? If you have, then you can target offers to specific people. Find all the people who, on average, don’t spend more than $20 per meal and give them a 10% discount if they spend $25. Do the same for people who generally spend no more than $30 by giving incentive for them spend $40—and so on. These are your regulars: they were going to come back, anyway, and now you’ve given them a reason to spend more than they normally do. Integrate an online ordering app with your POS. When people order online or through an app, the data shows that they tend to spend about 10% - 20% more on each meal. This goes back to the human psych element I mentioned above: without the public pressure of being on a line and staring at a menu trying to figure their order out, people buy more food. When they can order at their own, relaxed pace, people can really absorb the menu and not feel rushed into the decision. And when no one’s looking over their shoulder, they’re more inclined order more than they would otherwise.
Chapter 3
Marketing
Do enough research on anything over the internet, and you’re bound to come to one conclusion: the Obvious Institute of SelfExplanatory Statistical Analysis has been churning out more graduates than ever. Over at her website succeedasyourownboss.com, Melinda Emerson’s got a helpful little guest post on “Proven Methods to Fill Your Restaurant.” Emerson, also known as the “Small Biz Lady,” published this piece written by Misty Young, also known as the “Restaurant Lady,” which is filled with things that could only be described as “words.” So, what’s the first proven method to filling your restaurant? Get more guests! But don’t worry: if you’d already figured out in your quest for more guests that getting more guests would help, Young dials it in more specifically: use marketing. Got that? Oh, you want to know what kind of marketing would be most beneficial? The Restaurant Lady’s got you covered. She expands on this point, by telling us: avoid the marketing that isn’t working. She leaves it to us, her readers, to infer from this that marketing that does work is more likely to work. But that’s what makes her such a good leader in her field: she knows we’ll never learn if we don’t figure it out for ourselves. I feel better now that I’ve gotten the sarcasm out. We can move on now. Of course, if you want to grow your restaurant, you’ve got to market. If you want something, you must go and get it—and if you want more customers, it’s up to you to find them. While there may never be an advertisement as effective as word of mouth, there are a dozen better marketing strategies than relying on only that. As a restaurant owner, you can safely divide the world into two distinct groups: those who’ve eaten at your place before, and those who haven’t.
Those are the first demographics you ought to consider, and your strategies for each are going to be different. Strategy #1: Create a marketing campaign for the Has-Eaten-At-Your-Restaurant demographic. The conventional wisdom says that 80% of your business will come from the same 20% of your loyal customers. Whether those percentages are accurate or not, the general sentiment is right on: most of your customers are going to be people who’ve already been there. And it’s on these people you’ll want to focus much of your marketing efforts. These are your best customers, and they ought to be rewarded for this! Just because they keep coming back doesn’t mean they don’t want incentives to do so. And they’re more likely than first-timers to take you up on a deal, because they already like you. If you haven’t already made it a priority, now’s the time to start collecting your customers’ contact info and storing them in your POS’s database. This helps you to reach out to them with marketing emails and coupons; when you’ve got a record of all the meals they’ve eaten with you (Hello, POS reporting features!) you can personalise these materials to a high degree of specificity. You can also start implementing a customer loyalty program to encourage repeat business. Remember, though, that marketing oughtn’t be a one-way conversation. With any kind of hospitality business, every interaction with a customer is a dialogue. Not some metaphorical dialogue, either, but an actual dialogue, where your servers ask questions, and your diners answer them—they’ll even have a few questions of their own. One great way to start a dialogue is with a freebie. You’ve got to pay to play, the old saying goes, and this is a pretty low cost option to generate some good will.
Since you already know what they like, give them something else they might want to try. Tyson Cole, the self-described “white sushi chef” who owns two successful restaurants in Austin, Texas, explains it this way: “Guests love it when a dish comes out and the server says, ‘The chef wanted you to try this,’ because that creates a real connection and makes the experience personal.” Give someone a great meal, and they’ll come back for another. Give them a great experience, and they’ll tell their friends. Which brings us to the second marketing strategy. Strategy #2: Create a marketing campaign for the Has-Never-Eaten-At-Your-Restaurant demographic. There are any number of popular, time-tested ways of achieving this. Newspaper ads, radio commercials, local TV (if you can swing the cost) are all fairly effective. But the internet and social media can often accomplish similar—if not better—results at a fraction of the cost. Geo-targeted tweets can reach thousands of people within walking distance with little to no effort. Facebook ads directed at friends of people who already “like” your page can also help convert folks to try you out. Beyond these micro-bursts of proactive messaging, the social media platforms you use should be engaging and fresh, and focused more around fostering a community than plugging your eats. Not that you shouldn’t showcase your food, but if that’s all you’re doing people will tune out quickly.
And then, again, there’s the good old loyalty program. Sure, you can’t rightly give loyalty rewards to people who’ve never stopped in for a meal, but integrating your POS with a social rewards program—like Collect Rewards—kills two birds with one stone (which birds you can then dress, roast, slice, and then serve as a sandwich with cranberry chutney and a mild cheese). With apps like these, you can push offers out to participating customers—directly to their smartphones, with further incentives for sharing the same offers out to friends. It’s kind of like word of mouth, but better—and with a much bigger mouth.
Chapter 4
Come On, Get Happy
With all the POS reporting you’ve done over the first three chapters, you’ve probably noticed right now that there are some hours where you business is much slower than others. It’s one of those trends that will just reach out slap you in the eyeballs as you look at sections of graphs where your charts barely climb the Y axis. These are the hours where “increase average check size” isn’t a suitable strategy. If, from 4pm to 6pm you get an average of 10 customers, adding a few bucks to each bill isn’t going to make much difference. There’s safety in numbers, and there’s one proven method to increase traffic in your restaurant that’s been around for over a century. That’s an paralleled test of time when it comes to marketing strategies, so we need to make a big deal over. Give it a proper introduction.
“Therefore, my lords, omit no happy hour That may give furtherance to our expedition…” - William Shakespeare King Henry V: Act 1, Scene 2
Yes, Happy Hour. Who doesn’t have an hour to be happy? Though it’s often associated only with bars, there’s no actual law that says restaurants can’t play along. Remember, kids: you don’t need alcohol to get happy.
You can always eat your feelings with half-price wings. But alcohol helps, I’m not going to lie. As a restaurant owner, though, you can pretty much count on happy hour to give furtherance to your expeditions, as the Bard himself attested. Sure, you’ll make less profit per item, but you’ll also increase revenue—which raises profit overall. The good thing about happy hour is that it isn’t only about the immediate benefit of doing more business during business hours. It’s also a way to get people to think about coming back. Remember our two demographics in the previous chapter? Well, any good happy hour is going to attract a decent number of people from the second group, the Hasn’t-Eaten-At-Your-Restaurant demographic. You’ll recognize them instantly, because they’ll be the people you’ve never seen before. Some time between entering and exiting, they switch over to the Has-Eat-At-Your-Restaurant group—and it’s during this jump from one demographic to the other that you can create great customers. The nature of a happy hour food menu is that you’re offering smaller sized, but economically priced portions of items from your regular menu. Make it a habit of bringing free samples of dishes that people didn’t order. Whether it’s to whet their appetites for another round or another time, it’s good for business to display some of the range of your menu. If your menu and concept supports it, combination platters of your most popular items can be an excellent way to sell yourself and some food at the same time.
For more upscale—or downright fancy—restaurants, the idea of a happy hour might a little too out of place with your vibe. Not to fear: this is why the tasting menu was created. It’s essentially happy hour, but you get to tell people what to eat for a few courses, and pair it all with the appropriate wine. Conventional wisdom—or is it common sense?—tells us that filling your available seats will increase revenue. Just remember it’s not enough to say, I’m going to get more customers and hope for the best. Identify when you need more customers, and how you’re going to get them in. That’s going to look different depending on how your business operates, but in all cases: get poeple’s butts in your seats and then show them a good time!
Chapter 5
It’s Getting Mobile Out there
It’s an increasingly mobile world. Of the different kinds of retail businesses, restaurants are the most perfectly suited for a population that’s on the go. A bookstore has to compete with Amazon for the business because customers don’t need to leave the comfort of their home or bubble to make the purchase. But going to a restaurant is exactly the opposite: your potential customers are either already on the go, or are looking to get out. So meet them where they’re at before they’ve figured out where to go. An increasing number of apps for smartphones and tablets use locationbased technology to find nearby stores and restaurants. From review apps like Yelp to mobile ordering platforms like Boppl, people are never more than a few taps from finding out you exist. Make sure they can find you. Spend some time doing research as if you were a potential customer looking for a place to eat, and see how you stack up against the competition.
Where are listed on Google in relation to your competitors? Do you have a listing with Google and Apple Maps? Are you advertising on Waze? What about Yelp? Go through every place you can think of that people would look to find you and get as much info there as you can: your website/menu, hours of operation, the types of payments you’ll accept, parking—all of it. The less questions people have about you before they even show up, the more comfortable they’ll feel. That’s human psychology insight #3 here: people don’t like to appear as if they don’t know what the deal is, or they simply are nervous about those kinds of situations. Arm them with as much knowledge as possible by establishing a thorough presence on these mobile platforms. The same goes for online ordering. There are a number of apps that will integrate directly into your POS that can alert people to your presence. If a group of people are out at a bar and decide they’re hungry, I’ll guarantee that at least 3 of them will pull out a smartphone and start finding the closest place to eat. If they can look at your menu and order through the app, even better. And if they can pay for the order with it, as well: bonus.
All they need to do is show up, grab their food, and go. The more that can be done in advance of their arrival, the more likely people are to do business with you. This doesn’t mean you’d want to foster a cold and automated relationship with mobile customers. Again, there’s a good chance these are people who are in your NeverEatenHere demographic. Greet them with an extra warm smile and then throw them some extra hot sauce. Make it personal somehow and invite them back. Of course, going mobile isn’t only about finding those hungry, wandering souls and bringing them to you. With a mobile POS, you can take your restaurant anywhere and open up a completely new revenue stream. Maybe you’re eyeing a second location but don’t have access to the kind of capital required to make that happen. A food truck can be a nice middle ground—maybe even a better middle ground. With a food truck—or even just portable equipment that you can transport, set up, and take down easily—you’ve got a roaming ambassador for your flagship location. Hit festivals, farmers markets, sporting events, or just get a permit to be in a public space—and bring a tablet or smartphone. You’ll be ready take orders and ring them up—with cash, credit cards, and mobile payments—and have it all tie back to your main inventory and books without any extra work. The more centralised the POS the better, meaning that you should be able to manage anything—for one location or more—from a single app or website.
Taking your show on the road can be a big undertaking: at least make sure your POS makes it easy to prepare. Make sure you can spawn off new menus or price lists easily, and that you have the flexibility make changes on the go. Make sure people know you’ve got a permanent location. If they like you they’ll appreciate knowing they can find you again.