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     Ron's Tip Jar/Insights - Published by Ron Santibanez   

November 7, 2012

 


In This Issue:

Tips and Things - Why Standardize You Recipes? 

Rules of Thumb - Alcoholic Beverage Costs

Restaurant Start Up - Site Selection..The Principles 

How Much Does It Cost To Open A Restaurant?

 


 

 Tips and Things

Why Standardize Your Recipes?

A standardized recipe has several advantages. It will produce a known quality and quantity of food for a specific operation. It specifies the ingredients to be used---brands, grades, and varieties; the preparation and cooking procedures; the yield and potion size; and in some cases, the equipment, utensils, pots, pans, and even the flatware require for service.

But contrary to what you might believe, standardized recipes are not those previously used in other operations or found cookbooks. "Standardization" refers to recipes that are "customized" to your operation. They might begin with ideas you took from another restaurant or cookbook but then adjusted for your operation's equipment, ingredients, and serving procedures.

If you don't have standardized recipes, or if their not being followed, you won't have consistency in cost and quality. If the recipes have changed, let your standardized recipes reflect those changes. If you permit deviations from your recipe standards, you will lose both cost and quality consistency.

   


Thought For The Day

Delegating means letting others become the experts, and hence the best. 

  


Rules of Thumb

 More Rules Of Thumb

Alcoholic Beverage Costs

Liquor - 18 to 20 percent as a percentage of total bar sales

Bar Consumables - 4 percent to 5 percent as a percentage of total bar sales

Bottled Beer - 24 percent to 28 percent as a percentage of total bar sales

Draft Beer - 15 percent to 18 percent as a percentage of total bar sales

Wine - 35 percent to 45 percent as a percentage of total bar sales


Restaurant Start Up

Site Selection - The Principles...continued...

Below are the Principles of Restaurant Site Selection. Over the next several issues I will examine each one of these principles in detail.

 

  1. Know Your Operation - It goes without saying that you must know and understand your operation. Moreover, knowing your operation is a pre-requisite to any expansion you have planned. In fact, this is the strength of the of the food business. Food operators can usually recite and compare food costs, labor costs, controllables, and uncontrollables. Numbers are traded and widely discussed. Daily tallies, transactions, customer counts, meals purchased, and, hopefully, profits fill numerous notebooks. Nonetheless, as mundane as it sounds, you must truly grasp the complexities of your operation and accurately gage your management ability before expanding or starting out. Have you done your homework? If you are entering the food industry for the first time, have you studied successful food operations, and do you feel thoroughly familiar with their techniques? 
  2. Determine Your Customer Profile - Customers are attracted to any food operation for numerous reasons. As a food operator, you should know why your customers choose your facility. Also, identifying the characteristics of your most frequent customers is essential. Without such data, you are going into a fire fight with a BB gun. I am continually amazed at the number of food executives , responsible for spending millions of dollars, who don't really know their customer profile. At least once a week, a major food operator or officer of a major restaurant organization tells me his or her customer is "everyone." When I ask, "How do you know that?" the usual response is, "Well, I observe," or "My managers tell me." That is absurd! I cannot overemphasize enough the need to determine who your potential are, why they would come to you, or why they wouldn't come to you. One of the primary secrets for successful site selection is targeting areas with demographics that match your "most frequent visitor" characteristics.
  3. Delineate Trade Area - Numerous factors, including the following, dictate the size of a trade areas: Type of food facility, type of location, income, topography, competition, traffic artery, physical and psychological barriers, activity generators, consumer patterns, visibility (sometimes), and socioeconomic characteristics. Historically, restaurants have focused on a five-mile trade area, while fast food restaurants have settled on a three-mile radius. In many instances, these distances are realistic; just as often, however, they are not. It is important to analyze the type of location and the extent of the trade area  that might result from a new operation. In a major urban area a "special occasion" restaurant may attract customers fro 10 to 15 miles away, and rural locations with the right type of restaurant can attract customers in a radius of 60 to 100 miles. Moreover, fast food restaurants near major regional shopping centers often take on the trade area characteristics of the mall. In reality, trade areas are not rigidly round, square, or rectangular. Instead, they are positively influenced by the attraction of the restaurant and negatively affected by factors such as competition and physical barriers. 
  4. Establish Locational Criteria - Examples of locational criteria include the following: Types of locations, traffic arteries, trade area size, speed limits, number of moving lanes, adjacent uses, traffic flow, traffic counts, ingress, egress, visibility, competition, employment, topography, demographics, ethnic characteristics, and perhaps a liquor license. For someone who is starting a new operation and has no locational experience, the site attributes of other similar and successful food operations can provide very important guidelines. Examine the experiences of other operators and competitors. How have they fared? Where are their most successful units? Why are they the most successful units? What is common to their locational success?
  5. Analyze The Market Structure - Every market, whether it is a neighborhood, a small city, or a major urban area, has a structure that partially determines the extent of a trade area, the patterns that exist, and travel times. The structure includes the shape of the city, or an area, the road network, barriers (physical and psychological), income, topography, zoning, sewer and water availability, ethnic and socioeconomic characteristics, and climate. Structure plays a role in directional growth patterns, employment concentrations, development, eating-out patterns, and other factors that have generally influenced past and present development. Furthermore, the same structure is likely to influence future growth in the community. Understanding market structure is essential in selecting good locations for food facilities.
  6. Gather Factual Market Resource Data
  7. Ensure Adequate Accessibility
  8. Recognize The Importance Of Employment
  9. Identify Generative Areas
  10. Clarify Attitudes, Trends, Habits, and Patterns
  11. Evaluate Competitive Facilities
  12. Understand Visibility and Exposure
  13. Estimate Sales Potential
  14. Evaluate Site Economics and Physical Characteristics

 


What's Keeping You Up At Night?

 


"Why not go out on a limb? Isn't that where the fruit is?"

~ Frank Scully 


 We are offering a FREE Restaurant Start-Up Checklist. Just send us an email at Ron@RestaurantExperts.com and request your copy.

Additional Resources Now Available On Our Web Site:

"HOW TO START A RESTAURANT"

"HOW TO DEVELOP A RESTAURANT BUDGET"

"7 WAYS TO CONTROL FOOD COSTS"


How Much Does It Cost To Open A Restaurant?

The most frequently asked question I receive is, "How Much Does it Cost to Start a Restaurant?"

The answer is.....it depends. Asking how much does it cost to start a restaurant is like asking how much does it cost to buy a house. There are many variables and options that must be selected before you can attempt to come up with the answer. 

Begin by completing a comprehensive feasibility study.  A feasibility study on a specific site or geographical location will determine the capital requirements and projected sales/profits & ROI of your concept.

For more information on this subject Click Here.

 


You can now read todays Restaurant Business News on our website .  


 

Additional "Tips" are now available on "Ron's Blog."

 


   

Follow me on Twitter @ronsantibanez. I post frequent tips and suggestions to Improve Your Profitability.


 

We are now featuring our booklet "How To Start A Restaurant" FREE on our web site.  

Send me an email at Ron@RestaurantExperts.com if you would like a copy of our booklet, "How to Manage a Successful Promotion." Type "Special Booklet" in the subject line. 


  

Visit our web site RestaurantExperts.  You can view additional tips and techniques in addition to restaurant industry news that is regularly posted on our Profit Line Facebook page.

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 We encourage you to contact us if there are specific subjects you would like to see addressed in "Insights" or "Ron's Tip Jar".

"Insights" is a newsletter discussing issues that affect your restaurants profitability delivered by Ron Santibanez. You may also view past issues of "Insights" and "Ron's Tip Jar" by clicking here.

Contact us at ron@RestaurantExperts.com


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