www.RestaurantExperts.com

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

October 24, 2012

 


In This Issue:

Tips and Things - What's Your Strategy For Reducing Costs?

Rules of Thumb - Payroll Costs

Restaurant Start Up - Site Selection..The Principles 

Five Steps To Customer Satisfaction - The Final Step

How Much Does It Cost To Open A Restaurant?

 


 

 Tips and Things

What's Your Strategy For Reducing Costs?

Remember: COST REDUCTION is only one strategy for improving your bottom line. Low costs by themselves do not result in a solvent and profitable operation. Many owners/managers are great at controlling costs, but their operations are not really thriving in the financial sense. When costs are under control and have been pared to the bare bones, the only way to improve profit is to increase sales.

Consequently, your overall business plan must include a marketing strategy. You must bring in new customers and increase the frequency of existing customers. You must market and promote. Nothing is more discouraging to a manager who has his costs under control than not having the sales volume to optimize profit. Moral will begin to lag. The situation is analogous to the football coach who drills his team every day in preparation for this weeks game.......only to have the game canceled every week.

It becomes harder and harder for employees to maintain their edge and confidence if the business volume never improves. They begin to question whether it's worth the time and effort they must expend. They never really get to "do their thing" on a busy night. And since only increased sales can make that happen, part of your overall business strategy must be focused on achieving that end.

    


Thought For The Day

If we don't change, we don't grow. If we don't grow, we aren't really living.

  


Rules of Thumb

 More Rules Of Thumb

Employee Benefits

Five percent to six percent as a percentage of total sales. Twenty percent to twenty three percent as a percentage of gross payroll.

 


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
  5. Analyze The Market Structure
  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

 


The bitterness of poor quality remains long after low pricing is forgotten

 


 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"


Five Steps To Customer Satisfaction

We continue with the final step you can take to improve your customer service.

5. Do It Again

  • Never become complacent
  • Ask your customers to tell you what you can do to improve
  • Tune in and listen closely to their replies
  • Act on suggestions for improvement 

There is a difference between delegation and abdication. Never turn anyone loose unless they have been thoroughly coached or they may panic and fail.  


Don't delegate to people who don't want responsibility. Not everyone wants to advance and it's futile to force activity on someone who does not want it.


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. For example:

  • Fast Casual or Full Service
  • Free Standing or In-Line
  • Restaurant ready space or shell condition.
  • Landlord TI?
  • Hood or grease interceptor needed?
  • Size of space 
  • Interior finishes selected (options)
  • Type of furnishings selected (tables can range from $100 to $500 each)
  • Type of kitchen equipment needed
  • Menu concept
  • Liquor License
  • Staffing
  • Additional engineering needs due to facility issues

Completing a comprehensive 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. 


  

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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


For information regarding our start-up and profit improvement services, call us at 866-903-5875. You may also reach me by email at ron@RestaurantExperts.com

 


 

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