The R word
Unless you have been under a rock for the past nine months, you probably are thinking about that R-word. In my recent experiences talking to and working with restaurant owners and operators, an already challenging time of the year is being compounded by current political ads fueling hysteria about what our economy is going to do. My advice, focus on (or avoid) these r- words to help keep your business above water.
Recently, I went to a national casual dining chain that has elected to reinvent itself. The servers have gone from khakis and golf shirts to all black pressed slacks and dress shirts. Not wanting to abandon their old positioning, they still had a couple people wearing football jerseys on a Sunday. The menu is new, redesigned, and very hard to navigate. The key focus of the menu, it seemed, was their new line of steaks, not something I would typically go to this place for. The menu, presentations, and pricing all indicated this was a concept going a tick upscale, in an attempt to differentiate. However, the service had made no movement at all. Two different locations in the course of the week revealed huge server sections, where servers were hurried, did not suggest items in a detailed way, did not refill drinks, did not sell additional alcohol, and did not bother to pre-bus. This failed/missed part of the reinvention reminds me of a little ditty of wisdom “Why did you bother to take a bath if ou are going to put those same stinky clothes on.
Ah, but inflation. But, restaurant sales are supposed to be up this year. But, my sales are still up above the average. So, let's think this through. Due to economies of scale, the large chains probably feel the pain of inflation less. And, they have large cash reserves to rise out any economic uncertainty. Therefore, they will probably not raise their prices. So, why are you? Focus on value, increase your revenue through discounts that increase traffic, not increased margins on reduced traffic. I am sure sales will be up this year, however, some of that projected increase includes inflation, not increased foot traffic. Additionally, value pricing is pushing the QSR sales up, skewing the industry average. And, even if your sales are above average, they can come down eventually. You can always raise prices and end promotions in six months, you will never regain customers that believe they can no longer afford you.
As credit markets are swinging unstable right now, this may not be a good time to expand. Focus on what you have and what you did to get it there. Take advantage of the recent fed funds rate drop, and evaluate refinancing existing debt, horde the savings to fund expansion down the road. This is an ill-advised time to open that third, fourth, AND, fifth unit.
Return to the basics aka
Refocus your attention aka
Return to your roots
Unless you are turning a large fortune into a small one, you probably have done something right to have an established restaurant. This is the time to look at what you have, how you have gotten here, and return to those principles of food and service. Maybe the growing volume, or a catering aspect to your business has made you lose touch with your core customers. Use some down time to get reacquainted with them, bring back menu items that you had taken off. You get the idea. You have done things right in the past, do them again to bring back some nostalgia.
Ronald Reagan believed the economy was more than fifty percent psychological. He argued once in a Cabinet meeting, If people believe we are in a recession, we are,“ they control the market." A positive attitude, and smart business decisions so that your business stays successful and profitable is they key to weathering a storm.