Why did you get into the Restaurant Business?
As a former restaurant owner, people would ask me a lot of questions. The most common question I was asked was this: "Why did you get into the Restaurant Business?" That is a difficult question to answer. I was not really sure why I got into the business myself... I have many answers to that question and all of them are true. The main reason was this: We were absolutely broke, we had no water, electricity, or gas in our home. We lost both of our cars to the bank, our home was foreclosed on, we literally were at a major crisis point in our lives. I had strayed away from God and I had lived a selfish, self-centered life. Something had to change.
In desperation, I prayed "God, please help me.... I know it is my fault that we are in this mess and I am the one who messed it up..." God, who is faithful and just, convicted my heart to repent from the way I had treated my wife, our kids, and the ways I had been conducting business. I had no idea that in the midst of my struggle, God was using my predicament to draw me closer to Him.
After five weeks of hard work, and a borrowed $5,000, my wife, children and I opened Macaroni Joe's in Amarillo Texas in 1994. For the first few months, our children, ages 9 and 11, would wait on tables and help out in the kitchen. Our kitchen equipment consisted of two "Rent-To-Own" electric residential cook stoves, a used baker's table and a refrigerator. We had a chalkboard menu with about 12 entrees to choose from and our guest would come up to a small window in the kitchen to order. We would take the money we made at lunch to the grocery store and buy food for the dinner shift.
We sold Macaroni Joe's in June of 2006 so we could devote ourselves full-time to helping others. For twelve years God blessed us with a great Christian Owned Business. The restaurant didn't just sell food, wine, and service... the Restaurant served as a pulpit to reach the staff, guests and vendors. If you have been in the restaurant business for any length of time at all you know that there are people who work with you that have broken hearts. We have helped people get out of jail, we have given away cars to our employees, we have loaned money and we have had many of those same people take advantage of our kindness. That's ok... That is why I "really" got in the Restaurant Business, so I could do God's work! So I ask you...Why did YOU get into the Restaurant Business?
Today... our call is to help business owners and their spouses grow into the full destiny that God has spoken over their lives. Many of our services are free and they consist of us mentoring and encouraging you in what you are doing. Please don't let your pride or the lack of money get in the way of contacting us for the help you need.... the least we can do is pray for each other!
We target Restaurants who need consulting, Restaurants who desire to please God and they are open to advice about how to operate and run their restaurant in a way that brings glory to God. Let us consult you.
We are here to assist you in becoming the very best business in your community. We believe that as God prospers you, you will bless His Kingdom with your time, money and prayers. How can we help you succeed? Let us know...
7 Common Mistakes Restaurant Owners Make
1. Under-pricing their product.
It seems like this is perhaps the biggest problem that an independent business owner faces. The greatest challenge after the basic things like finding a concept, a Chef, a team of managers, servers, office staff, menu design, advertising etc...is determining how to properly price your product. If you are too expensive people will percieve you as a special occasion restarant. If you are too cheap people will undervalue your product and even worse you will go out of business and then it doesn't matter how much they once loved you... you won't be here for them any longer.
The key to pricing your product properly is truly a complex combination of over twenty factors to determine the balance between volume and margin. Did you know that every year about 800,000 new businesses open in the USA and by the end of the year there are only 400,000 of those left? By the end of the second year only 200,000 of those businesses are still around. Consider this statement: If your business is not 8 years old today the odds are that it never will be. Yes, that's right! The average life-span of a business in the USA is under 8 years. That is like saying "If you are not 80 years old today the odds are that you never will be" Why? because the average age of death in this country is presently 78 years. So, if you are not 80 you probably won't be!
So, when you start pricing your product in comparison to your competitors and that is the only equation you have to go by, you need to remember that the majority of your competitors are going broke at those prices and YOU CAN GO BROKE TOO!
If you hire CRC to work with you the very first thing we will focus on will be determining the best pricing formula that fits your business. If you have said "I don't think I can afford a consultant" you need to understand that a consultant is going to help you find the money to pay him and solving this one problem would certainly be the first place for us to start.
2. Blind trust.
Many restaurants fail for easily avoidable reasons. It is not their menu, location, product or even service that causes them to fail...it is a poor approach to implementing structure into their systems to prevent shrinkage and theft. So here is my question to you:
Who's guarding the guards?
Yes, who is watching the people who are watching the people who are doing their job? Who are you watching? Who is watching you? Who is watching your food reps? How do you know when you have paid too much for a product? When you recieve a box of beef that says it weighs 60 pounds how do you know that the truck driver did not take out a slab of ribeyes? did you weigh the box? If you are working hard at the tables or in the kitchen you are not able to properly prevent loss because you can't watch everyone at the same time. We can help!
Here is the problem. In a restaurant that is earning a net 10% profit and does about $1M a year and they have an employee who is stealing or ringing up orders wrong or forgetting to ring up a soft drink etc... For each $10 of product they lose it takes $100 worth of sales to replace it. I remember a dishwasher we used to have who was carrying some plates that were about $40 each and because he had too many of them at once he dropped a few of them on the floor and they broke. He broke about $500 worth of dishes in just one week. He was not dishonest or lazy or mean...he was just not careful enough to fill that role properly. When you look at the true expense of keeping that dishwasher it is scary. Because, if we are only earning a 10% net margin on a $1M restaurant then that means that we are making a profit of about $320 per day. His mistakes cost us nearly 2 days of profit in one week! Imagine if you have two or three employees making small mistakes every day? What does that cost you? You will never be able to raise your prices high enough as described above to compensate for these type of losses.
The second thing we will focus on in your business will be shrinkage and implementation of systems to reduce theft. By the way, If you are of the belief that this could never happen to you then you are in denial or you have not been in business for very long. More than anythong...you want to know God's will for your business and if there is a problem with shrinkage we will ask God to reveal it to us.
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Services Offered
Beverage Consulting- We have attained three awards from Wine Spectator for our wine list. Let us help you create the best wine and beverage program in your city. We know what wines you need to complement your food and your environment. We have found that one of the major decision making factors when people want to eat at a restaurant is the beverage program. A well designed wine list and/or mixed drink program will place your restaurant at the top of your guests minds. Allow us to help your restaurant have a profitable drink menu.
Menu Consulting- For the last twelve years our restaurant has won many awards for its' creative menus. We have two consulting Chefs at our disposal as needed. Allow us to consult you on your menu design. We can assist you with reviewing and improving your existing menu and by adding new items to the mix. One of the keys to marketing a menu is creative writing. If the descriptions of your menu are flat so are sales. Yes, it is true that your guests are ordering food already, but with creative descriptions, bold and exciting flavors and enhanced food presentation you will notice an increase in overall sales.
Price Consulting- Price plays a huge role in how your guests percieve your establishment. If you are too expensive you are seen as a "special occasion" restaurant. If your prices are too low your guests may percieve that there is an issue with quality. People are very price sensitive... Foe example: I remember a dish we had at Macaroni Joe's called the Relleno Ribeye. It was a 28 day aged, dry beef, grilled over an open fire and served on roasted baby red potatoes with a Oaxacan Mole Rojo sauce and topped with an Asiago and smoked chicken chile relleno. Our Chef complained that even though we were making money at $26 for that steak it took an enormous amount of effort for the kitchen to roast, stuff, batter and then fry each relleno to order and he asked me to take it off of the menu. I made the suggestion that we keep it on the menu but that we raise the price to $38 so that no one would order it...... Boy was I wrong! We sold almost three times as many of those steaks when we raised the price! If you are going to stay in business you will need to accurately determine the right price for each of your menu items. We are experts at that and we can help.
Staff Consulting- In my career I have hired an estimated 1,000 employees. I have found a formula that works about 80% of the time. This method for interviewing and hiring the right people is worth $1,000s of dollars to you. If you hire the wrong people all of the other things you are doing right are in vain. If one of your problems is staffing let us consult you with proven formulas that will identify and attract the right staff.
Vendor Negotiations- Many Restaurants are so busy running their business that they often discount the importance of having a strategy for purchasing quality products at the very best prices. Through our Restaurant Consulting Service we have been involved in dozens of contract negotiation meetings and can advise you on how to secure the best price for the products you buy.
Website Development- We have the knowledge and experience to assist you in developing a web presence that will properly represent you to the online consumer. Not only is it improtant to have a great website, it is also imperative that your website is "coded" properly so that the search engines can send you traffic. Your website when designed and optomized properly serves the same role as a strong billboard campaign. Trust our Website Consulting Expertise to assist you in developing an effective internet presence.
Guest Loyalty- What would you rather have....more customers or customers who visit you more often? The right answer is "BOTH" First you create guests and then you create guest loyalty. The sweetest sound to any guests ears is hearing their name. It makes them feel important and realize that they are not just a number to you and your staff but that they are family and that they are are recognized for their improtant role. Developing a great guest loyalty program is not just giving guests a discount for eating with you.....it is much more relational than that. Let Christian Restaurant Consulting show you how the finest restaurants in the world are creating guest loyalty programs that are so seamless you wouldn't even know it exists.
Jeff Ludy
