Thread: Tough Times!
View Single Post
  #7 (permalink)  
Old 06-04-2008, 06:28 PM
Damon Damon is offline
Junior Member
 
Join Date: May 2008
Location: North of Santa Barbara, Ca
Posts: 9
Default Can't be Everything

A full service restaurant, ice cream parlor, pizza place..what's next a taco bar? You can't be everything to everyone, if you want to try something new that's great but prior to doing so you need to consider a few things. First, what's the payback on your capital investment..how many pizzas do you have to sell to break even on the equipment. Second, do you have the space for the additional inventory that's needed. Third, and this is always a shot in the dark..if you offer something new, and I'll stay with the pizza idea; what's your cannibalization percentage and relative profit margins. You have to figure out what your profit will be on an average pizza, let's say for easy math it's $10.00, now what's your average profit on those meals served when you'll be making pizzas (I'd imagine it's lunch/dinner) and here let's say it $5.00 Now a certain percentage of the people who buy a pizza would of come in anyways. Now if it's two people splitting a pizza instead of each ordering a regular meal you've made noting 1 $10 pizza = 2 5$ meals. You only make money if pizza either increases your customer count OR yields a higher profit then your regular menu.

About opening at 9..easy math, for a few weeks keep track of the number of customers who come in, say between 6-7, 7-8, 8-9. Ascertain your operating costs and subtract from revenue. I changed mine several years ago after figuring out that the first hour of business during the week was no more then a break even.

Don't send your menus to businesses or clubs - take them. I tried mailing them with a discount coupon to large employers several years ago, sent them to one employer per month. Never got one back. This year have been making the rounds to the same employers, meeting with owner or HR (I'm in a small town so it's usually the owner) and give them a copy of the menu with discount coupons to distribute, explain our program of "honoring" an employer each month, now I get several back. A certain percentage are from people who would of come in anyways but not all. Likewise I use the meeting as an opportunity to explain how we can do gift certificates for such things as "Employee of the Month", employee anniversaries, Christmas etc..

I guess lastly, the question isn't how many hours you work, the question is are you saving more money by working those hours then you could by working to grow your business. That's a hard call, as you're not sure if you're going to get new business from your efforts but you do know that additional labor is going to cost you money. Perhaps a compromise is that you have someone work one of your shifts and you dedicate that time to marketing...do not even go to the restaurant then instead hit the proverbial bricks.

These are tough times, especially for we indies..I fully expect this year to be the worst we've had (have owned it for 10), and I'm not all that optimistic about next year. Watch your expenses, ensure the quality of your product and ensure that your customers have a memorable time. You might also want to subscribe to the "WOW Newsletter" at Restaurant Marketing: Marketing to Restaurants in USA & Canada. It's a weekly mailing, takes 30 seconds to read and every once in a while has something that just resonates with you a "duh" moment if you like.

Last edited by Damon; 06-05-2008 at 10:00 AM.
Reply With Quote