Restaurant biz?

By the way -
If you are in a position to hire someone to work for you, especially if it's to manage people, a P&L, a facility, customers, for sales.... and a you get a proven restaurant manager as an applicant - even if that person would need some training, you'd be doing yourself (and them) a huge favor if you look past the assumptions people commonly have about restaurant workers not being able to cut it in an office environment. These people work very hard, they know how to work with a wide range of people, they treat customers like kings and they are cost conscious at a level most people would consider to be overkill.
 
Wow, two pages! Thanks for the insightful comments!

The big points I'm taking away are:

Rule #1: Have a clean, welcoming place and serve something that's unique enough for the location (helps the top line).
Rule #2: Watch all expenses like a hawk (helps the bottom line).
Rule #3: Never forget rule #2.

My own additional questions: No one mentioned marketing. Is that a significant issue for helping get customers in? Also, what about updating the menu with new items? I'd imagine people have their favorites, but I notice most restaurants offer new things to keep people from getting bored. Is there some kind of good mix of old reliable vs. new?

Based on some of the comments, I dug a little more into the restaurant's history.

Current owner (CO) purchased the already-running restaurant from previous owner (PO) about 4 years ago. It was a BBQ joint w/bar, open for lunch and dinner. CO did a good thing, working under PO for about 3 months during handoff to learn the recipes, etc. Not sure if PO was as good of a business person as pit-master. PO carried a note for the purchase, but that's already been paid off, so cash flow should have improved since then.

One of the first things CO did was remove the bar and filled it with tables to make it more "family friendly." OK, but I had always heard alcohol sales, while cumbersome with regulations and fees, are higher margin sales. I understand maybe ditching the expensive stuff that's tempted to disappear, but at least have a nice cold beer with the ribs?

Some time after that, it became a "country home cooked food and BBQ" place that serves breakfast too! Breakfast + lunch on some (slower?) days; breakfast + lunch + dinner end of week. I looked for their current menu. In addition to the full breakfast menu (the usual eggs, bacon, sausage, pancakes, hashbrowns, biscuits, etc), the lunch/dinner menu now is about 45 items, adding hamburgers, personal pizzas and fried seafood!

Is that way too many menu items to effectively manage costs on? This is not a huge place.

I don't get it. Their reviews are 5/5 on FB, 4.3/5 on Google, and 4.0/5 on Yelp.

My guess is they don't have a good handle on food expenses, at least. I saw several reviews that mentioned the abundant portions, and CO's wife mentioned they had to raise prices about 8 months ago. Hubby was laid up for a bit and she had to take over the finances. She said she realized they weren't making any money (not sure how detailed those calculations were).

I hope they can make it.
 
rpadula said:
the lunch/dinner menu now is about 45 items, adding hamburgers, personal pizzas and fried seafood!.
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Holy Crap! I am one for a smaller, better menu rather than a bunch of mediocre options any day. There is no way they are pounding out 45 dishes that are exceptional...plus the food and incidental support costs for that many menu items has got to be burying them!


...and yes...alcohol is where the profit margins are at. That should be a no brainer if the place came with an alcohol license. Does not need to be a dive bar, but that is one way to drive up the profitability of each ticket. I help run a food festival every year and we can't get anywhere close with the food profitability margins that we have on alcohol sales. Beer and a "signature cocktail" or two is all you need!
 
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I've done a few tours in the service industry.

Yes, like it or not, booze is a top line and ancilliary profit driver. Good margin on the sale and after 2 beers, barriers to desserts are lowered, etc. Must train the staff to limit liability (card hard) and turn tables. Beer and wine will probably give you the best return vs incremental from hard liquor and cocktails in a smokehouse.

Do not discount those Yelp/FB ratings...that's a good sign for repeat business, which is the life blood.

Slim the menu and if there are some fan favorites that get cut, make them specials for the month when their base ingredients are at their peak freshness. Also look at orders vs waste...sometimes going up to more deliveries in a week saves money by having less on hand and in the trash. Depending on your area, there are multiple suppliers. Balancing having a good relationship (they can save your bacon when something goes wrong) and keeping them honest on pricing and discounts.

Yes, marketing matters but it isn't easy in the internet age if that isn't your area of expertise...leaving word of mouth. Encourage repeat business and spreading the word e.g. "give this card to a friend and you both save X." Coupons by mail and newspapers, eh, I doubt they are worth the cost.

Put that money to the staff to make sure every single person that walk through the door feels warmly welcomed in an instant, has a easy going meal, and as they are leaving, that their visit was truly appreciated. Good luck.
 
dmspilot said:
Works mainly in touristy areas and suburbs where people have never had good food. I avoid said areas when I go out to eat since the food sucks and you can tell they're compensating for it with the aspects you mentioned.
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Probably true today.. the place I worked at was pretty high class, Richard Nixon was regular.. Guess the point he was making people coming here are expecting high class service along with their high class food. I guess you can look at at it if you have the best food and the service sucks, well... you see where it is going.

I have to agree, the next time someone ask me how is my food tasting, I am going to tell them it is horrible.. that is not service, that is annoying me.
 
rpadula said:
Based on some of the comments, I dug a little more into the restaurant's history.

Current owner (CO) purchased the already-running restaurant from previous owner (PO) about 4 years ago. It was a BBQ joint w/bar, open for lunch and dinner. CO did a good thing, working under PO for about 3 months during handoff to learn the recipes, etc. Not sure if PO was as good of a business person as pit-master. PO carried a note for the purchase, but that's already been paid off, so cash flow should have improved since then.

One of the first things CO did was remove the bar and filled it with tables to make it more "family friendly." OK, but I had always heard alcohol sales, while cumbersome with regulations and fees, are higher margin sales. I understand maybe ditching the expensive stuff that's tempted to disappear, but at least have a nice cold beer with the ribs?

Some time after that, it became a "country home cooked food and BBQ" place that serves breakfast too! Breakfast + lunch on some (slower?) days; breakfast + lunch + dinner end of week. I looked for their current menu. In addition to the full breakfast menu (the usual eggs, bacon, sausage, pancakes, hashbrowns, biscuits, etc), the lunch/dinner menu now is about 45 items, adding hamburgers, personal pizzas and fried seafood!

Is that way too many menu items to effectively manage costs on? This is not a huge place.

I don't get it. Their reviews are 5/5 on FB, 4.3/5 on Google, and 4.0/5 on Yelp.

My guess is they don't have a good handle on food expenses, at least. I saw several reviews that mentioned the abundant portions, and CO's wife mentioned they had to raise prices about 8 months ago. Hubby was laid up for a bit and she had to take over the finances. She said she realized they weren't making any money (not sure how detailed those calculations were).

I hope they can make it.
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Sounds like an episode of 'restaurant impossible', including the well meaning but bullheaded owner.

What CO needs is a good consultant with hospitality experience to go over his cost structure and to slap some sense into him.
 
rpadula said:
My own additional questions: No one mentioned marketing. Is that a significant issue for helping get customers in? Also, what about updating the menu with new items? I'd imagine people have their favorites, but I notice most restaurants offer new things to keep people from getting bored. Is there some kind of good mix of old reliable vs. new?
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I've never been in the restaurant business beyond a stint in fast food, but as a consumer I think marketing would be a challenge for an independent restaurant. All the chain places are bombarding consumers with ads on all platforms. We like non-chain restaurants, but we only eat out once a week so sometimes we go to a place and enjoy it, but kind of forget about it, until a few months later and we drive by or see an ad and remember we liked that place and should try it again.

I would recommend some kind of digital marketing -- Facebook, etc. with some coupon/discount to get people to return. Once they've been a few times, hopefully they'll become regulars. Another idea is our local school has a fund raiser at local restaurants where X% of the sales on a day goes back to the school (usually a Tuesday or Wednesday -- slow nights). The school publicizes it to the families and I've seen some decent crowds on what are normally slow nights. Plus you might get some people to try it who will come back again.


And BBQ without beer??? I'm out.
 
the only other points I can think to add....
One of those foodtv shows I've watched a couple times really preached fresh ingredients. Depending on what sort of place it is, I think that's generally great advice..... Never a good sign when your food comes out and is clearly some premade thing out of the freezer..... like processed chicken nuggets out of a bag vs real chicken meat breaded and fried in-house. (not that I'd ever order that, but my kids sure have....)
and the other thing, I kind of hinted at before...it needs to be comfortable....little things like instead of a simple table and chairs outside on the patio, a nice arbor overhead, some plants, something to divide the area from the parking lot.... little things that's hard to put a finger on exactly...
 
Brad W said:
One of those foodtv shows I've watched a couple times really preached fresh ingredients. Depending on what sort of place it is, I think that's generally great advice..... Never a good sign when your food comes out and is clearly some premade thing out of the freezer.....
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For sure. One thing to note, is that the food from nearly every chain restaurant in the country is either frozen or pre-made, which is why I generally opt for the smaller, hometown mom n’ pop restaurants that are not a chain. It helps out the local economy and you tend to get fresher, less processed food. I went to Cheddars for dinner a few years ago and my broccoli came out with a nutritional label in it. I called the manager over and she was embarrassed, and frankly, I was embarrassed for them. They call themselves Cheddars Scratch Kitchen - yeah right!
 
RyanB said:
For sure. One thing to note, is that the food from nearly every chain restaurant in the country is either frozen or pre-made, which is why I generally opt for the smaller, hometown mom n’ pop restaurants that are not a chain. It helps out the local economy and you tend to get fresher, less processed food.
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Dont drive by the 'mom&pop' place in the morning when the Sysco truck delivers.
 
weilke said:
Dont drive by the 'mom&pop' place in the morning when the Sysco truck delivers.
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Heh! Oh ya, I’ve seen that as well. Point is, I think you’re more apt to get better quality food from a non-chain, local place. Could be wrong, but that’s generally been my theory.
 
Ventucky Red said:
Probably true today.. the place I worked at was pretty high class, Richard Nixon was regular.. Guess the point he was making people coming here are expecting high class service along with their high class food. I guess you can look at at it if you have the best food and the service sucks, well... you see where it is going.

I have to agree, the next time someone ask me how is my food tasting, I am going to tell them it is horrible.. that is not service, that is annoying me.
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But does the waiter need to know my name? :D
 
ColoPilot said:
BBQ without beer??? I'm out.
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QFT. No bar needed for an ice trough full of longnecks. Don’t even need to offer draft.

Too many food items and sounds like they’re losing money on portion size. If you want to make money, know what it costs to make each dish down to the penny. 3x cost seems to be a rule of thumb to start with Expenses going up means prices have to go up.

Waste. Find out how much is getting thrown out and figure out what that translates to in terms of sunk costs and lost revenue. Ruthlessly eliminate the waste.

Doesn’t sound like this place needs marketing. If there’s a strong and loyal customer base, tweaking is what sounds like is needed, not sledgehammers.

But you’ve gotta know how much it costs to make every. single. item. That’s all-in costs, not half-baked food cost + a G&A guesstimate.
 
Sell baby sell!

my fam had one, I had one, then I was a beer rep for a while in a lot of bar and restaurants- everyone of my bar and restaurant owners hated it...

As someone mentioned they are a trap... almost all owners end up not owning a business but a rather own a poor paying job.

I’m not a negative Nancy by nature, but it’s a rough rough gig... I think I’d work a corner before owning one again!
 
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I learned to run a business and how to manage customers and staff when I ran restaurants.
I made enough to retire early and I gained quality of life when I left the restaurant business and moved into IT. That was also a key reason I was able to learn to fly and buy my own plane. Wouldn’t have been able to do that on a restaurant manager’s pay.
 
JEB said:
I learned to run a business and how to manage customers and staff when I ran restaurants.
I made enough to retire early and I gained quality of life when I left the restaurant business and moved into IT. That was also a key reason I was able to learn to fly and buy my own plane. Wouldn’t have been able to do that on a restaurant manager’s pay.
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actually mine was the gateway to my licence- but not necessarily how one would want to get it...

Once I realized mine was sinking and it was too late, I grabbed enough money out of the thing and went and got my ticket and bought a club share.

figured I was going to get something out of it! Lol

Couldn’t fly the club plane a lot starting out again in a recession for $10/hr... but I crawled back up and now have my own bird, still have that club share and back to owning a business but not a restaurant! ;)
 
Van Johnston said:
... tables not in direct arctic blast from the AC...
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Although there are some people (I'm one of them right now) that want to be in the direct airflow. Keeps the Covid at bay. Cold blast? Maybe not. But in the airflow directly from vents? You bet!
 
For many years our town had a very successful restaurant.
They closed evenings and were closed on weekends.
The owner focused of feeding busy working people from Monday to Friday.

Daily dinner special was a home cooked meal ..... mostly prepared in advance , potatoes , meat , veggies , soup , etc.

Place would fill up at noon , waitress would bring bowls of soup and bread within the first minute .... just as the soup was finished she brought plates of the daily special , then filled the coffee cups (which were already on the table) and brought a small desert .... this all happened within the first 10 minutes .... at the end of 30 minutes most guys had eaten their meal and were leaving.

This opened seats for the next incoming customers .... this was like doubling the size of the restaurant in the sense that it filled up twice in the lunch period.

Operated for over 30 years .... owner made plenty of money and got evenings and weekends off. Just that simple.
 
rpadula said:
... she realized they weren't making any money ...
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People, this is the important thing. A career in management has taught me that the easiest way out of a P&L problem is to hypothesize more revenue. Most comments here are focused on this to one degree or another.

The problem with hypothesizing more revenue is that, if it happens at all it usually happens too late. The solution to a P&L problem must always be to focus on costs. As mentioned, food cost known and managed to the penny. 33% is not a bad food cost number, but 25% is better and can be achieved on some items. Even small things like fewer (expensive) olives on a salad are worth examining. Same-o on labor. Staff must be never called in or must be sent home early on slow days and if the last hour of opening is usually dead, the restaurant should close earlier. Track revenue and labor costs separately for every hour of the day and every day of the week, then manage them aggressively. One might argue that this can be hard on staff, but a bankruptcy will be harder on them.

The alcohol strategy should be optimized within the current policy limits or the policy should be changed. (One of the things that has really hurt restaurants doing a good pandemic takeout business has been that they aren't selling the alcohol that their P&Ls were planning for.) Hard work. No fun. Agreed.

Hypothetical revenue is a wonderful cure for P&Ls. It is easy to create and it postpones the hard decisions. It is the refuge of naïve and incompetent managers. Unfortunately, it is often also the road to ruin. The CO should recognize the dangers of this path and avoid them. Fix the P&L and life will be good. If some of the hypothetical revenue materializes, life will be wonderful.
 
Everyone missed their biggest mistake, asking pilots how to run a restaurant. Reminds me of the joke, What's the difference between god and a pilot, God knows he's not a pilot!

Are they owning it as business/source of income, as a hobby or both? If it's a business, make sure every decision is based upon numbers. For instance, provide better wait staff than the competition if the numbers show that makes a difference if its solely a business. If its a hobby, then go ahead and offer your secret recipe meatloaf that only handful of people order and you have to waste some ingredients.

My last advice, ignore everything on this thread (my comments included) and talk to another successful restaurant owner that you are not in competition with now or anticipate being in competition with in the future. And if you don't know your competition, sell the business.

Some sarcasm above, If they have been doing this for a few years, I bet they are hard workers and I hope the best for them!
 
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NoBShere said:
Everyone missed their biggest mistake, asking pilots how to run a restaurant. ...
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What makes you think that people here have no experience except for being pilots? Maybe that is true in your case but given the cost and demands of flying I'd guess that the majority here have successful careers, including many business owners, that are completely independent of flying. In my case I ran successful non-aviation businesses and for the past 8 years or so have been mentoring small business owners pro bono. The OP's question was similar to the questions many of my clients have had. Many of the posts here show good relevant experience and offer worthwhile advice, though I agree with you that your posts are best ignored.
 
airdale said:
What makes you think that people here have no experience except for being pilots? Maybe that is true in your case but given the cost and demands of flying I'd guess that the majority here have successful careers, including many business owners, that are completely independent of flying. In my case I ran successful non-aviation businesses and for the past 8 years or so have been mentoring small business owners pro bono. The OP's question was similar to the questions many of my clients have had. Many of the posts here show good relevant experience and offer worthwhile advice, though I agree with you that your posts are best ignored.
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I’ll stick with my original post. Just curious, Why do you think market and industry specific information is less valuable than random and general anecdotes?
 
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TCABM said:
Too many food items and sounds like they’re losing money on portion size. ...

Waste.
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this is my read too. 45 menu items seems like a lot, how much extra time does a customer spend deciding what to order? You don’t want to rush them, but more time reading the menu is less table turns.

additionally, the overhead of the food budget and spoilage. And the recipe management. And the tracking. Focus on the most popular and most profitable items. Sysco isn’t always the cheapest way to get food, nor the best. Pre made chicken strips and frozen burger patties aren’t the most profitable thing to sell. Track the money relentlessly.

Despite someone saying “pilots don’t know about X”, keep in mind that a lot of us are also pilots.

last, reviews are nice, but look at recent reviews. Someplace that was around for 10 years as a bbq pit might have piled up a lot of 5 star reviews by people who like bbq, but they’re not so crazy about the new food.
 
Not sure about the cost/benefit ratio of having a liquor license, but I know when it's my turn to choose a restaurant, most people want a place that serves alcohol, especially beer with BBQ. It's something that I wouldn't care about personally, but many do.
 
Back in the 90s, I did some heavy research into the topic. Biggest problems I found was getting "good help". Employees come and go quickly so it's a constant battle to keep the place staffed. Pilferage is a huge factor. To keep everyone honest, you need to be there personally a huge amount of the time. The only way around that is to hire dedicated and ethical managers to keep the place running.
 
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