Ray Camillo – Founder & CEO, Blue Orbit Restaurant Consulting
As restaurant consultants, we are often in a position to offer advice…and to hear some zingers of both good and bad advice that restaurant owners have been given. As entrepreneurs, restaurant owners often seek advice from friends (whether in the industry or not), family members, vendors, and guests. Restaurant owners who need the advice are often so bogged down in operations trying to seek out a profit that they have neither time to seek the best advice nor the funds to pay for it. So, they take it as it comes in the form of well-meaning, ad hoc chit chat. Because intuition is often the main filter that has carried them this far, restaurant owners can over-value their ability to separate good intentions for bad. Below we’ll review our favorite “worst advice” that some of our restaurant owner clients have been told… and it’s often advice that we have to reverse or overcome.
“You need to advertise more.”
This one is a big one. While more advertising could certainly be a good solution to some restaurant problems, it’s not always the answer. Throwing money at advertising without understanding why the business is not commanding better sales won’t help. Here’s why.
One of the toughest things for restaurant owners – and indeed, anyone seeking better results – is looking in the mirror too identify the root cause of a problem. Dale Carnegie made a fortune selling a great book called How to Win Friends and Influence People that discusses, at its core, the propensity for people to deny responsibility for anything that has gone wrong. Ask a child who just stole a cookie if he just stole that cookie and they’ll say, “wasn’t me.” I suppose we’re just wired that way. So, when it comes to identifying a plausible reason that their restaurant isn’t doing well, it’s easy to blame lack of exposure instead of the food, the location, the ambience, the service, the décor, etc. When friends, vendors and guests say, “you should advertise more” the restaurant owner finds it oh-so-easy to fixate on that as a solution because it conveniently absolves them of any responsibility to fix what’s really wrong.
We often tell potential clients who call to inquire about our services that the best management show on TV is The Dog Whisperer because Cesar Milan fixes the dog in the first five minutes of the show and spends the rest of the show fixing the owner. In every episode, the owner seeks Cesar’s advice to deal with the crazy dog… and in every episode, Cesar flips the responsibility to the owner, proving quickly that the dog is fine when exposed to competent leadership.
All of this to say, the goal of advertising is to spur trial – to get a new customer to choose to try your restaurant for the first time instead of trying someone else or returning to their favorite place. Any decent advertising initiative will produce some new customers, but what happens after they come in? If the food stinks, the service is surly, the restaurant is dirty, or the location is sketchy, a restaurant owner can spend all they want on advertising their restaurant to encourage new customers to walk in the door, but what the restaurant really needs is for guests to return. Like the dog owner looking for someone to fix their crazy dog, restaurant owners who seek advertising as the sole solution to low sales may be confused.
Advertising addresses a symptom of poor operating structure, so we encourage clients to first fix a guest’s intent to return. Then, once a guest is sure to experience something worth returning for, it might be worth it to invest in advertising to spark more trial. The good news is that word of mouth gets around that the restaurant is worth trying, and momentum can turn without spending anything on advertising. On The Dog Whisperer, sometimes the dog owner waits too long to call Cesar, and the dog is unsalvageable. The same is true for restaurants, so don’t wait until it’s too late to call the experts (like us).
“You need to add catering.”
Every restaurateur wants to increase sales. Sales hide a lot of sins. After all, one can only squeeze the P&L so hard for efficiency before it can’t be squeezed anymore. And often, the squeezing can result in a downward sales spiral. To increase sales, restaurant owners think that adding more sales channels, like catering, will increase sales. They’re partly right, as a solid catering program can significantly increase sales, but not if the sales channels that the restaurant was built to capture (say Lunch and Dinner dining sales) isn’t working. Throwing complexity at a restaurant as a means to add sales only adds…. well… complexity. Labor, food cost, serving vessels, packaging, inbound customer communication, commission structures, delivery/pickup logistics – all take the focus away from Lunch and Dinner sales. Before recommending that a restaurateur implements a catering component, we almost always insist that the business is thriving…even bursting at the seams when performing its core function – usually Lunch and Dinner dine-in sales. Catering isn’t great for saving a failing restaurant, but it can really boost an already successful concept.
“You need to hire better managers or better waitstaff.”
Whenever I hear this piece of poor advice to restaurant owners, I pull out my Cesar Milan reference above. W-2 employees are generally motivated to do a good job. Achieving better pay isn’t the only reason either. What so many managers and owners fail to realize is that W-2 employees are also highly motivated by achievement, a job well done, benefits, respect, a sense of belonging and a sense of worth. Providing a solid combination of these things will generate great results and build a strong team capable of incredible feats…just because they want to. When a client tells us that their management team stinks or their staff needs training, I am inclined to look at the owner and the company culture as the culprit before looking at the staff. When we do look at the staff, it’s often to get to piece together what’s wrong with the manager or owner before looking at them as the problem. It’s almost always a toxic or dysfunctional business culture that makes a team of managers or staff perform poorly. The right advice is to insist that the restaurateur seek to identify the dysfunction – and its root cause(s) – before attempting to address it through firing/hiring “better” employees.
“You need to add more menu items.”
If sales are low in a restaurant, it’s because customers are not buying enough… which often just means there are not enough customers. The folks who recommend adding menu items might be trying to politely suggest that the menu stinks, but their advice stops there. Adding more menu items often increases inventory as restaurants need to bring in more/different ingredients, which decreases the pace at which a restaurant moves through ingredients – or, inventory velocity. A restaurant should sell out of every inventory item every 2 to 3 days. If you mark a box of lemons with a red crayon on Monday and you see that same box of lemons on the shelf on Thursday, then you’re ordering too much corn starch and carrying too much inventory. Adding menu items as a means to increase sales is folly. Instead, evaluate the menu’s Dogs (low sales, high cost, low margin), Stars (high sales, low cost, high margin), Workhorses (high sales, high cost, low margin) and Challenges (low sales, low cost, high margin) to strategically craft a menu that delivers the right overall profit margin. Adding menu items only adds complexity, bogs down efficiency (aka throughput), slows down the customer dining experience (as they have more items to choose from), increases the amount of service knowledge needed, and potentially dilutes the brand message. Restaurants should keep menus relatively simple, concise and true to their brand story.
“The Construction / Design / Permitting processes ran long during pre-opening, so cut your training time down to hit the target opening date.”
This one dips into new restaurant openings, but the foul is so common and rampant that it makes this list. In our experience, every hired gun in the restaurant creation and launch process believes “we’re the ones” who are most responsible for bringing it to life. Designers think it’s their design that rules the day. General contractors perpetually point to the restaurant as their creation. Chefs say it’s their food. Owners say it’s their gumption. Managers say it’s their muscle and systems. This thinking is dangerous because it feeds an opinion that delays are acceptable since “my scope of work is the most important to the project and everyone else can work around me.”
In the early phases of restaurant concept development, it’s necessary to pinpoint an opening or go-live date. It feeds the first rent payment negotiation with the landlord. It determines the project timeline milestones. It informs the hiring timeline. It drives deliveries and permitting. All very important stuff. However, so many things can go sideways before the restaurant is ready to add employees into the mix. That milestone is usually the coveted Certificate of Occupancy that turns the building over to the opening team as “habitable” and ready for conversion into a living business. Permitting and construction delays usually gobble up the lion’s share of delays, but rarely do restaurant owners (especially inexperienced or first-time restaurant owners) think to push the opening date. They assume they’ll make up the delay down the line in some other phase. Other delay culprits include underestimating equipment lead times, unforeseen holiday delays, designer sanctioned artisan delays, vendor setup, management recruiting difficulties and funding delays.
Each entity down the line is forced to accept the delay caused by the previous entity…except when it comes to training. Training somehow seems to take it on the chin and all of the previous entities are paid and gone when the managers and restaurant consultants inherit the abbreviated schedule. This is a HUGE mistake. Opening a restaurant is not a construction project or a design project or a tax revenue creation project… it’s the development of a brand that usually must break into a competitive market to deliver exceptional food and service in order to survive, much less thrive. The best way to ensure that survival is to execute the full training and launch plan after the C of O is awarded. Anything else ignores the true reason everyone on the project was hired in the first place… which was to launch a successful business.
Owners of new restaurants-in-development need to have the courage to manage the project timeline in a way that either puts responsibility on project segment owners to recover their own time lost – thus protecting the training schedule and opening date – or accept that the opening date must move to preserve the training schedule. The short term financial consequences of moving the opening date can be dramatic, including rent penalties, carrying pre-opening labor beyond plan, and delayed or elongated marketing initiatives. The long term financial consequences of not moving the opening date and introducing a poorly executed brand to the public can be the kiss of death for a restaurant… and it happens before the doors even open.
So, what is a restaurant owner to do?
Free advice is easy to get, and there are plenty of people willing to share their opinions about things they know very little about. Generally free advice is innocent and well-meaning and often shared at the receiver’s request, so let’s not blame the provider of the bad advice. Instead, recognize that free advice can be dangerous.
Opening and running a successful restaurant is not rocket science, but it is a business that is part science, part emotion, and part luck. A consumer’s decision to dine in a particular restaurant is complex and not merely a matter of convenience or utility – often it’s a lifestyle choice where feeding oneself is subordinate to seeing and being seen. Blow it on any front, and sales seem to magically disappear without clear evidence pointing to why. With restaurant customers being notoriously unforgiving, missteps can send a restaurant’s trajectory in the wrong direction, sometimes never to recover.
The cost of bad free advice is difficult to measure, but I’m pretty sure it is significantly more expensive than the cost of good paid advice from expert restaurant consultants.