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Jeff Ackerman: Tips for restaurants to stay alive

For the record, I’ve never owned a restaurant. But I have waited tables, washed dishes and eaten in hundreds of them over the past half century (I was … not to brag … assistant night manager at the Jack in the Box on Lombard Street in San Francisco), and that ought to at least qualify me as a free consultant.

It seems to me … and I’m just a diner, mind you … that restaurants are in a pickle these days. For starters, the odds are stacked against them from the start, with a failure rate of around 90 percent, according to people who study failure for a living. Most of us like to eat, so opening a restaurant always seems like a good idea. Others have always wanted to share their mother’s favorite recipe with the world. My wife makes a killer enchilada, but you need a jackhammer to clean the plate when it’s done (it’s the cheese). I can’t imagine cleaning 100 of them per day and my kids don’t do dishes.

When times get tough, the first things to go are the diners and lunches out, which means competition is fierce for the customers still out there wining and dining (they are the ones who sold their homes four years ago and put their profits into Google and Exxon).



Restaurants are also facing skyrocketing food costs, especially dairy-based products such as butter (31 percent), cheese (65 percent) and milk (117 percent). Then there are the utilities, rent, workers’ comp costs and the rest. Perhaps that explains the recent closure of the Stonehouse Restaurant in Nevada City and rumors of others that may soon follow suit.

So … as more and more restaurants struggle to keep the doors open in this “Economic Downturn,” I offer a few suggestions from the peanut gallery.




Tip 1: Cut your portions in half and lower your prices.

We’ve been trained from birth to eat everything on our plate, and restaurant portions have contributed to this national obesity … I mean fat … problem we have.

Last week I went to lunch at a very popular Mexican restaurant and ordered a chicken burrito for $9 or so, with beans and rice. For the record, that’s the equivalent of one gazillion pesos, but who’s counting. Anyway, when the hot plate arrived … and I have NEVER had Mexican food where the waiter didn’t warn me about the temperature of the plate … the burrito was roughly the size of a rolled up Sunday New York Times and it was covered with cheese. The rest of the hot plate was smothered with beans and rice.

For the record, I probably would have still paid $9 or so for a burrito half the size, but if you can reduce your supply costs by a third and lower your prices 10 to 15 percent, there’s probably still room to improve your margin. Customers just love reduced prices.

By the way … I took the other half of the burrito back to the office, stuck it in the refrigerator and forgot about it for a month. My dog eventually polished it off, since he has never worried about the “Eat Before Such-And-Such-Date” warning. The things that dogs eat will disgust any living creature.

Tip 2: There’s a new business term out there called “Freemium.” Offer your customers something free and make money on the extras. For example … what does it really cost a restaurant to offer two-for-one dinners on a midweek night when there are lots of empty tables? The doors are already open, which means you’re paying for the utilities, wages, etc. What does it really cost to throw that extra dinner on the grill? Seems you could make it up on the booze and desserts, not to mention the repeat business.

Tip 3: Hire people who smile. This seems like a no-brainer, but I can’t tell you how many frowning waiters and waitresses I’ve run across. I read a survey once that found food quality was not the number one reason people select one restaurant over another. Most impor- tant was the atmosphere, followed closely by consistency (good or bad). Food quality was third. I know … see if you smile after someone stiffs you for the tip.

Tip 4: Quench the thirst. I don’t mind waiting to order, but give me something to drink … water … anything.

Tip 5: Find the one thing that separates you from your competitors and promote the heck out of it. It’s called a Unique Selling Point, or Value Proposition. Quit worrying about what your competitors are or aren’t doing (such as whether they are a franchise, or just a place to buy a sandwich) and find your own niche. The McDonald’s brothers wondered what would happen if they cut their menu by half and focused on speed and cleanliness. It worked out pretty well for them.

Tip 6: Know your customers. By my third visit to the local Starbucks, the waitperson knew my name and my drink. It’s not as if I have distinguishing features, either. I’m short, white and bald and there are 30,000 others just like me in Nevada County. If Starbucks can do it, so can you.

Tip 7: Most of us only have an hour for lunch (including drive time), so if you can’t get me in and out of there in 40 minutes, I’ll probably eat elsewhere.

Tip 8: Know your market. Nevada County is one of the oldest (by median age) in the state, so it probably wouldn’t be a good idea to open a Hooters. Or … if you do … make sure you start serving dinner at 4 p.m. because we need to be in bed by 8.

Happy dining.

Jeff Ackerman is the publisher of The Union. His column appears on Tuesdays. Contact him at 477-4299, jeffa@theunion.com, or 464 Sutton Way, Grass Valley 95945.


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