Category Archives: Consulting

December 8, 2017 · 2:17 pm

The Food Business Isn’t Just Food

It’s Foodie Friday and the topic today is business. I know: that’s pretty much the topic every day, but let me explain. I read an article on one of the restaurant sites I frequent that spurred a thought that goes beyond the restaurant business.

Photo by Helloquence

The piece was all about the financial statistics a good restaurateur needs to watch. I’m always surprised when a place with good food in a great location goes out of business but it seems to happen a lot. Sometimes it’s that the chef leaves and things slide downhill but more often than not it’s because the business part of the food business overtakes the food part of the food business.

One needs only to watch an episode or two of the show Restaurant Startup to see how a food business is not especially different from any other startup. I assume what I’m seeing on the show reflects the new restaurant world at large and today’s article confirms that belief. Many of the contestants have no clue about the first, and maybe the most important statistics any startup needs to grasp: Cost Of Goods Sold. In a restaurant, that’s food. In a service business, we usually call it cost of sales. In either case, it’s the cost of producing whatever it is you’re selling. You’d be surprised how many businesses don’t know this number.

That number is part of a bigger one called overhead, which includes rent, salaries, services such as accounting and legal, and things like keeping the bathroom clean (your restaurant has one; hopefully, so does your office). These numbers are critical because if you charge too little for what you provide you won’t be in business very long, and you can’t figure that out unless you know your monthly nut.

Once you have the Gross Profit (or Gross Income) number, you can subtract your expenses to get Net Income or Net Profit. Divide that by your sales and suddenly you have a profit margin. That’s something you can use to benchmark your results against other businesses of the same type. In the restaurant business, it’s generally not very big, which is all the more reason why a complete grasp of the numbers is critical. There isn’t a lot of room for error.

I spend a lot of time with my clients on their numbers. It’s not just so that they can present themselves well to potential investors either. Like your web traffic or any other piece of data, they can illuminate a lot and help you make critical decisions. Ignore them at your own peril.

By the way, I’m writing this as a sort of thank you to my late brother who was my CPA and who beat accounting into me many years ago. He passed 5 years ago next week and I miss his guidance and the clicking of his calculator every day.

Leave a comment

Filed under Consulting, food, Helpful Hints

Tagged as , , , ,

December 1, 2017 · 10:52 am

No Waffling Here

It’s Foodie Friday and this week I’d like to have us reflect on that great Southern institution The Waffle House. It seems that one trips over a Waffle House every few miles here in the South and there’s a reason for that. It is a beloved place and not just among the stereotypical audience one might suppose. Watch this clip from his Parts Unknown show in which Anthony Bourdain discovers the wonders of the place and you’ll see how even chefs respect it. As the clip hints, there are few better places for one to land having been a little overserved and possessing an appetite.

Photo courtesy Nick Gray

What can any of us learn from this? A few things, I think. First, consistency. You can say you don’t like the food but you can be sure that whenever or at whichever Waffle House you order it from you’ll get the identical dish. It is consistent beyond belief, including how each dish is plated. That’s hard for a single restaurant to do all the time. To have over 2,000 places doing it is pretty unbelievable.

It is efficient. There is a code for servers and cooks involving placement of jelly packs, butter, and other condiments on the plate that allows cooks to work on many orders simultaneously without messing anything up (check out the photo).

It is clean. One might think that a place open 24 hours a day would begin to get a little worse for wear. Not a Waffle House. They are constantly sweeping and cleaning. I think we’ve all experienced something “off” at less-upscale restaurants. Dirty silverware, food residue on a plate or a grimy floor. Not here. I get that your business might not be serving food, but a sense of order reflected by attention to detail is a trait your customers want, something the constant cleaning provides in this case.

It is transparent. Because the kitchen is open, you can see the wonder of each order being made. It instills a feeling of confidence since the kitchen has nothing to hide. The eggs are fresh (I’m told the chain uses 2% of all the food service eggs in the country), not powdered and the other ingredients are clearly fresh as well.

It is personal. Because every plate is cooked to order, it is made exactly the way the customer wants it.

It isn’t vanilla. What I mean by that is that it has its own style and even its own language. Where else can you go and order something smothered, chunked, covered, diced, and several other ways as one can with Waffle House hash browns?

Finally, it is reliable. It’s always open, so much so that there is an unofficial “FEMA test.” If the local Waffle House is closed, a location is undergoing some sort of disaster which may require FEMA intervention.

Each one of the aforementioned qualities is one our own businesses should possess.  Ideally, they have them all. Does yours?

Leave a comment

Filed under Consulting, food, Thinking Aloud

Tagged as , , , , , ,

November 27, 2017 · 11:14 am

Lost In The Flood

Today is Cyber Monday, which is, of course, another “Hallmark Holiday” – something made up by marketers to sell stuff. It’s the first Monday after Thanksgiving which, as we all know, exists only to let us know that Black Friday is the next day. That might even be a bit untrue since Black Friday now seems to start after lunch on Thursday.

In any event, there are lots of deals to be had (available while supplies last). I did a little counting and my inbox received 324 Black Friday emails announcing sales, deals, specials, and other marketing miracles. I’ve received 88 Cyber Monday emails promoting today’s deals but the day has barely begun so that number is low. My business account received far fewer which I guess means that neither day is as huge for B2B selling.

I don’t know about you, but I deleted the vast majority of these emails without even opening them. It wasn’t that they had crappy subject lines. They all just got lost in the flood created by the breaking of the holiday dam. Interestingly, Amazon, from whom I get a daily mail about something I might have been checking out in the last week, only sent a single missive for each sale day while several other retailers sent multiple emails every day.

What’s a marketer to do? The next month is a prime selling window for nearly every brand so sitting it out isn’t really an option. There needs to be a recognition, however, that the noise level is at jet-engine levels and something needs to help your marketing efforts get noticed. If you’re thinking that moving to social channels is the answer, it’s probably not. Sure, it might be easier to get in front of the customer but, as a McKinsey study stated:

E-mail remains a significantly more effective way to acquire customers than social media—nearly 40 times that of Facebook and Twitter combined. That’s because 91 percent of all US consumers still use e-mail daily,1and the rate at which e-mails prompt purchases is not only estimated to be at least three times that of social media, but the average order value is also 17 percent higher.2

I’d suggest avoiding the flood as best you can. Start your holiday season in early November (or maybe even late October if you can avoid the Halloween noise) by teasing offers to come. Get your customers in the mood to buy. Who wouldn’t want to have their holiday shopping done early? Obviously, if you’re not checking your outbound mail across every platform to be sure it renders properly you’re committing marketing suicide. Responsive design is a must!

Finally, go local and get personal. Whatever you can do to tailor your messages to each location and/or each customer will greatly increase your conversion rates. I’m always surprised when I get what is obviously a generic email when even minimal segmentation would get me to read it. There are dozens of retargeting technologies out there. Speak as if you were at a cocktail party – one to one – and not with a bullhorn.

To paraphrase The Boss, have you thrown your marketing to the war, or did you lose it in the flood?

Leave a comment

Filed under Consulting, digital media, What's Going On

Tagged as , , , , , , ,