Restaurant Consulting NYC | Are You Being Penny Wise and Pound Foolish? How to Consider Managing Your Restaurant’s Big Purchases | 4Q Consulting, LLC

Are You Being Penny Wise and Pound Foolish?

How to Consider Managing Your Restaurant’s Big Purchases

If you are putting off upgrading your aging restaurant equipment or are not investing in equipment that makes you the most productive, you could be harming your business while trying to save money.  As discussed in our last blog, Where Oh Where Have My Margins Gone, the current financial challenges in the restaurant business are on the rise with increasing labor regulations, higher wages and market pressures. Many restaurateurs are thinking that with rising costs there is no way they could possibly spend for new, expensive equipment, technology or software.

Before “cutting off your nose to spite your face”, analyze how you can monetize a capital investment by growing your sales, cutting your costs and delivering a consistent, quality product.

The purchase price might be a big number, but if you use the 4Q Approach, it shouldn’t be that scary:

Quantify Your Purchase.  To quantify this big spend, you need to fully understand your business and the economies of the purchase.  If you are buying a rotisserie for your restaurant, do you buy the small manual unit or the larger capacity, automated unit?  To answer this, you need to calculate how many more chickens you need to sell to recoup the cost of the larger unit.  If you can increase output – to sell more, and create a more consistent (better) product with little added labor - the increase in cost from one unit to another is easy to overcome.  Additionally, you can profit by the flexibility a larger unit affords, offering a wider range of rotisserie menu items.

Qualify Your Purchase.  Very often restaurants put off installing new or upgraded equipment due to sticker shock.  Upgraded equipment can often lower your ever-increasing variable costs, optimize work flow, or offer up solutions to operational challenges. This can lead to improved product quality and, in turn, repeat business. More efficient equipment can possibly replace part or all of your labor cost by lowering the number of man hours needed to monitor product produced on old, inefficient equipment.  Think about an older rotisserie that most be continuously monitored to prevent burnt or unevenly cooked chickens – in this example both your labor and food costs can be impacted.  Additionally, modern equipment can lower energy costs and replace the cost of constantly repairing older units.  

Quantitative Analysis of Your Purchase.  Most large equipment or software expenditures can be financed in some way, so you don't have to lay out a large chunk of money all at once.  When investing in your business, don’t go part way: buy the equipment you need to improve efficiency, and grow your business.  When you decide to buy a new car, to replace the Junker that is constantly in for repairs, you buy the entire car - you wouldn’t buy the tires one month, the engine the following month and the chassis the third month.  Instead, you would finance your large expenditure to make the price palatable.  You must analyze the impact buying new equipment has on your restaurant operations.  What you can potentially save in your cash flow, by being more efficient, can be used to finance your new purchase. Sometimes, new equipment “pays for itself”.

Query about Your Purchase – Before making a large capital expenditure is it always a good idea to speak to your accountant or financial adviser.  Make sure you understand the depreciation and tax benefit implications of a capital investment in advance.    Additionally, there are often state rebates and incentives for installing new, more energy efficient kitchen equipment that can help offset the purchase price.

Making smart, planned decisions on your large capital expenditures can often help you grow, and streamline your business for the long term.  

Don’t know where to begin?  Do you know how to and procedures in place to be as successful as possible?  www.4qconsult.com can develop customized operational guidelines to meet your needs. 

All original content copyright Noelle E. Ifshin, 2016-2017. 

Noelle E. Ifshin
President
4Q Consulting, LLC 
noelle@4qconsult.com  
www.4qconsult.com 
244 5th Avenue, Suite 1430, NY, NY 10001  
(212) 340-1137

Restaurant Consulting NYC | Where Oh Where Has My Margin Gone? The Changing Labor Environment and How It Affects Restaurants | 4Q Consulting, LLC

Where Oh Where Has My Margin Gone?

The Changing Labor Environment and How It Affects Restaurants 

People outside the restaurant industry are often surprised by how small restaurant profit margins actually are.  To say margins are razor-thin would be an understatement, as the average profit margin of a restaurant is 3-5% of total revenue.  Labor expenses are a restaurant’s largest expense and the external forces on labor are keeping many restaurateurs up at night.  

Labor-related issues will be the biggest challenges facing the restaurant industry in 2016 and beyond. Restaurants will need to rethink their business models to handle the changes that are coming.  Here are four items that we are advising our clients to watch carefully:

Tightening of the Job Market - Finding top talent is becoming increasingly difficult for restaurant operators.  With the improved economy, the growth of the restaurant industry and the continued low labor participation rate, finding quality staff is challenging.  According to federal data, the restaurant industry alone added 40,000 jobs, or 16% of all workers to the US economy in February 2016.  With increased competition for talent, the cost of recruiting and hiring new employees has become more and more expensive. Moving forward, employee retention will be a cost saving imperative and restaurants must work to slow the revolving door of employee turnover. Conversely, working short staffed has its own costs associated with overtime pay, poor product quality and customer service.

Higher Minimum Wages – Minimum wage increases disproportionately affect restaurants as the food service industry employs close to half of all the people in minimum wage jobs.  It is therefore no wonder that operators are worried about where the minimum wage issue is going.  Many states and municipalities – such as California, Seattle and most recently New York City and New York State – have passed accelerated, higher minimum wage laws that are forcing operators to rethink their labor and compensation models. 

New Regulations Governing Hourly Employees – Paid sick leave, spread-of-hours rules and healthcare insurance are additional changes to the landscape that operators must prepare for now and in the near future.  Ensure that you are fully versed in all the laws and regulations that affect your restaurant, so you can plan for any economic impact of these in advance.  If you need help in understanding these very important rules, get it. Not planning can put your restaurant at risk for a lawsuit.

Changes to the Federal Overtime Laws – The U.S. Department of Labor is working towards changes in defining who is an “exempt” vs. “non-exempt” employee. This will have a major impact throughout the restaurant industry.  Traditionally, salaried employees - such as restaurant and bar managers, chefs and sous chefs - perform manual tasks throughout their day while managing their staff.  New regulations may re-categorize these positions as “non-exempt” based on the job functions and entitle them to overtime pay if their salaries are below a certain amount.  Should this happen, operators will be required to rewrite their manager job functions and descriptions due to the potential economic impact of these changes.

With these big labor challenges, it will be crucial for operators to become more and more efficient to preserve their bottom lines – especially for smaller mom & pop operators.  As discussed in Between the Lines - Operational Challenges That Can Make or Break Your Restaurant:

         “Restaurant success depends on many things, but it can all boil down to 
          one question:  Where does the money go? Having a handle on your 
          operations is a key to answering this question. Have processes and 
          procedures to reduce economic drains, train your staff to follow them and 
          hold them accountable.” 

Not adapting and hiding your head in the sand will lead to poor management and poor fiscal controls – which can make those margins evaporate faster than a sauté pan of boiling water. 

Don’t know where to begin?  Do you know how to put policies and procedures in place to be as successful as possible?  www.4qconsult.com can develop customized operational guidelines to meet your needs. 

All original content copyright Noelle E. Ifshin, 2016-2017. 
Noelle E. Ifshin, President, 4Q Consulting, LLC 
noelle@4qconsult.com  www.4qconsult.com 
244 5th Avenue, Suite 1430, NY, NY 10001  
(212) 340-1137

Restaurant Consulting NYC | Can You Hear Me Now? Ensuring your Brand Message is Heard | 4Q Consulting, LLC

Can You Hear Me Now?

Ensuring your Brand Message is Heard

Often when we review a new client’s existing marketing and branding, we find an unclear and confused message.  In order for any marketing to be successful, it must find continuity and fluidity across all platforms; the message must be Clear, Concise, Consistent and Communicable.  If customers can easily understand who you are, it clears one obstacle in improving your top line sales. Remember, a customer’s experience with your restaurant starts long before they walk in the door. 

Here are four basics to consider in ensuring customers hear your brand message: 

Know who you are.  The reality of your restaurant has to meet the expectations you are putting out in your marketing.  As we discussed in Restaurants Know Thyself, you can't be all things to all people.  Know who you are, embrace it, and include it in all of your marketing. If you run a Mediterranean restaurant in name, design and decor, you should not have an Irish Pub menu.  Remember, marketing your brand is not just about paid advertising, it also includes items such as menus, signage, uniforms, and scripted server approaches at the table.

Be Consistent. 4Q preaches consistency a lot, in all aspects of restaurant operations. You’d be surprised how many times we see inconsistencies in basic information – such as hours of operation and menus – in different places where a restaurant promotes itself.  Are the hours of operation on your door the same as on the printed take out menu?  Are they the same on your website, Facebook Page, Google listing, online ordering portals, etc.? Additionally, does all of your media reflect a consistent message and communicate who you are (see above)?  If customers don’t get consistent information and messaging about your restaurant, they will become confused, get frustrated and turn elsewhere to restaurants that care to get it right. 

Get your message online and keep it in line. Restaurants don’t always embrace their digital strategy in this day and age of 24/7 connectedness.  Before the Internet, restaurant marketing was static: it consisted mainly of newspaper, magazine, radio, TV and the yellow pages ads.   Today, marketing a brand message has become dynamic.  There is so much noise out there in the digital/social media world with paid ads, social media pages, customer reviews, etc. that  vie for customers’ attention. You have to actively manage your image with a consistent message by:  producing and posting relevant content that draws new customers and keeps existing customers engaged; responding properly to complaints in a public setting; answering questions; and utilizing “Calls-to-Action”.   Keeping a clear, focused message in all your online interactions, can help you stand out in all this digital noise.

Teach the message.  Employees are your walking, living, breathing billboards inside and outside of your restaurant; but are they putting out “The Message”?   You must inject a clear, concise, and consistent message into your employees, and hold them accountable to communicating it.  If your message is that you are a farm-to-table restaurant, your employees must be able to explain that to any and all customers and potential customers. Additionally, as we discussed in Employees are Your First Customers, “In social situations, often the first question asked is ‘What do you do?’ or ‘Where do you work?’”  Each time your employee answers that question, is an opportunity to communicate your message.

Small or large, independent or chain, no restaurant can ignore how their marketing message is heard. Certain advertising campaigns still resonate in our culture, and are long remembered because they are clear, concise, consistent and communicable – you can still sing that 30 year old jingle.  All of the pieces noted in this blog must work together in concert:  like a choir everyone must be singing the same song, in the same key, or the audience will leave!

Don’t know where to begin?  Do you know how to put policies and procedures in place to be as successful as possible?  www.4qconsult.com can develop customized operational guidelines to meet your needs. 

All original content copyright Noelle E. Ifshin, 2015-2016. 

Noelle E. Ifshin, 
President, 4Q Consulting, LLC 
noelle@4qconsult.com  
www.4qconsult.com 
244 5th Avenue, Suite 1430, NY, NY 10001  
(212) 340-1137

Restaurant Consulting NYC | You and Me and Restaurant Makes Three | 4Q Consulting, LLC

You and Me and Restaurant Makes Three

Husband and Wife Restaurant Owners

As discussed in The Family Owned Restaurant, family business are the bedrock of the U.S. economy. Family businesses often start with a husband and wife team trying to make a better life for their families.  In many cases, the marriages and the businesses become so intertwined that it becomes hard to tell where one ends and the other begins.  Starting and running a successful restaurant can be more demanding than having a baby, and often couples do not survive the birth of a restaurant.  

In order to ensure both the restaurant and your marriage survive, here are four important items to keep in mind when opening or running a restaurant with your spouse:

Treat the business like a business, not an extension of the home.  Draw a distinction and leave work in the business. If both husband and wife are to be partners in the restaurant, having a written partnership agreement is recommended – especially if you plan on having additional business partners. By the time you realize you need an agreement, due to a dispute, it is often too late.  You should have a written agreement that includes: the division of ownership; an outline of the amount of, and stipulations for, taking salaries; and how to handle any profits or losses.

Don't assume that the role in the personal relationship translates to the roles in a work relationship. Just as you want to define the partnership agreement, it is advised that couples decide in advance the work roles within the business – which spouse is going to do what.  For example, the person who balances your personal checkbook at home might not be the best one to reconcile purchase orders and inventory.  And, when defining job roles, if there’s something neither is good at, delegate it to someone else!

Couples we work with find that the key to their success as both a married couple and business partners is to continually communicate their roles and how they can help each other in those roles.  In that regard:  

Standard operating procedures (SOP’S) should be agreed upon, set and followed. Understanding the task expectations of each role and adhering to the agreed upon SOP’S that meet them, removes the possibility of misunderstandings with couple business owners.  Even the small tasks matter: agreeing upon how receipts are filed and the books are balanced; when cash is taken to the bank and who does it; who orders food and beverages and what levels of inventory you plan to keep; and who handles staff scheduling and how are changes to the schedule made are all examples of key items to agree upon in advance.

Support each other and be unified.  Present a united front to your employees at all times.  As basic as it sounds, do not bicker, fight or have large disagreements in front of your staff.  Like another other business partner relationships, you will have disagreements on how to run the business. Remain professional at all times and take those arguments off-site or behind closed doors.

Even though you are spending a lot of time together in the restaurant, you still need to make time for each other.  Find a way to have a night together away from the restaurant – even if you end up discussing restaurant business, being in a different environment changes the conversation.  And most importantly, try not to go to bed angry.  Fighting couples don’t work well together and can have a huge impact on how the business functions.

Remember why you decided to open a restaurant in the first place.  You want to plan ahead to be as successful as possible, while ensuring that demands of the restaurant don’t pull apart your marriage!

Don’t know where to begin?  Do you know how to put policies and procedures in place to be as successful as possible?  www.4qconsult.com can develop customized operational guidelines to meet your needs. 


All original content copyright Noelle E. Ifshin, 2015-2016. 

Noelle E. Ifshin
President
4Q Consulting, LLC 
244 5th Avenue, Suite 1430, NY, NY 10001  
(212) 340-1137

Restaurant Consulting NYC | Restaurant Industry Changes to Face in 2016 | 4Q Consulting, LLC

Restaurant Industry Changes to Face in 2016

As we ring in 2016, there are some big changes facing the restaurant industry.
Restaurants must prepare to face these changes in the year ahead to mitigate disruption to business operations, reduce costs and maximize customer satisfaction. 

There is good news on the horizon, as industry analysts point to a strong outlook for restaurants relative to the US economy for 2016.  The bad news is the restaurant business isn’t getting any easier.  Restaurants, which already operate on razor-thin margins, now face rising wages and commodity costs, increasing government regulations, and additional security and safety concerns.  

Operators should focus on the following four items to move their business forward in 2016:

The Pressure of Rising Wages, High Employee Turnover and the Reduction in the Labor Force will require operators to think strategically about their HR in relation to their overall operation.   The economic shift from the customer to the employer to cover a living wage – increasing minimum wages and a move away from a tipping model – compels operators to reduce employee turnover and hold on to their best employees.  We have discussed the cost of turnover before, but now more than ever restaurants cannot be a revolving door of hourly staff.  The cost to onboard a new employee is too high and constant turnover can make it hard to maintain your desired level of product and service quality.  Additionally, as the economy continues to recover, there are, and will continue to be, fewer qualified, skilled candidates to fill critical positions.

Technology can and should be leveraged in all aspects of your restaurant from enhancing the customer experience, to managing products and staff, and even monitoring food and beverage storage and usage.  The right investment in technology can help you be more flexible and nimble, which in turn allows you to manage what impacts your bottom line in a timely fashion.  The right technology can enable you to change menus sooner to combat rising costs, launch and track promotions, and ensure that your reservation interface is in-line with what your customers want.  Operationally, new technologies can improve scheduling to reduce labor costs, and increase table turnover to increase sales. Administratively, new technologies can help small businesses with their bookkeeping, payroll and sales tax processing.  Lastly, you must stay compliant in all Federal, State and local technology regulations that keep your customers’ personal and payment information safe from data breeches – which can be a costly mistake.

Caring For and Knowing Your Customer is crucial for your restaurant’s survival. According to a recent report by Morgan Stanley, Millennial’s’ dining habits are drastically different their parents’. Millennial’s eat out more often, view “Healthy” foods differently (they don’t count calories as previous generations), demand food from ethical sources, do not want traditional “Fast Food” and prefer Fast Casual Concepts. Millennial spending habits are expected to peak in the next 3-5 years to become one of the largest growing restaurant demographics in the United States.  You must know who your customer is to be able to provide them what they want, to reach them in your marketing and keep them engaged.

In light of what we discussed above - the challenges in the changing labor market, maintaining razor thin margins, trying to keep up with technology – Consistency must become your central goal.  As we discussed in Consistency Is King, “Customers should not have to spin the roulette wheel each time they visit your restaurant; they should experience the same quality of food and service every time.” When things go wrong, the first instinct is to completely change your operation.  However, as discussed in Restaurants Know Thyself, staying the course and perfecting your operations will dampen down the volatility of the challenges faced.

Modification and flexibility are critical for restaurants to survive in this day and age. However, adapting to the times does not necessarily mean an overhaul of your entire concept.  An overreaction to big changes can often be an over correction! 

Don’t know where to begin?  Do you know how to adapt to industry changes in a timely manner so you can be as profitable as possible?  www.4qconsult.com can develop customized operational guidelines to meet your needs. 

All original content copyright Noelle E. Ifshin, 2015-2016.

Noelle E. Ifshin, President, 4Q Consulting, LLC 

Restaurant Consulting NYC | Seven Deadly Restaurant Sins | 4Q Consulting, LLC

Seven Deadly Restaurant Sins

Owning and running a successful, profitable restaurant is never easy.  When you break down restaurant business concepts into their lowest common denominator, you are left with the “3 P’s” - Product, People, and Process.  What is served, who serves it and how it is served should tell the customer the story of who you are and what your brand is.

The Seven Deadly Restaurant Sins are behaviors that get in the way or prevent you from properly executing the “3 P’s”.  The sins, if ingrained in your restaurant, can become barriers to change, growth and success.  

Think of the sins as “land mines” which must be avoided in order to be successful:

Greed – Greed can often get you into trouble as a business operator.  In a free market economy an operator wants to be as profitable as possible.  However, operators must also financially take care of their employees by offering them a fair wage, and their customers by providing excellent customer service and a product at a price the market will bear.  We have all read about famous restauranteurs who are sued for various reasons:  violating wage and hour laws; not distributing tips properly; underpaying illegal immigrant staff; price gouging tourists; adding gratuities to checks subjectively.  The cost of this greed, in the form of PR headaches, legal fees and loss of business is almost always greater than the few extra dollars you can collect. 

Gluttony – Gluttony is nearly synonymous with greed and is defined as “one given habitually to greedy and voracious [behaviors]; withholding from the needy”.  In business, gluttony can be very destructive; it is not knowing when enough is enough and profiting to the detriment of others.  Your business is a citizen of the community in which is exists; it is important to have a program that gives back to the community or to your employees. In larger companies, these types of programs can help attract top employee talent.  For small businesses, an out-reach program does not have to be expensive - simple, easy and workable are often best.  Try donating leftover food to community kitchens, or left over raw scraps to a company that makes mulch for a community garden; volunteer time for a local cause; sponsor the local little league team.  Involve your employees and get ideas from them about what is important them.  You will be seen as a good corporate citizen, which will pay you back in positive PR.

Pride – Pride is a double edged sword in the restaurant business.  Pride in your product and staff can be very useful to help you stand out in a crowded field, however pride can also act as a hindrance to improving your business.   Pride can prevent you from being able to: recognize when you are on the wrong track; change course in time to prevent a financial downfall; react to factors in the economy – such as rising food and commodity prices.  If you always look with a critical eye, you will always find ways to improve.

Sloth – Sloth is defined in Merriam-Webster’s dictionary as “reluctance to work or make an effort; laziness”.  Laziness in any business is the kiss of death, but especially in the restaurant industry.  Once laziness sets in, standards start to slip, corners get cut and consistency of product and service becomes non-existent.  The antidote to sloth is vigilance of even the smallest details.  It’s the little things you decide to ignore that add up, causing your standards to decline.  As we discussed in Consistency is King, “Customers should not have to spin the roulette wheel each time they visit your restaurant; they should experience the same quality of food and service every time.”

Wrath – Wrath is great anger that expresses itself in a desire to punish someone. Operators who yell, belittle and antagonize employees or customers won’t be open very long.  In today’s world where anything can be posted on line and go ‘viral’ overnight, an operator must be the utmost professional and lead by example at all times.  Once you have a reputation as being wrathful towards your employees, it will be very hard to recruit and keep top talent.  Customers will avoid restaurants where the owner or manager has a reputation for yelling at guests.  Your restaurant wouldn’t exist if not for the employees and customers, who should be treated as the valuable components of your business that they are.  If something is wrong with your business, look at yourself first.  The old proverb rings true here – “A fish rots from the head”.

Envy – Envy is a feeling of discontent or covetousness with regard to another's advantages, successes, and or possessions. The sin of envy in a restaurant is to covet other restaurants, to worry about what others are doing and not to focus on running your own business.  It makes you take your eye off the ball in your own operation, which in turn, can cause your downfall.  Owners must focus on making their restaurants the best they can be, whatever they are – if you own a hot dog stand, make it the best hot dog stand you can without being distracted by what the owner of a five star restaurant across the street is doing (or wearing, or driving).  With focus, you will be much more successful.

Lust – Lust in business is often seen in conjunction with envy.  To lust is to crave or desire something, often what others have.  It can be a lust for power, money, or material objects and, like envy, can lead to unscrupulous behaviors.  Lust can lead to not reporting all your cash income, taking kickbacks from vendors, ordering personal items through the business, and not being honest with your partners and investors about the business’s finances. Besides some of these actions being illegal, these behaviors drain resources and break the trust of those who count on you, putting obstacles in the way of building the business to the level of success it could achieve.

What all these sins have in common is that falling prey to them is shortsighted and they get in the way of flawlessly executing the “3 P’s” - People, Product and Process.  The restaurant business is not brain surgery!  At a basic level, restaurants should be able to provide an excellent product at a fair price through superior customer service.  Avoiding the Seven Deadly Restaurant Sins puts you on the path to building a sustainable, profitable, long-term business.

Don’t know where to begin?  Ask yourself, do you have the proper procedures and operational guidelines in place to help you be as successful as possible?  4Q Consulting can develop customized operational guidelines and training programs to meet your needs. Email us today for a free business consultation at www.4qconsult.com.


All original content copyright Noelle E. Ifshin, 2015.
Noelle E. Ifshin, President
4Q Consulting, LLC
244 5th Avenue, Suite 1430, NY, NY 10001  
www.4qconsult.com

Restaurant Consulting NYC | Why Cross Training and Creating Redundancy in your Restaurant Staff is Crucial to Success | 4Q Consulting, LLC

Why Cross Training and Creating Redundancy in your Restaurant Staff 

is Crucial to Success

As we discussed in A Well Trained Staff is Your Secret Weapon: “People run your business and your business is only as good as your people.  An effective training program is an owner’s key tool to ensure consistency in product and customer service, which is a basic tenet of running a restaurant.”  

The restaurant business is a team sport which has specialists in certain positions – i.e. bartenders, servers, line cooks, etc.  Each person on the team should know their role, be trained for their specific job and know how it fits into the team as a whole.  However, what happens when the only manager who knows how to close calls out sick or you are under staffed and no one is cross trained? It becomes increasingly difficult to run a successful restaurant when you have no redundancy.

Here are four reasons why redundancy and cross-training in your restaurant staff is crucial to your business:

Better Productivity – Cost and insufficient time are often cited as reasons why restaurants do not take the time to set up cross-training programs.  Though it may increase your overall training costs, to train multiple people to do multiple jobs, you reap the benefit when pressed into action.  Employees and managers who are properly cross-trained can increase your restaurant’s productivity because it allows you to make changes without disrupting service. We tell our clients that it is more costly, in the long run, to not cross-train your staff.  The cost comes in many forms, but mostly in a work force that is not as productive as possible, resulting in having to use more staff per shift, expensive mistakes being made by untrained stand-ins and the possibility of a poor customer service experience for your guests.

Better Product Quality through Consistency – As we examined in Consistency is King, “Customers should not have to spin the roulette wheel each time they visit your restaurant; they should experience the same quality of food and service every time.  It should not matter which chef or server is working on any given day, the customer experience should never be a surprise.”  We have all been to a restaurant that was great one day and then only so-so the next time around.  Whether the staff line-up has changed due to growing the business or people calling out sick, you must have bench strength in your ranks, this way no one can tell that the Sous Chef is cooking instead of your Executive Chef on any given night.  Consistency is the key to establishing regular clientele, and regular clients are the most important customers to have.    Maintaining regular clientele is a critical factor in establishing a solid reputation that will attract newcomers.

Better Employee Retention – There are many reasons why employees leave jobs; high on the list is becoming frustrated or bored in a job.  Assuming you've done everything correctly during the on-boarding process, yet you are still having large amounts of turnover, it is time to look at what type of advancement and cross-training opportunities you provide your employees.  Cross-training also helps to engage the long-time employee who feels that they are no longer learning anything and feels that the restaurant doesn't invest in furthering their knowledge.  At a basic level, human beings like to feel that they are continually learning new skills and will acknowledge management’s investment in them by staying with the company.

Better Financial Results– Improved productivity, product quality and employee retention should all lead to organic cost savings.  These savings, in the long run, will offset the initial costs to cross-train all of your staff.  By being able to achieve the first three “betterments” stated above, you will be able to: reduce production steps and/or mistakes; run your business leaner; make time-effective market-driven changes; focus on cultivating on-going, repeat business; and lower your recruiting and hiring costs.

You must start by setting training expectations with your management team. Often chefs and managers do not want to train their staff to do their job, for fear that they will be replaced, so they leave out crucial steps or ingredients that are key to a great product or service.  They must understand that they are only as successful as those they train underneath them, and they can only grow in their careers if there is someone “on the bench” ready to go!  Take your best people and encourage them to share their most developed skills: Make teaching a badge of honor for employees who achieve an elite level of competence.

By focusing on cross-training your staff and building in redundancy, you can create a place where teamwork can thrive, your employees are invested and are continually learning.  

Don’t know where to begin?  4Q Consulting can develop customized business and operational guidelines to help you start and run your business.  Email us today for a free business consultation at www.4qconsult.com.

All original content copyright Noelle E. Ifshin, 2014-2015.
Noelle E. Ifshin, President, 4Q Consulting, LLC 
244 5th Avenue, Suite 1430, NY, NY 10001
www.4qconsult.com

Restaurant Consulting NYC | Happy Holidays | 4Q Consulting, LLC

Happy Holidays and Best Wishes 

for a Happy New Year 

filled with Health, Happiness 

and Spectacular Success 

from all of us at 4Q Consulting, LLC

Restaurant Consulting NYC | Between the Lines - Operational Challenges That Can Make or Break Your Restaurant | 4Q Consulting, LLC

Between the Lines - Operational Challenges 

That Can Make or Break Your Restaurant

Today’s restaurants face many challenges: intense competition; rising cost of goods and real estate; and the slow U.S. economy - just to name a few. Restaurants average profit rates of 3-5% of sales* - thin margins by any measure. However, poor management can make those margins evaporate faster than a sauté pan of boiling water. It is no wonder that 60% of all restaurants fail within the first three years **

As a restaurant owner, you oversee all areas of your business.  These can be separated into three basics: Finance, Sales and Marketing, and Operations. Yet with only so many hours in a day, many owners neglect the breadth of their responsibilities, and only watch their revenue.  Sales and marketing is important in getting customers into your restaurant, and we covered this at length in Attracting Customers.  However, it is what happens within your operation, between top-line sales and bottom-line profits, which makes or breaks your business.

Here are the 4 biggest challenges that can make or break your restaurant:

Poor Financial Controls – Owners often watch their sales daily, while not watching their costs and expenses as diligently.  Common sense points out that if your profit margin is zero it will always be zero, regardless of sales level, unless you change something. Restaurants should measure costs in relation to sales on a weekly basis, as discussed in both Why a Weekly Food and Beverage Inventory is Crucial to your Small Business and Does your Restaurant Compile a Weekly P&L Statement.  Reviewing weekly statements allows you to spot problems and make operational adjustments much sooner than waiting until the full P&L at month’s end: improper product ordering and handling, waste, cash management and employee theft can be significant drains on your business, every day.  

As revealed in How Much of your Profits are Being Eaten by Employee Theft, many employees steal because they can get away with it, and few restaurants have the right controls in place to prevent it. Further, Measure by Measure and 4 Simple Ways Your Restaurant Employees Can Help You Be More Profitable showed how not controlling spoilage, waste and improper portioning can decimate your small margins. 

Poor Staff Training – As we stated in our Blog:  A Well Trained Staff is Your Secret Weapon, “People run your business and your business is only as good as your people. An effective training program is an owner’s key tool to ensure consistency in product and customer service, which is a basic tenet of running a restaurant.”  This is true for all staff, at all levels.  

With a properly trained staff you have less waste in your restaurant.  A short list of why this is includes: Training mangers on proper inventory and ordering avoids excess product; stewards on proper product storage and handling avoids spoilage; cooks and bartenders on proper recipe execution and production levels maintains portion controls; and servers on proper use of the POS system minimizes incorrect orders, misfires and voids.

Poor Quality Control – Quality Control is all about consistency. In our experience, consistency is best achieved by adhering to standard operating procedures that are codified in writing. As outlined in 4 Reasons Why Your Restaurant Needs an Employee Handbook, recipe books, job-specific handbooks, and training manuals standardize tasks and clearly communicate to employees your expectations and the standard to which they will be held. These procedures should cover, in detail, every process in your establishment, from purchasing guidelines to how to deal with an unhappy customer. As boring and unsexy as it sounds, excellence comes from consistency, which can only come from diligence and attention to detail. If customers know what to expect every time they walk in your door, they will keep coming back.

Poor Leadership – Whether it is you, as the owner, or an outside hire running your restaurant, there is a big difference between being a manager and being a leader. As discussed at length in Follow the Leader, “In order to lead rather than just manage, which is vital in today’s diverse, fast-paced world, one must be able to be more than a day-to-day task master. While a manager deals with the technical dimension in an organization or the job content, a leader marshals resources, human and otherwise, for the best possible results.”  Leaders communicate vision, build relationships and trust, train, coach and mentor, and encourage change and risk-taking.

Often, managers who come up through the ranks are not properly trained as managers and make common mistakes.  In the Top 4 Mistakes Managers Make in Managing People, we discuss how “Managers are the front line representation of your business and must effectively work with a diverse group of people. They must live and breathe your company core values and practices.”

Restaurant success depends on many things, but it can all boil down to one question: Where does the money go? Having a handle on your operations is a key to answering this question. Have processes and procedures to reduce economic drains, train your staff to follow them, hold them accountable and have trustworthy leaders in your organization. Additionally, you must be vigilant that your standards are upheld, and make changes as needed. It doesn’t hurt to get an outside, objective opinion from time to time as a gut check whether it is a consultant or mystery shopper

Don’t know where to begin?  4Q Consulting can develop customized business and operational guidelines to help you start and run your business.  Email us today for a free business consultation at www.4qconsult.com.

All original content copyright Noelle E. Ifshin, 2014-2015. 
   

Restaurant Consulting, NYC | Why the Right Restaurant Culture is Crucial to your Success | 4Q Consulting, LLC

Why the Right Restaurant Culture is Crucial to your Success

Wherever people live or work together, a culture develops. This is defined as “the behaviors, beliefs, values, and symbols that [a group of people] accept, generally without thinking about them, and that are passed along by communication and imitation.”1   Restaurants, like any other business, engender “Organizational Culture” – a culture specific to that group, which describes everything from its approach to customer service to the shorthand jargon that develops among members.

Your organizational culture is crucial for delivering the right impression to your customers, and your customers get a taste of what your business is all about every time they interact with your staff (see: Employees are Your First Customers – Happy Employees Part 1).  It is important to carefully seed and nurture a culture that defines the restaurant’s priorities, but also allows for some traits to develop organically from your staff.   

In our blog 4 Reasons Why Your Restaurant Needs an Employee Handbook, we discussed the handbook as a central document to your business. It is where you should define and codify the values that make up your restaurant’s culture, which are imparted to employees during on-boarding, as well as the ongoing training sessions.

Here are four reasons why you need to create and promote the right culture in your restaurant:

Culture Encourages Professionalism – By communicating expected behaviors, actions and values to all employees, you define what your culture is and how they participate within it while in the workplace; By encouraging those behaviors, actions and values to meet your standards (whatever they may be), you create a “Culture of Professionalism”. Managers and supervisors must reinforce the culture and lead by example, not by the philosophy of “Do as I say, not as I do", as we discussed in Follow the Leader. They must live and breathe your mission and values and tend this culture of professionalism in your restaurant - complimenting positive behaviors and correcting negative ones.   

Restaurants, large and small, that promote a culture of professionalism, without being stodgy, have employees with high levels of loyalty toward the company.  This type of business culture increases productivity, work quality and employee retention.

Culture Reduces Employee Turnover – The restaurant industry is known for its high turnover rates. Generally speaking, many food and beverage industry employees aren't looking to make a career out of tending bar, waiting tables or seating restaurant patrons. However, employees with high job satisfaction tend to remain with their employers longer, thus reducing turnover. Studies have shown that a well-defined and actively maintained company culture is associated with high job satisfaction.  Businesses can lower turnover rates by fostering a culture that values open communication, provides adequate training, and rewards employees for a job well done. By retaining employees, companies save resources recruiting and training a constant flow of employees; they build a higher caliber workforce that positively affects product quality, lowers operating costs and increases the bottom line.

Culture Increases Consistency – By lowering your turnover rate of employees, your increasingly experienced staff becomes a well-oiled machine that improves consistency within your operation. In Consistency is King, we discussed that daily vigilance to the standards you set are crucial in order to ward off possible problems that can impact costs or revenues: poor communication, order errors, kitchen errors, bad customer experiences, etc. Creating a culture of “Being the Best” consistently also leads to and reinforces your “Culture of Professionalism”.

Culture Improves Your P&L – As we examined in Restaurants Know Thyself, when your culture is defined, your restaurant has a distinct identity.   A well-defined culture increases both your top-line sales and your bottom line profits. When you have less employee turnover, you have a professional, experienced staff that works well together that creates a more consistent product and less waste – which improves your operating costs.  You build a repeat clientele that comes back time and again to visit their favorite server and to eat their favorite dish.  A successful restaurant has return customers at the core of it business, because repeat customers will attract new business and word-of-mouth advertising is the most efficient way to grow top line sales. 

Creating and nurturing the right culture in your restaurant allows you to take care of your employees who will in turn take care of your guests.  As a business owner, it is your job to be sure that your team has the tools it needs: Strive to be the best boss to your staff; hire only the best employees (with the right attitude) and enable them to be awesome through excellent training, to give the best customer service; have the highest possible sanitation standards; buy only the freshest ingredients; offer the best food and the best service. Be mindful of being consistent in all these things so that customers have the same good experience time and time again.

As seen in Employees are your First Customers, happy employees are engaged, exceed expectations and become brand ambassadors for your restaurant.  Your restaurant will become a business people want to work for, vendors will want to do business with and the place where many want to eat – again and again.

Don’t know where to begin?  Ask yourself, do you have the proper written procedures and operational guidelines in place to be as successful as possible?  4Q Consulting can develop customized branding and marketing plans, and operational guidelines to meet your needs. Email us today for a free business consultation at www.4qconsult.com

All original content copyright Noelle E. Ifshin, 2014-2015. 

1. https://www.tamu.edu/faculty/choudhury/culture.html

Restaurant Consulting NYC | Location, Location, Location...| 4Q Consulting, LLC

Location, Location, Location...

Everyone has heard the expression: “Location, Location, Location”. A restaurant's site selection is as crucial to its success as great food and service. However, many restaurants that open in “great locations”, fail because they don’t adjust their business model to the particularities of that location.  

Choosing a location involves more than picking a place and signing a lease. Your location selection will influence many parts of your business plans and operations. 

It is highly recommended to work with a licensed real estate broker who knows your local market as well as an attorney who specializes in real estate. They will best be able to guide you to appropriate properties, and to negotiate the best possible deal on your behalf; be patient as this process takes time.  If you already have a certain location in mind, you shouldn’t become too attached until you know it meets your needs.

Before you create a business plan, write a menu, or dash off to the bank to apply for a loan, here are 4 essential elements of a location to consider:

Population Base/ Demographics/ Foot Traffic – There needs to be enough people who live or work in, or pass through, the area on a regular basis to keep your restaurant busy.  The population base and the different types of traffic will dictate some of your operating procedures. For example, if you are in a thriving downtown commercial area, you might only open for breakfast and lunch but close for dinner, as there is not enough foot traffic to stay open. Your location, and its demographics, may influence your menu design, as well.

To analyze the population base of a particular area fully, you can commission a site study. A reputable local real estate broker or the local chamber of commerce can also provide some of this basic information. 

Financial Realities – Rent is usually your largest fixed expense, and you will probably have significant capital investment to prepare the space to be operational, therefore your business plan must account for covering and recuperating these expenses.  In building your business plan, you will have to budget several scenarios to determine how many guests you will have to serve, at a specific check average to be profitable at a given rent; you will also need to determine if the plan is sustainable over time, to meet your financial obligations. 

Buying real estate might be cheaper in the long run than renting space in major markets where rent is high.  By purchasing real estate you might be able to: create a rental income stream; realize large tax deductions on your property taxes; and take deductions for your mortgage interest payments.  Purchasing works well for those with investors or large capital reserves that are not needed to run the day-to-day business operations. Consult with your attorney and accountant.

Accessibility – There is a reason that major restaurant chains are often located near main intersections or highway and freeway exits. Most successful restaurants, whether in urban or suburban areas, are easy to find.  Your restaurant should be street-facing and not tucked away in a building or set back. 
How your customers get to you is also a consideration. A parking lot, easy public or street parking, and nearby public transit all improve accessibility; alternately you might offer valet service. The bottom line is that your customers need to be able to find you, and should be able to get to you - make it easy for them!

Operational Restrictions – A space that does not immediately accommodate or restricts your operational needs is not a bad space, it may in fact be a very good space; it just changes your operational and financial plans. A few examples of restrictions on property that can affect the capital investment or the targeted cash flow of your business:  Many office buildings do not allow cooking in the attached retail spaces, as they do not want smells permeating the building; if they do allow it, you may have to build out proper ventilation.   Ensure the space is ADA compliant, and meets local public safety codes; if it is not, you will have to alter the space to adhere to regulations. The zoning of a location is vital; some municipalities may limit sidewalk or outside seating, or may not issue liquor licenses if you are located near a school or house of worship. 

Additionally, many leases contain conditions, covenants and restrictions (CC&R’s) issued by the landlord.  Know what these are before signing a lease, as these CC&R’s can affect your business just as much as public zoning regulations and can cost you precious capital.

Do your due diligence. By understanding each of these elements, and how they may affect your business plan, you can better choose the right location for your new restaurant.

4Q can provide restaurant site selection consulting services and works with New York’s best commercial real estate brokers to find a location that meets your every need. 

Don’t know where to begin?  Ask yourself, do you have the proper business plan in place to help you be as profitable as possible?  4Q Consulting can develop customized business plans, and operational guidelines to meet your needs.  Email us today for a free business consultation at www.4qconsult.com

All original content copyright Noelle E. Ifshin, 2014-2015. 

Restaurant Consulting NYC | The Big Chill | 4Q Consulting, LLC

The Big Chill

The coldest air in almost 20 years has swept the nation this week with 90% of the country being issued freeze warnings.  Combine record snow falls from Storm Hercules last week, a vicious cold snap and the Farmer’s Almanac’s 2014 forecast for a colder and snowier winter than the average, and we have a recipe for rising commodity prices now and well into the spring.

Food and commodity prices are driven by basic supply and demand and tend to be inelastic – once they rise, they are slow to fall below the increased level.  This means that prices continue to go up, driving up operating costs.

These price increases can and will affect all aspects of the restaurant business, and operators must pay close attention to commodity prices and availability.  Now is the time to start planning for your spring menus and pricing levels, so as not to be caught off guard. 

Here are 4 possible increases to watch out for:

Meat Prices – According to Bloomberg, “Cattle futures reached $1.371 a pound this week, the highest since Chicago trading began in 1964.” This increase in futures pricing is due to several factors, most of which is uncertainty in yield levels at slaughter houses. In colder months, and in harsh weather, livestock need more feed to keep warm, increasing livestock farmers’ operating costs. Since livestock use more of their energy to stay warm in these conditions, they do not gain as much weight, resulting in a decrease in supply.

Dairy Prices – Dairy cattle, like beef cattle, will also use more energy to stay warm and have lower weights.  Lower weight dairy cattle produce less milk, which in turn lowers supply and raises prices.  Additionally, the on-going debate in the US Congress over the Dairy Policy portion, of the yet-to-be passed Farm Bill, is causing more uncertainty in the dairy market.  Unless a new Farm Bill is passed before March 1, 2014, the odds are dairy prices will fluctuate significantly until the un-subsidized dairy market can settle into normal supply and demand patterns.

Produce and Grain Prices – A deep freeze obviously harms produce crops.  Usually, these disruptions in the planting and growing seasons are contained in a few specific regions of the U.S.  This week all 50 states issued an unprecedented number of freeze warnings, affecting all regions of the U.S.  In Florida, the world’s second largest citrus-producing region after Brazil, this week’s freeze potentially harmed up to 15% of the citrus plants. This can have resounding impact for pricing going forward.

Wheat futures on the Chicago Board of Trade climbed as much as 1.2% this week, Bloomberg reports: “ 'As much as 15% of winter-wheat plants in the Great Plains face damage’, as stated by Kyle Tapley, a senior agricultural meteorologist at MDA Weather Services in Gaithersburg, Maryland.” This has implications for all grain-based products well into the spring and summer months.  Expect increases in raw cereals and flours and possible increases from your Bakery and Bread suppliers.

Energy Prices – Energy prices are on the rise due to demand and scarcity.  When the temperatures drop, demand for energy increases as we turn up the thermostat, while production of gas, oil and coal slows and can even stop, driving up prices.  Increased energy prices affect all other commodity prices, as it is more expensive to bring those products to market.  Additionally, increased energy costs affect restaurants by increasing the costs of product delivery and fuel surcharges, heating your restaurant space, heating your hot water and using your kitchen appliances.

During a cycle of limited energy supply and increased energy prices, farmers who grow corn may get a better price for their limited crop selling it for Ethanol production rather than feed. This in turn can drive up the price of feed and the cost of raising farm animals, pushing meat and dairy prices up, as well as cutting the supply of grain on the market with the price impact there as well  . . .  It is all connected.

As a business owner, you must be aware of all of the external economic forces that affect your business and be able to plan for them. As we head into this very cold and snowy winter, keeping an eye on costs and energy usage, and appropriately adjusting your menu and offerings, to maintain your quality and profitability will be a must for operators.
  
Don’t know where to begin? 4Q Consulting can develop customized operational guidelines to help you manage your costs through all stages of your business.  Email us today for a free business consultation at www.4qconsult.com. 

All original content copyright Noelle E. Ifshin, 2013-2014.

Restaurant Consulting NYC | Happy Holidays! | 4Q Consulting, LLC

Happy Holidays and Best Wishes for  a New Year filled with  Health, Peace and Spectacular Success

follow on Twitter | friend on Facebook | follow our Blog Noelle E. Ifshin President Copyright © 2013-2014 4Q Consulting, LLC, All rights reserved. Our mailing address is: 4Q Consulting, LLC 244 5th Avenue, Suite 1430 New York, NY 10001 Add us to your address book