Restaurant Consulting NYC | The Financial Health of Your Restaurant | 4Q Consulting, LLC

The Financial Health of Your Restaurant

Is your restaurant in need of a financial check-up?  Many restaurant owners we work with are not aware of the financial health of their own restaurants, or know they are in trouble but cannot explain why.  Having great food and service is not enough to be a good business and many restaurants struggle financially.  As a restaurant owner, assessing the health of your business is an essential part of your responsibility and can often be overwhelming.

Conducting regular financial check-ups of your restaurant does not need to be difficult and can be broken down in to smaller steps. In order to give your restaurant a financial check-up, you need to do the following:

Keep Clean Books - Studies find that restaurants that incorporate accounting best practices are more likely to be profitable than those that do not.  Keeping an organized accounting system is the only way to have a clear idea of how cash is flowing through your business. The key elements are to know 1) where in the business your revenue is coming from 2) where you are spending your money, 3) how much you are spending, and 4) how much you need to earn to make a profit. It doesn’t matter whether you use high tech software, a bookkeeper or an old fashion ledger book, you need some kind of system for timely recording of revenue and expenditure to allow you to make business decisions and plan for the future. 

Compile A Monthly P&L – As we discussed in, Does Your Restaurant Compile a Monthly P&L Statement?, a profit and loss statement, or P&L, is a basic financial statement that serves as a report card for your business.  A crucial part to creating a useful P&L statement is monitoring your food and beverage inventory; this step will allow you to spot food waste in handling and storage, possible theft and proper ordering levels and frequency. Tracking fixed and variable costs, such as payroll, operating expenses and occupancy costs can highlight wasted resources and where you can tighten your belt.

Know Your Prime Costs Inside and Out – Prime costs are the total of food, beverage and all payroll expenses including taxes and benefits, and are the most important numbers a restaurant owner should know.  Once you’ve compiled your P&L, prime costs should be what you examine first, as they offer the most accurate depiction of your restaurant’s health, showing how well your business is managed day-to-day.  Frequent review of food, beverage and labor costs holds your chefs and managers accountable for their work.

Adjust to Changes in Your Business Cycle - Since prime costs are variable, they can and should be adjusted when your restaurant experiences changes in business levels, as we illustrated in The Dog Days of Summer: How to Manage During a Downturn in Business. Planning for or being acutely aware of a fall-off in business, enables you to scale back labor schedules properly, rotate out vacations among the staff and utilize staff that has been cross-trained – increasing productivity per work hour.  Making changes to your menu can also impact food, beverage and labor costs by offering a smaller menu, consolidating the number of items on your menu and decreasing the number of steps of production.

Just like an annual physical with your doctor can lead to healthy changes in lifestyle, keeping your finger on the financial pulse of your restaurant can highlight areas of weakness. With this information you can make appropriate and timely changes to have a financially healthy restaurant. 

Email us today for a free business consultation at www.4qconsult.com.  We help restaurants be profitable, from start-ups to existing restaurants looking for a fresh set of eyes.  4Q Consulting, LLC can develop customized plans and operational guidelines to survive a slow period of business!

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 | Seasonal Restaurants - Preparing for the Off Season, Part Two - Marketing | 4Q Consulting, LLC

Seasonal Restaurants - Preparing for the Off Season

 Part Two Marketing

In our last Blog: Seasonal Restaurants - Preparing for the Off Season, Part One, we looked at what businesses can do, focusing on their operations, to survive through their off season.  Just as seasonal businesses need a long-term plan for their year-round operations, so do they for their marketing. Beyond marketing to the local client base, as we discussed, the off season is valuable time to market to in-season customers as well.

Whether you own a seasonal clam shack on the shores of New England or are the General Manager of a ski resort in Colorado, you have experienced the challenges of a seasonal business. The old adage “out of sight, out of mind” is the scourge of your year-round marketing: though you are out of sight you want to stay on their minds.

Here are four things you should be doing to keep your business on people's minds year round:

Grow Customer Database – A robust database of customer contact information is an important tool in marketing. Capture guests’ information in the height of the busy season, when you have the most foot traffic.  Getting a strong list of past customers and people who've expressed interest in your business will enable you to maintain contact and stay top-of-mind during the off season, as well as convert new leads into customers during for next season.
Further, Open Table or other cloud-based reservation systems are great tools to grow your database, while driving foot traffic to your restaurant. 

Call to Action – Use calls-to-action (CTA’s) on your website and in your social media that reward customers for interacting with you. This serves two purposes: collection of customer data and creation of content. For example, offer a free glass of wine on their next visit to customers who subscribe to an email list or blog, or a free t-shirt to customers who write a review on a linked site. Even when you are closed for the season, new reviews are a way to get your seasonal guests thinking about you and elicit feelings of nostalgia for your restaurant during the off-season. This new content can easily be leveraged in your off-season email marketing, website, and social media updates, making customers eager to return.

Stay Social – As mentioned above, out of sight is out of mind.  You want your customers and tourists thinking about your restaurant even after they have left town, or to know about you before they arrive.  Consider social media your virtual, year-round storefront. Even if your customers or potential customers aren't in your seaside town or visiting your website, you can reach them through social media. Posting consistently to all of your social media feeds such as Facebook, Twitter, Instagram and Pinterest, is a great way to offer special discounts, gather and publish reviews and testimonials, share new content, run contests and polls, and generate hype for the next season.

Generate Hype – Generating excitement for your business throughout the year is a great way to stay top-of-mind for your guests.  If you are a seaside restaurant, why not engage in the dead of winter when it is 5°F outside?  Content showing a beautiful beach and ocean, with an offer for holiday gift certificates, is a great way to have your customers daydreaming about the excellent times they had in your restaurant.  If your content plays upon the nostalgia of good times and the excitement of things to come, you'll have an audience engaged in planning for when they can enjoy your restaurant again.

Maintaining a seasonal business has unique challenges beyond those faced by other restaurants and food service operations. By properly planning a year-round marketing calendar, you will be well positioned for the next busy season, with customers anticipating their return to their favorite restaurant.

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

All original content copyright Noelle E. Ifshin, 2012-2013. 

Noelle E. Ifshin, President, 4Q Consulting, LLC        
244 5th Avenue, Suite 1430, NY, NY 10001 
noelle@4qconsult.com

Restaurant Consulting NYC | Seasonal Restaurants - Preparing for the Off Season | 4Q Consulting, LLC

Seasonal Restaurants - Preparing for the Off Season 

Part One - Operations

Whether you own a seasonal clam shack on the shores of New England or are the General Manager of a ski resort in Colorado, you have experienced the challenges of a seasonal business.  Many seasonal businesses only have a three to four month “busy” season, when there is more than enough business to be profitable; it is what happens in the “off” season that often determines whether or not these businesses make it until their next busy season.

It is crucial to have a plan in place to handle off-season challenges, ensuring that customers have their favorite local restaurant to come back to.  It may not be possible to be profitable in the slower months, but with the correct operating procedures, you can survive the off-season’s inevitable downturn in revenue.  

Here are four operating procedures to focus on:

Manage Your Cash Flow - The single most important step for survival of your seasonal business is rigorously managing your cash.  This takes discipline.  Calculate what your cash flow needs will be based on both your fixed and estimated variable expenses.  Know what your break even point is, as sometimes a viable cash management strategy is to close the business for the slowest portion of the off season. During the busy season, set aside a certain percentage of revenue to create a reserve that will help carry you through the off-season, so as not to go deeply into debt, if at all. Get to know your banker, and establish a line of credit to tap into, as it is important to stay current with your bills.

Adjust Your Offerings – Changing your menu can impact both food and labor costs. Consider replacing some menu items with less expensive, seasonal and local ingredients. Cooking with what is locally in season is always less costly than using out-of-season imported items.  Also, reducing the overall number of items on your menu and increasing product cross-utilization allows you to carry a smaller inventory (see Manage Your Cash Flow, above), thus reducing the amount of possible waste.  Furthermore, less labor-intensive preparations allows you to work with less staff.  An example that combines these concepts:  In the winter months, a menu built around stews, casseroles and braises allows you to use less expensive cuts of meat, seasonal root vegetables and less labor.  

Hire, Train and Schedule Wisely – Having a core staff from the local population can be crucial to your success; you will easily be able to supplement your staff for the busy season, and will not find yourself short-staffed when your seasonal hires leave. It is important to cross train your staff, as it will allow you to schedule fewer people during slow times, cutting down your labor costs – a server who can mix drinks saves also scheduling a bartender for a slow lunch shift.  In these ways, you will always have well-trained people available who can handle a wide array of jobs in a thinly staffed environment. However, staff and schedule judiciously, as under-staffing can lead to burn out, more waste due to error from stress and distraction, and a negative guest experience.

Attract the Locals – In seasonal communities, the local population becomes the core of your customer base in the off-season.  Cater to them and actively attract them to your restaurant. A good way to increase off-season sales is to offer locals discounts: deeply-discounted wedding receptions, special weekday prix fixe menus and/ or corporate meetings and events. An appropriately engineered menu will allow you to do this without severely eroding your profit margin. It is important to curry favor with the locals, because their great experiences at your restaurant will turn them into your best marketing tool, as we wrote in our blog Attracting Customers.   They are likely to recommend you to other locals in the off-season, as well as the in-season visitors who may not know about you.

Maintaining a seasonal business has unique challenges beyond those faced by other restaurants and food service operations. By properly planning ahead to ride out the slower season which you know is coming, you will be able to make it through to the next busy season in good financial shape.

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

All original content copyright Noelle E. Ifshin, 2012-2013. 
Noelle E. Ifshin, 
President
4Q Consulting, LLC        
244 5th Avenue, Suite 1430, NY, NY 10001