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

Restaurant Consulting NYC | Consistency is King | 4Q Consulting, LLC

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.  It is one of the reasons McDonald’s is the number one restaurant in the world – you know what you’re going to get whether in New York, Los Angeles or Chicago.

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.  

Assuming you have hired the right employees and trained them properly, here are 4 points to focus on to ensure consistency:

Consistent Messaging - Your food isn't the only thing you provide your guests; you also give them an experience.  A lack of consistent messaging can turn customers off and stop them from coming back. Your brand’s message has to extend to every single aspect of your restaurant, from the persona of your servers, uniforms, type of music playing in the dining room to the logo on your napkins.  Also, all of your advertising, marketing and social media campaigns must be aligned to accurately depict what your restaurant is.  Customers trust you to deliver on your promise and they want to know what to expect.

Consistent Food – Beyond reducing waste, as referenced in Measure by Measure, consistency produces the same appetizer, entrée and cocktail every time.  For this reason, written recipes and standardized kitchen and bar procedures are essential.   You want your signature Salmon entrée to taste the same on Monday night as it does on Friday night.  Additionally, establishing correct production levels ensures menu items are available when your guests want them.

Consistent Service - Whether you are fine dining, casual table service, or a neighborhood dive bar, guests have certain expectations as to the service they want to receive. How guests are greeted at the door and at the table, when and how their orders are taken, how they are served and treated, are all essential “Steps of Service”.  By having these service steps codified, and adhered to, in conjunction with your brand image, ensures a uniform delivery of your product. Great service is achieved by knowing the basic steps of service that guests expect and being able to repeat them time and time again.

Consistent Vigilance – You and your manager’s daily vigilance to the standards you set are crucial in order to ward off possible problems. This can be done by getting ahead of any potential issues through proper planning, training, and constant communication. All employees must know their roles, how to execute them and what to do should they run into problems.  As discussed in our previous Blog, Are Your Pre-Service Meetings a Waste of Time?, pre service meetings are the appropriate time to reinforce your expectations and standards with your staff. 

As an owner, you should know what’s really going on in your restaurant from the guests’ point of view.  Consider using trained mystery shoppers from firms specializing in this service, or recruit your own shopper from your pool of friends, acquaintances and even regular customers. 

Monitor and engage in on line review and social media sites, such as Yelp, Trip Advisor and Facebook to see what your guests are saying about you.  These observations can serve as a way to identify where improvements need to be made and can be used to retrain, tweak and change as needed.

Great dining experiences can be easily cancelled out by one bad experience and one bad experience will cause a customer serious hesitation when deciding whether or not to return to an establishment. You have thoughtfully created a product and image for your restaurant.  It is imperative that you preserve that identity.   Consistently providing the same quality product can determine the success or failure of your restaurant. This does not mean that your product must be high end or gourmet; it just has to be the same product day in and day out.

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, 2013-2014. 

Restaurant Consulting, NYC | Harassment – It’s Not Just For Supervisors Anymore! | 4Q Consulting, LLC

Harassment – It’s Not Just For Supervisors Anymore!

From time immemorial, the restaurateur has held to the adage that the customer is always right. But what if the customer is wrong by grossly misbehaving toward your employees?  Employees always have to be polite and helpful to customers, but they don’t have to tolerate unwelcome flirtation, verbal abuse or physical injury.  Most business owners are familiar with the idea of eliminating harassment between supervisors and subordinates in the workplace; however, it is important to protect your employees from harassment in all its forms, which can come from anyone with whom they interact while performing their work duties. In a restaurant setting, once you throw alcohol into the mix with harassing customers, difficult situations can escalate quickly.

Deciding when a particular customer’s behavior crosses the line and makes for a hostile work environment may be a judgment call; however: "Once an employer is put on notice that any of its employees are being subjected to sexual harassment, it must take prompt corrective action to stop it," according to Lynette A. Barnes, regional attorney of the EEOC's Charlotte District Office, whose jurisdiction includes the state of Virginia.  "This is true regardless of whether the harasser is a co-worker, there [sic] supervisor or a third party.”1   Ms. Barnes made this comment summarizing the 2012 ruling of EEOC v. Southwest Virginia Community Health System, under Title VII of the Civil Rights Act of 1964, which awarded $30,000 to a receptionist who complained of sexual harassment by a patient.

Other EEOC lawsuits have been decided that all forms of harassment (sex, race, religion, sexual orientation, etc.) in the workplace can be committed not just by supervisors and coworkers, but by third parties such as customers, vendors, delivery people, or repair workers, and the employer can be held liable. Harassment can even happen outside the workplace while work duties are being performed – think about your delivery people.

These lawsuits can be costly to defend and the awarded damages can be a huge financial burden, enough to put you out of business.

Here are 4 ways to keep your employees safe from the threat of third party harassment and protect you from lawsuits:

Formal Written Policy – As discussed in 4 Reasons Why Your Restaurant Needs an Employee Handbook, “having a well written manual in place can protect your business from potential labor disputes and costly legal fees, which can destroy your business.”  Your manual must have a section that addresses harassment, both within the organization and from third parties, and how to deal with it.  It must include clear guidelines outlining: how an employee can escalate a situation to a manager, supervisor and/or the owner; what steps will be take once a complaint is made; and a non-retaliation clause.

Train Employees on How to Handle Situation – Once you have a written policy, this policy must be included in your employee training for all positions.  Train your staff on how to stay safe from aggressive or harassing customers. Often situations get out of control quickly and your staff must be able to remain calm throughout.  Have safety systems and protocols in place should these situations escalate. Additionally, your managers and supervisors need a higher level of training than your front-line staff to be able to deal with these types of complaints. Managers should be sensitive to situations that they can diffuse before they become reportable problems, or aware of situations that employees do not report.

Safety Systems and Protocols Protecting Employees – Have safety systems and protocols in place should these situations escalate. Regardless of how management learns about the harassment, you should immediately re-assign an upset employee, so as not to have to deal with or talk to a particular offending individual.  Then the manager must address this with the offending person. This can be a difficult conversation, but no customer, vendor or repair person is more important than the legal rights of your employees. 

Consider these additional steps: having an employee buddy system for closing, so no one person closes alone late at night; putting notification of unacceptable employee behavior on your website, on POS computer ‘pop up’ messages; and including a term in all contracts with third party vendors and service suppliers notifying them of your policy on harassment and requiring them to adhere to it.

Remove or Ban the Individual from your Establishment - If the behavior doesn't stop, the owner or manager needs to take such action as removing and possibly banning a customer, vendor or repair person from the restaurant. Many Restaurant owners do not want to take such a drastic step and lose a customer, but the cost of losing a customer is much less than the cost of an EEOC lawsuit.

Like many other issues we have addressed in our blogs, the keys to protecting your employees are: training, communication and vigilance.  It is important that your employees can feel safe in reporting a situation to management and know that you and your team “have their back”. Keeping a comfortable work environment allows your employees to do their best, provide the best service and keep your customers happy. 

The people whom you hire can be your biggest asset. It is easy to forget that Employees are Your First Customers, if you do not take care of their well-being, they will not be beneficial to your business.

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.

Footnotes:
1.   http://www.eeoc.gov/eeoc/newsroom/release/9-6-12b.cfm


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

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, 2013-2014. 
   
Footnotes:
* 2005 Cornell Hotel and Administration Quarterly, http://cqx.sagepub.com/content/by/year
** NRA’s Restaurant Industry Operations Report 2013

Restaurant Consulting NYC | The Family Owned Restaurant | 4Q Consulting, LLC

The Family Owned Restaurant

Family businesses are the bedrock of the U.S. economy.  “Family owned businesses contribute 57% of the U.S. GDP, employ 63% of the U.S. workforce (FEUSA, 2011), and are responsible for 78% of all new U.S. job creation. (Astrachan & Shanker, 2003).” * Business schools have entire courses dedicated to examining the dynamics of family businesses.   According to Rocki-Lee DeWitt, Professor of Management at the University of Vermont’s School of Business Administration:

                   “When family and business are ingredients in a restaurant 
                    business, be ready for some tasty treats and momentous
                    flops. The family must ask themselves ‘What would this 
                    business look like, and how would it run, if my family wasn't 
                    involved in the business?’'"

Psychologically, families tend to be driven by a deep concern for both the well-being of individual family members and the family legacy.  When a family works together, normal family goals may come into conflict with the economic goals of the business.  

With proper planning, many of these challenges and conflicts can be avoided.  Here are four “must-haves” if you are considering owning or currently running a family-owned restaurant:

Have a Written Partnership Agreement – Many families assume they do not need to formalize their partnerships with family members.  By the time they realize they need an agreement, due to a dispute, it is often too late.  You must have a written agreement that should include: the division on ownership; an outline of the amount of, and stipulations for, taking salaries; and how to handle any profits or losses.  Additionally, and possibly most importantly, family partnerships must have defined job roles – who is going to do what?  Just as a corporation would have specific written job descriptions and job roles for executives, so should a family-run restaurant.  Do not assume how the responsibilities and work load will be divided up. If you are formally registering your company as an LLC, a Corporation or a Partnership, some of these factors will impact how you structure your business.

Have Written Standardized Procedures and Strict Internal Controls – The challenge of any family owned business is how not to run it as the family unit.  Standard operating procedures (SOP’s) should be followed by all employees, whether or not they are family members.  Having written manuals outlining SOP’s for all procedures in the restaurant, ensures that all employees are held to the same standard. For example, the owners or family members should not be doing their personal grocery shopping intertwined with the restaurant’s food ordering.

Furthermore, if a family member has always been great with money, you still need internal cash controls in place.  Ensure that your policies and procedures are just as stringent as they would be if an outsider was doing the work, and have your cash and internal controls reviewed by your CPA.

Have a Higher Level of Professionalism – Just as family members must be held to standardized procedures, at minimum, in their duties, they must be held to a level of professionalism to keep personal matters out of the business.  Family members typically have insight into each other's personality and thought process that non-related business partners wouldn't have, making crossing the professional line into personal terrain tempting.  While lashing out at a co-worker would not be acceptable in most corporate positions, it's easier to lose your cool when there's a personal relationship involved.  I hear from many of my clients in family-owned restaurants “you say things to your relatives that you wouldn't say to anyone else, or you would land in court".  Leave your emotions at the door and remember your family members are your co-workers when you're at the office.

Have a Succession Plan – A comprehensive written succession plan is crucial for all businesses, especially family-owned restaurants, to avoid disputes and misunderstandings.  First and foremost, have a plan should one of the partners or family executives decide to leave the business: how will their role be covered and how will ownership be re-allocated?  Consider including estate planning in your partnership agreement for an older partner to protect the family and restaurant from estate taxes and probate costs.  Further, don’t assume younger generations will want to come into the business or that they will know how to run it when they do; start grooming your successor several years before you plan to retire.  Lastly, if no family member wants to run the business and you don't want to bring in an outsider, start to put together a detailed plan, sooner rather than later, to sell or merge.

Whether a restaurant is family-owned and operated, it is still a business and must be set up properly with clear, well-defined goals and objectives and be operated with the same standardized procedures as any other business.

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.

Footnote:
* University of Vermont School of Business Administration, Family Business Facts             http://www.uvm.edu/business/vfbi/?Page=facts.html

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

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