How to Avoid Declining Sales
Restaurant Closures occur everywhere, it doesn’t matter if you are a corporate restaurant or an independently owned restaurant.
There are many reasons why restaurant closures occur:
1. Economy
2. In Proper Employee Training
3. In Proper Manager Training
4. Under Performing
5. Declining Sales
6. Health Related
7. Lease Agreements
8. Menu.
Below is a short list of restaurants that closed a significant amount of locations:
1. Big Boy Restaurants – 265
2. Ponderosa / Bonanza Restaurants – 212
3. Bennigan’s / Steak & Ale Restaurants – 300
4. Tony Romas – 116
5. Blimpies Subs – 1114
6. Ground Round -106
7. Damon’s Steakhouse -107
8. Chili’s Restaurant – 280
9. Sbarro Restaurant – 155
10. Ryan’s / Old Country Buffet / Hometown Buffet/ Fire Mountain and Country Buffet – 74
11. Friendly’s Restaurant – 100 +
12. Bob Evans – 48
13. McDonald’s Restaurant – 500 +
14. Bone Fish Grill – 14
15. Johnny Rocket – 2
16. Panda Express – 2
17. Starbucks – 2
This list of restaurant closures is relatively small compared to the actual number of restaurants that closed in the past 20 years. The number of restaurant closures in the past 20 years may be in the thousands.
Restaurant sales matter. If your business is going to survive you need to have above average restaurant sales. Declining restaurant sales occur for many reasons.
Managers that can’t manage people or customers
Restaurant Managers are not trained properly. Develop a training program that consists of position training for every area in your restaurant which include:
- Dishwasher Training
- Cook Training / Prep Training
- Server Training
- Greeter Training
- Management Training
- Management training should include:
- Hiring and Training Techniques
- Do’s and Don’ts of Hiring/Firing
- Sexual Harassment
- Open Door Policies
- Manager Computer Functions
- Figure 8’s
- Minor Laws
- Guest Complaints
- Guest Recovery Techniques
- Alley Rallies
- Communication Skills
- Customer Service Skills
- How to read Body Language
- Open & Closing Job Responsibilities
- Cash Procedures / Bank Deposits
- Time & Temperature
- Food Safety/Sanitation Policies
- Checking in the truck
- Security / Safety
- Inventories
- Food / Labor Awareness
- Profit and Loss and Prime Cost
These managers may also possess poor skill sets. Managers need to manage people period. These managers need to know every area in the restaurant like the back of their hand. Managers wear many hats. Restaurants have many moving parts that require a diverse group of people with varying skill sets, talents, and personalities.
Managers who have walked a mile in the shoes of the people they are overseeing are more understanding, compassionate, and seek like-mindedness while providing insight into how best to relate to, approach, and motivate each member of their team The best consistent managers move up in the ranks from the bottom to the top. These managers know firsthand what work and what does not because they came from the regular crew. These managers were once a dishwasher, cook or server and they know what each position details. Furthermore, these managers walked in the shoes of these employees and understand what is expected of them.
Experience is the key in having effective, properly trained managers managing your employees and your restaurant or bar.
Food / Labor / Profit & Loss and Prime Cost Awareness
Knowing your restaurant numbers can be very effective in understanding on where and how to fix the issues. Food cost and labor cost is a large portion of the restaurants financial pie.
It makes up over 60% of the pie. Food and Labor expense are huge and should be managed effectively. Profit and loss statements need to be analyzed and used as a tool in pinpointing along with correcting on-going issues in your business. Knowing your numbers is half the battle, knowing how to correct the issues is the real fix. Food and Labor are the two largest chunks of the restaurant financial pie. Prime cost generally should be between 60- 65%.
Various other restaurants, chain operators are able to keep their prime cost 60% or less, but for most table service independents, achieving a prime cost of 60% to 65% of sales still provides the opportunity to achieve a healthy net income provided a restaurant has a fairly normal cost- and-expense structure in the other areas of their P&L. The gross profit margin is a financial measure used to determine the financial health of a company. It shows the portion of funds remaining after taking out the monetary value of goods sold from the revenue figures. The higher the gross profit margin percentage, the more funds are available to reinvest, save and/or pay expenses
Calculation
To calculate the gross profit margin you will need the revenue and cost of goods sold figures from a company. The gross profit margin is simply the revenue minus the cost of goods sold. This figure is then divided by the revenue and multiplied by 100 to come up with a final percentage.
Knowing and reacting to your numbers will dramatically increase your bottom line as long as you consistently monitor food and labor percentages.
Food Cost Formula
Beginning Inventory + Purchases – Ending Inventory = Cost of Goods Sold (COGS) Divide Cost of Goods Sold by Restaurant Revenue x 100 = Food Cost Percentage.
Food costs (including beverages) for the restaurant industry run typically from the 25 percent to 38 percent range, depending upon the style of the restaurant and the mix of sales.
Labor Cost Formula
Total Labor Dollars Divided by Restaurant Revenue x 100 = Payroll Labor Cost Percentage
Some fast food restaurants can achieve labor cost as low as 25 percent, while table service restaurants are more likely to see labor in the 30 percent to 35 percent range.
Train your managers to be proactive while managing the shifts.
For more valuable information on food and labor awareness visit:http://www.workplacewizards.com/restaurant-101/
Below Average Customer Service
Successful restaurants in today’s world have a system to ensure the servers are providing WOW restaurant customer service to the customers. Restaurant Customer Service must maintain high standards. Many restaurants are having a difficult time staying afloat due to the economy and an unstable market.
Today, most people want to stretch their money, and do not want to spend their hard-earned cash on mediocre service. If the guest receives mediocre service, they will go to the restaurant next door where they can get WOW restaurant customer service. You should be the restaurant next door that is giving WOW service. When you train your servers on how to provide top-notch service, then you will see excellent results. Successful Restaurants use a proven service program. This is the importance of the Workplace Wizard’s WOW Service Program.
Set a high standard, start training your servers today, and become a WOW restaurant. The first part of the Restaurant customer service program is for all the servers to know your Menu. Then they need to know the WOW Steps of Service and receive top-notch training. Next, they need to perform the WOW Steps of Service consistently.
They must feel supported in their efforts by the management staff and the rest of the restaurant team. Cooking staff will also need to be performing top-notch and communicating with service staff.
When it comes to using the WOW Steps of Service test, the servers need to study the steps through the WOW Steps of Service Quick Reference sheet. When they are ready to take the test, they need to take it from memory and not by using the reference sheet.
Plenty of servers say that they know the steps of service, but then when asked them to recite the steps, many of them cannot remember. It is because they do not know them. How can you ensure servers follow the steps if they do not know them?
Training is essential.
The trainer for the Restaurant Customer Service Program needs to the best server in the restaurant or your Front of House Service Manager. The trainer needs to score 100% and can verbally recite the steps. In addition, the trainer should be consistently demonstrating the steps of service in their work. The person leading the training must be a top-performing server who WOW’s the customers on a daily basis.
This server has repeat customers coming in and asking for him/her by name. Once the trainer understands the Restaurant Customer Service Program, he/she can begin training the other service staff.
Steps of Service Quiz and Answer Key
http://www.workplacewizards.com/steps-of-service/
Steps of Service Chart
http://www.workplacewizards.com/server-steps-of-service/
Inferior Food Quality and Execution
It is important that food is prepared and served to the guest quickly and correctly. Hot food hot and cold food cold. As food is placed in the selling window it needs to be delivered to the customer immediately. Leaving food in the food pick up window longer than 20 seconds will produce inferior food that may drop in temperature. Everyone knows that food quality is at its peak straight off the grill, oven or fryer. Technically, if you were to serve food straight off the grill, oven or fryer to the customers that fast you will have less guest complaints and more compliments.
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Timing food is the key to great execution; whatever takes longer to cook should be the very first thing to prepare. For example, burgers: the bun set up should be plated before the burger is done cooking. French fries should be done cooking just before the burger comes off the grill. All items on that plate should be plated together at the same time and hot in temperature. To do this you need to time how long it takes to cook each item. Once you know how long it takes to cook each item, then it’s all about timing the food to come up together and served hot if it’s hot food or cold if it’s cold food.
It would be fantastic if you can afford an expediter to ensure food quantity and quality occurs before it is delivered to the customer. Proper plate presentation and garnishes plays a huge role in this execution.
Plate Presentation
Clockwise: Protein (Meat) Starch then Vegetable.
Each plate needs plated up correctly with the rim of the plate wiped clean with a separate sanitized cloth. Food needs to be of quality and hot. Serve it the way you would expect to receive it. The last line of defense is the person who serves the food to the guest, is the food hot? Is the food of quality? Is the rim of the plate clean? Scrutinize the plate and be very picky after all the guest is paying for it.