So I’m at a recent conference with restaurant owners and we were talking a lot about mobile marketing and social media marketing for restaurants and the question kept coming up – “Do we need to hire someone to do all this stuff?”

Short answer: Yes, absolutely.

Longer answer: You may already have a marketing or PR or tech oriented person on your staff that can take over these duties as part of their job. Yet that would assume that they currently have a lot of downtime in their responsibilities, which, I’d guess, is unlikely to be the case.

In my conversations with restaurant operators we pretty much identified the tasks to require a half time position and perhaps a full time position for aggressive or larger restaurants. So that’s 20-40 hours dedicated to digital marketing – is that prudent and worth it? Well, I’ll argue the answer is yes – so let’s talk about it.

Job Responsibilities & Checklist

There are four main areas I would task for your Digital Marketing Manager…

1) Email Newsletter
You’ve got an e-newsletter right? Please say yes. If not, this is task #1. Find an email service provider like Fishbowl or Constant Contact and get a sign-up form on your website and plug email address collection in your restaurant. You should be publishing an e-newsletter to your customers once a week. Every restaurant has enough going on at their location(s) that weekly is the right frequency. The bare, bare minimum with an email program would be once per month, but that is really not enough. Push for weekly.

2) Website Updates
There is nothing worse than seeing Valentine’s Day event info in May when I’m looking to make Mother’s Day plans. A dedicated e-marketing person on your team will ensure that this does not happen by updating the site weekly with event info, menu changes, new photos/videos, etc. You lose credibility with customers when your website is not updated correctly and this is an easy one to get right.

3) Social Media
Managing social media for your restaurant could be a full-time task all by itself because there is so much to manage, juggle and keep updated on.

There are the big three of social media: Facebook, YouTube & Twitter. There are the social review sites to keep tabs on such as Citysearch, Yelp & Urbanspoon. There are restaurant guide sites from local newspapers and magazines and countless others.

You obviously can’t monitor every single site, but with a dedicated e-marketing manager you can select maybe 10 to 15 websites to keep tabs on by creating a virtual dashboard with direct links to all appropriate sites. See chart for our recommend prioritization of targets.

4) Mobile Marketing
Mobile is getting bigger by the day. Most likely you haven’t started your mobile efforts, but take my advice and get started. Even a slow start, just get some motion going as it relates to mobile. That includes collecting mobile numbers for text messaging and mobile promotions. It also includes investigating mobile apps such as mobile ordering, a customized mobile optimized website, and possible customer service options such as mobile service surveys. The other biggie with mobile is “location based services” and that would include (relatively) new services like Foursquare, Gowalla, Facebook Places as well as many more.

Ok, so believe me when I say that is a lot to keep up with. Who is going to do it? You as the restaurant owner or manager? You just can’t do it yourself. You need to manage and oversee it and have the e-marketing manager report to you or your overall Marketing Manager, but yes you need to have a dedicated person pushing all of these efforts.

If you’re going to commit to e-marketing efforts, then you need to truly commit to them. You can’t start and participate infrequently and think that it is going to work. The immediacy of social media & mobile in particular call for a fresh and updated presence that is never really more than 3 to 5 days dated. Any more than that and your relevance equation drops quite dramatically.

ROI Equation
Your next question should be related to return on investment. Will the salary for your e-marketing manager be justified in increased sales and marketing performance? The good news is your salary investment should be on the lower side as a recent college graduate (or current student) would be ideally suited to the position due to their existing familiarity with the technology involved.

Your Online Voice
One worry I hear from operators is that a young staff member might misrepresent their brand online with a lack of professionalism or inappropriate comment or posting. It’s a valid concern, but it can be managed successfully with your management oversight process. As the owner or executive, you need to build the content plan and tone of voice carefully with your digital marketing manager. It is then their task to spend the quality time and effort to implement that plan in the various online channels.

Metrics & Measurement
You’ll need to establish metrics in order to effectively measure the results of your e-marketing efforts. You can track clicks and new business and increased customer database size as well as fan and follower up ticks and other social connections.

So do the math. How much new business do you need to do to support this new position? I can tell you that it’s a huge opportunity and one of the biggest downsides of taking no action is missing the boat and being late to the party only to find that your direct competitors are better established for success via these e-channels. They can literally dial up customers on-demand through their mobile, social and email customer lists. Do you want to be able to do that?

This article was written and contributed by Running Restaurants, the premium restaurant business membership site.

Jaime Oikle from Restaurant Report is hosting a 1hr teleseminar focused on social media marketing for restaurant owners tomorrow, Wednesday Aug 5, at 3pm EST.

Click here for the full scoop on what will be a VERY informative call

Mr. Oikle invited Joan Stewart from Publicity Hound and Nathan Gilder from Restaurant Revolution to share step-by-step examples and how-to for restauranteurs desiring better relationships with customers.

On this exclusive call with Restaurant Report, new media marketing techniques such as Twitter, Facebook, Youtube, and other important websites will be discussed.

Restaurant owners will be given expert advice and real world examples of other operators using these tools successfully.

Other topics include blogging, dealing with poor reviews online, Internet video creation, and common mistakes operators (both large and small) are prone to experiencing.

Click here for the full list of topics and to register for the call

If you cannot make the live call, a recording will be made available to you!

To differentiate yourself in the restaurant business—and make that burger worth the price—you have to be innovative, creative, irreverent and unpredictable.

At least that’s what works at Hard Rock Café, where customers don’t just pay for those twelve-dollar burgers, they line up for the privilege. And while you may not be able to attract guests with a giant electric guitar or an original Beatles concert poster, you can implement some of the same best practices that have made the Hard Rock’s culture of service so irresistible.

When Peter Morton and Isaak Tigrett opened the first Hard Rock Café in 1971, their vision was to offer hospitality unparalleled in the industry. A lot has changed since then: the menu, the music, even the memorabilia. What hasn’t changed is the Hard Rock’s “unbelievable guest obsession”—or the eight best practices that keep that obsession alive in every restaurant, every day.

1. Train employees in the language in which they dream. Respect for individuals means respecting the ways in which they learn. Variety is the key: offer training in multiple languages, through multiple medium. At the Hard Rock, most training is delivered “comic-book style,” with fewer words, more pictures and a healthy dose of humor.
2. Assist your staff in creating a volunteer philanthropy group. Make sure your mottos are more than just words on a wall. At the Hard Rock, the phrase “Love All – Serve All” represents an absolute commitment to making the world a better place. A unique volunteer program is created at each café, and the employees drive the process. As a result, they are more determined in their efforts—and more loyal to the company that helps them make a difference.
3. Enforce standards, but give out “permission slips.” Fundamentals are important: the right people need to be in the right positions with the right training, and technical standards must be met. But truly individualized service is delivered by individuals. Give employees the freedom to be the people you hired.
4. Hire only “rock stars”—and treat them like volunteers. The expression “hire for personality, train for skill” is popular for a reason: Unique experiences are created by unique people. And to get the best performance out of those unique people, treat them with the same courtesy and respect you’d show a workforce of volunteers—and they’ll pass that behavior on to your guests.
5. Realize that people will only repeat what they like. If guests paid a cover charge to enter your restaurant, would you treat them differently? Would you welcome them more warmly and talk with them at every opportunity, rather than just when you’re serving them food? This is how Hard Rock employees are trained to think about guests—and it shows in every interaction.
6. Earn mental “shelf space” by creating positive experiences. Guests rate us on a REX scale: reality versus expectations. To earn a positive rating, we have to exceed expectations. And since guests have so many choices (and such short memories), we have to earn positive ratings every time, with every guest, to stay top-of-mind.
7. Treat every customer like a guest in your home, your company’s CEO or a first date. When the CEO eats dinner in your restaurant, do your cooks make absolutely certain his or her order is perfect? Do servers execute every step of the sequence of service? Do managers stop by the table for authentic, personalized conversation? Now imagine what would happen if every guest were treated this way.
8. Do what you say you will do. Companies with integrity have employees with integrity. Deliver on your promises to employees, and they will deliver on your promises to guests. At the Hard Rock, that “promise” is the same as it was in 1971: an unparalleled guest experience. What promise does your company make?

by Jim Knight, Senior Director of Training and Development at Hard Rock International and member of CHART, restaurant training.

Though most culinary programs teach many different methods for pricing food, every culinary student seems to emerge from the Culinary Institute of America or Le Cordon Bleu believing in the world of restaurants, all they have to do to be profitable is serve great food and deliver a 33% food cost, or is it 25%, or 35% or 30% or 19%?

The truth is, hitting a budgeted food cost does nothing to guarantee there will be enough money left over from the sale to pay for things like labor, rent, insurance, linens, smallwares, uniforms, utilities, taxes, etc, etc, etc.

Hitting that cost percentage really means nothing.

Further, not hitting it only means, “I should give things a closer look.” It doesn’t mean there is a problem. On the contrary, a high food cost could mean you’ve been selling a lot of high cost items that contribute more gross profit per sale. Are you going to make more money selling 50 hamburgers priced at $6 that cost $1.50, or 50 lobsters priced at $30 that cost $15?

As long as there isn’t a significant increase in the overhead of serving the lobster, gross profit dollars win every time. You don’t want to sell the item with the 25% cost and $4.50 gross profit, you want to sell the item with the 50% cost and the $15 gross profit.

Rather than comparing the food costs, you should be comparing the gross profits from each item. Obviously, if you have $15 left over from the sale after paying for food (gross profit) compared to $4.50, you’re going to have a lot more money to pay your overhead and turn a profit.

If you want to create prices in your restaurant that guarantee you’ll have enough dollars left over after paying for food, you’ll need to make three important considerations:

1. Market price point – What does your market consider a fair price for the food you are preparing, served in the atmosphere you offer?
2. Menu item cost – I know I said you shouldn’t use cost percentages. That doesn’t mean you don’t include the cost of the food into the price. You need to keep up-to-date recipe dollar costs for every item on your menu, and use those costs to figure into your pricing.
3. Needed gross profit – What does every person who walks through your door cost you to serve? You have a lot more costs to cover than just food. That’s just a fraction of the picture. You must consider every expense of running your business when pricing menu items, including the profit you need to make.

I guess now the question is, “How do I price by gross profit?”.

I’m glad you asked.

Market Price Point

You can’t throw prices out there, whether based on cost percentages or gross profit, without considering what your market is already paying for those products elsewhere. Just like your potential customers, you must consider what other operations are charging for the same type of food, or even the same dishes, that you are offering.

If you are going to charge more for the same dish than your competitor down the street, you have to be able to justify your price with added value. Added value could be larger portions, more exotic ingredients, better atmosphere, better location, live entertainment or something else. It could also be the promise and delivery of a unique selling point that your competition doesn’t have.

Whatever your prices, they must offer value to your customers. If your customers don’t feel your food is worth what you’re charging, you won’t have enough of them to make money no matter your pricing method.

Menu Item Cost

How much does each menu item cost you to make? Ingredient costs go up all the time. When is the last time you updated your menu item costs? Without knowing exactly what a menu item costs you to make, and how many dollars you need to add on to the price to pay for the ingredients, you can’t possibly come up with prices you KNOW are going to make you money.

The easiest way to track recipe costs (menu item costs) in my opinion is with Microsoft Excel spreadsheets. While there are many commercial food costing and inventory programs out there that will help you cost out your items, many use costing formulas based on valuation methods I don’t endorse, or require too much input to keep prices up-to-date.

Some do have the capability of linking directly to broadline vendor’s invoicing systems to update prices automatically, but most smaller vendors don’t have this capabibility and you’re still left doing a lot of extra manual input. For my money, there is nothing simpler, less time consuming and easier to use than Excel spreadsheets.

That doesn’t mean you shouldn’t use other inventory and costing tools. Any effort you make toward calculating recipe costs and inventory is going to pay off. Even the more expensive softwares will make you money in the end.

Don’t make the mistake of getting lazy with your recipe cost tracking. Many operators only price out menu items when they’re making a menu change (which are normally too few are far between). Between changes, they don’t see how the cost of ingredients is impacting certain menu items, and without that information they don’t have the urgency to make the necessary pricing changes needed when they are needed.

Needed Gross Profit

This is the most important consideration in setting menu prices. You must know what your guests cost you to serve. Without knowing what they cost you to serve, you can’t know how much money you need from each of them to pay all your bills and make a profit.

Look at your financial picture this way. Your food costs make up anywhere from 20-35% of your financial picture in most restaurants. Depending on your labor costs, your food cost could be the largest expense of running your business, and it needs consideration when forming menu prices.

BUT……

What about the other 65-80% of your financial picture? It’s not all profit. Most of that picture is expenses other than food cost, and if you’re lucky a little profit left over. Doesn’t it go to reason that you have to include those costs in your pricing? Of course it does. Without knowing those costs are covered, you can’t know you’ll make money.

Before you can know how to add gross profit into a menu price, you have to know how to calculate it. Here are some explanations to try and illustrate how to calculate a needed gross profit per person. The needed gross profit per person is what you add to your recipe cost to arrive at a menu price. Unlike the menu price, the needed gross profit per person is a fluid number.

Since it is important to keep menu items within the price point of your market, you will likely have to increase the gross profit you add to some items, while decreasing it on other items. It’s only important that the end result gives you an average gross profit per person that delivers enough gross profit to pay the bills.

You can start to calculate your needed gross profit by looking at your financials and customer count records. It’s best to use financials from months where you achieved as many of your financial goals as possible to establish your needed gross profit numbers. You can use an average of all months by using a year-end profit and loss statement.

From your P&L, you need to find how much all your operating expenses for the year were without including product costs. This is your overhead. To this, you’ll add the ideal profit you should have made during that time period.

Total expenses for year – product costs + ideal profit = Total needed gross profit

Once you know how much gross profit you would have needed to collect during the last year to make the profit you should have made, you have the beginnings of your pricing method. Before we go any further, you need to take into consideration any inflation or cost increases you can assume for the following year.

Operating costs will always go up, and you need to price for those cost increases. If you’re smart, you’ll re-price your menu every 3-4 months to make sure those costs are covered, but that is another article. To be on the safe side, I add a 5% cost increase into the total needed gross profit to come up with a target for the next year.

With the ever increasing cost of gas, you could either add in a higher buffer, or do what I suggest and evaluate your pricing every 3 to 4 months. It’s much better to do regular, small increases to some menu items than annual large increases to all of them.

Total need gross profit x cost plus increase (105%) = Total needed gross profit (adjusted for next year)

Now that you have your new needed gross profit, it is very easy to figure out how much of it you’ll need to collect from each person to cover all your expenses. That is, assuming you track how many people come into your restaurant. If you don’t, you need to start doing it now, and you’ll need to estimate how many covers you did for the previous year. Estimate low to be on the safe side.

To find out how much you need to collect from each person, simply divide your total neeeded gross profit for the upcoming year by your total customer count for the last year.

Total needed customer count ÷ previous year customer count = Needed gross profit per customer

This number is simply the amount of gross profit you would have had to collect from each of last year’s customers to achieve your financial goals for the upcoming year. What this gives you, is a target gross profit to collect from every person this year to achieve profit. That profit will be achieved if you can meet or exceed your customer counts from the year before, or you can exceed the gross profit average per customer.

Gross profit per customer x customers per year = Actual gross profit

If you can exceed your total needed gross profit per year with your actual gross profit, and you do a good job of controlling your expenses, you will exceed the profit you budgeted for.

Remember in all this that your budgeted food cost percentage hasn’t entered into the equation once. You are adding the actual cost of your menu items to the needed gross profit per customer to come up with a selling price. That’s all it takes.

There are a few other things to consider though. Your needed gross profit per customer is collected from a few different sources. You don’t have to mark up every menu item by your needed gross profit. Your needed gross profit per customer is collected by combining gross profits from everything a customer buys.

The markup on entrees, appetizers, desserts, soft beverages, alcohol and merchandise all contribute to gross profit. If you need $7 in markup from 30,000 customers per year to make your total needed gross profit, you have many different avenues to get it from and don’t have to mark up every menu item by $7.

Another factor that majorly affects these averages is your customer count.

If you’ve determined that you need $7 gross profit from each of 30,000 customers that walks through your door to reach your total needed gross profit, then you can also reach that number ($210,000) by serving more customers at a lower gross profit markup.

If you could double your covers to 60,000, you could theoretically collect $3.50 in markup from each to collect the same total gross profit. Whenever considering cover changes however, you must also consider how serving more people will change your overhead.

If you serve twice as many people, some of your expenses will also increase. They WILL NOT however, increase exponentially. Additional customers are always cheaper to serve than your primary customers, as they are the ones you are covering your fixed costs with. Add your additional expenses to your year end numbers and start over calculating your needed gross profit.

I hope I’ve laid out this method in a way that you can understand it. While it isn’t complicated, it does go against the principles being taught in classrooms and kitchens all over the country. If you have followed along well though, you can see how this pricing method takes into consideration every cost of doing business, and leaves no guessing as to what you need to do to make money. This method of more effective planning could do a world of good for your profitability.

Article by Brandon O’Dell, the restaurant consultant.

]]> http://www.restaurantrevolution.com/food-pricing-for-your-restaurant/feed/ 1 http://www.restaurantrevolution.com/using-your-restaurant-music-for-employee-retention/ http://www.restaurantrevolution.com/using-your-restaurant-music-for-employee-retention/#comments Fri, 11 Jul 2008 03:02:12 +0000 Nathan http://www.restaurantrevolution.com/?p=79 Music can inspire, sooth, motivate, energize and activate the human mind. People everywhere love to listen, shake, rattle, rock, roll, twist, cry, jump, rap, bump, slam, disco, waltz, polka, relax, sleep and even learn to a variety of recorded sounds.

Bringing my passion of music to training was a natural progression for me. The strategic use of music to train restaurant employees has proven to be an invaluable tool to engage employees, impact learning and affect behavioral change.

Music sets the mood and atmosphere; and also touches emotions, breaks walls of resistance, energizes, and relaxes. Here are some examples of how music can be used in ways that are appropriate, motivating, and memorable:

New Menu Item Rollout
We had a restaurant that was going to be adding a line of rollup sandwiches to their menu, so we tied training into a “Shake-Rattle-and Roll” theme. We used Joe Turner’s old “Shake-Rattle and Roll” song as the theme for the staff training and even called it “The Shake-Rattle-and Roll, Rollup Menu Roll Out” training session. It was a blast and we had every team member shake, rattling, and rolling rollups!

Clean Is Mean!
During cleaning and sanitation training for a restaurant that employed mostly high school-aged workers, we created a “Clean Is Mean” rap contest. I used rap music during the training session and then we had the employees team up in small groups and compose a rap song that was called “Clean Is Mean” (mean meaning “cool.”) The objective was to include all our major cleaning and sanitation points covered in the session into their songs. We then had the teams perform their composition and awarded rap CD’s for prizes.

Holiday Specials
I once used a surfing music theme before, during, and after a training session focusing on our Memorial Day weekend specials. We played surfing music from the 1960′s during the training and throughout the weekend in the restaurant. We used music from the Beach Boys, The Ventures, The Trashmen, Dick Dale and the Deltones, just to name a few. We even called our servers, “surfers” for the weekend and had them all “surfing” up food.

It’s important to choose the right music for the right situation and the right audience. Before you embark on using music to engage employees, remember the following “4 P’s”:

• Preparing – Choose, in advance, the music appropriate to your audience and purpose.
• Precaution – Music published before 1900’s is considered Public Domain and can be used free of charge. Most modern music, however, is protected by copyright laws, unless used by non-profit organizations. Contact ASCAP at 800-505-4052 or BMI at 212-586-2000 for details.
• Practice – Be comfortable with the equipment and music chosen.
• Premier – Your use of music slowly. Test it out to make sure it produces the desired results.

No matter what the training topic or setting, I never leave my office without my CD’s and boombox! Have fun and rock on!

Article by Lanny N. Okonek, member and past President of the restaurant training Council of Hotel and Restaurant Trainers (CHART)

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