Bracing for a recession

These are tough times for everybody but perhaps restaurateurs are feeling the impact more than most other business since people are cutting down the eating out budget.

I read somewhere that the restaurants suffering the most are the middle priced ones. People who used to pay $20 to $30 for a meal are going now to fast food places to eat cheaper. Fancy restaurant clientele are not being affected that much by the crisis so they can still afford to go out to their favorite upscale restaurant and pay the fare.

So what can you do, if you have a small mid-priced restaurant to survive these down times?

Here are some suggestions for you:

  1. Look at your marketing budget and cut any expenses that you can’t measure. This doesn’t mean to cut down in marketing. Cutting down in marketing in slow times is a terrible idea, although for many restaurateurs is the first thing to do to save money. What you have to do is to make sure that your marketing dollars are working hard. If you don’t know if a marketing campaign is working for you, then assume that it is not. For example, don’t spend money advertising in newspapers, magazines, radio or Yellow Pages if you can’t count how many customers these ads bring to your place. You need to make sure that you are making more revenue from the ads than you are spending in the advertising. This looks like an obvious thing but I can guarantee you that many restaurateurs never question or analyze their advertising expenses.
  2. Reduce your portions if you give lots of food in your dishes. Not only you’ll be doing a favor to your customers (they really don’t need to overeat these huge portions) but you will save in food costs. Reduce quantity and improve quality. Everybody will benefit.
  3. Look at your menu and see if you have dishes that give you very small profits (either because of the high cost of their ingredients or because they are very labor intensive and difficult to prepare). If so, replace them by dishes easier to make or that require less or more inexpensive ingredients. Again, you will save in food costs increasing this way your profit per sale.
  4. Keep an eye on your labor expenses. If you see that some days of the week are slower, reduce your employees these days. If you reduce your labor expenses, you will cope better with slow times since you won’t spend in food if they don’t eat.
  5. Spend extra time and energy pleasing your clients. They are your most important asset, more than your food or your chef or anybody else. If you don’t have clients, nothing else matters. Period. Make them very welcome to your place, bend backwards to please them and try to always exceed their expectations. This is the best way to assure that they will come back.
  6. If you haven’t done so, start a formalized referral system to bring back your best clients. Please read my previous blog to get more information about this point.
  7. Replace costly snail mail by communications via your website and email. This cost you nothing and will allow you to keep in touch with your clients more often.

These are just some ideas for you to implement. In these time of crisis, ingenuity and excellence go a long way to make sure that you’ll be there when the economy recovers and hungry customers are looking for the best places to eat. Your restaurant should be always on top of their minds and their harts.

Good luck!

Jose L Riesco
© Riesco Consulting Inc
Restaurant Marketing Strategies

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