The debate about coupons as a tool for restaurant marketing will rage forever. Some say they are not necessary and give away bottom-line profits unnessasarily. Other entrepreneurs say it is a great way to introduce new guests to the restaurant and to feature new menu items.

The fact is both sides of this raging industry battle are right and wrong. Using coupons and incentives can be a waste of resources if used improperly and too frequently. On the other hand, if used to highlight or feature a segment of your menu, they can change a frequent diner’s habits and encourage more adventuresome trials of your menu.

Here are a few do’s and don’ts when considering coupon campaigns;

• Don’t use a coupon to reward a frequent diner’s existing habit. Why offer $5 off next weeks visit? They would be there anyway!
• Do reward a diner for becoming involved in your marketing. For instance, a free dessert or appetizer for bringing in a new guest is a good incentive.
• Don’t try to drive new traffic to your restaurant with an insignificant coupon. Few people are motivated by a $10 off coupon to try a restaurant for the first time. When is the last time you were motivated by a coupon to try something new?
• Do use a coupon to fill weak sales periods in your day. For instance, offering a free espresso with the purchase of a slice of pie from 2 to 5 PM daily may help build those hours and encourage expanded visits.
• Don’t measure your results solely in the number of coupons returned. Sometimes the mere offering is enough to draw attention to something new. An example may be a series of new pasta dishes coupled with a coupon for a free fried ravioli appetizer. Customer’s attention is drawn to the higher margin pasta selections and may produce sales in the long term, even though the temporary coupon was never used.
• Do work the math on every coupon campaign. Look at your goals and the cost to attain them. Is there a less expensive way to reach the same results?

If you use the coupon as an incentive too frequently, it almost becomes a permanent discount that a customer begins to expect. Over a long period of time, guests may wait to visit only when the incentive is offered. Coupons are just one arrow in your quiver of marketing tools.

In Part 1 we discussed the customer’s tendencies and habits in a difficult economy. Now we need to examine how restaurant owners and managers need to change their thinking to match the consumer’s outlook.

Almost from the day an entrepreneur gets into the restaurant business, the term “margin” is tossed around freely. In the hotel, institutional and chains, the margin between food cost and selling price becomes fixed as the way to price the menu item. Everything is based on an acceptable percentage to maintain profitability. Independent restaurant owners need to re-think this process. Independents don’t have the luxury of a captive market like hotels, hospitals, schools and other foodservice operations that have fewer competitive forces and customers who can opt for convenience as opposed to price or value.

When tweaking your menu for consumer trends, balance is still a concern. You need to have items that will allow the diner to choose lower priced entrees  if that is their mood, while not deviating from your theme or concept. However, pricing becomes an opportunity to look at total plate profits as opposed to just a particular margin goal. For instance, if you are a steak house and price a New York strip dinner at $23.95, you may have costs for the total plate in the range of $11 to $12. You plate profit will be $11 to $13.

When looking at a lower price point for a new menu item or two, consider plate cost and profit rather than just margins. An example could be a Blackened Chicken Breast Fettuccine that has a cost somewhere around $2.50 to $3.50. Priced at $15, you will have about the same plate profit as the New York strip and be offering the diner a choice that is almost $8 less than the extravagant steak. It’s perception that counts. Do you care which dish your customer orders? Probably not.

A customer who orders a generous portion of a Pot Roast Feature with potatoes, onions and carrots can bring the same dollar amount to your bottom line as a lobster dinner. Bacon wrapped pork tenderloin medallions with a red cabbage and apple chutney can be as profitable as that fisherman’s platter at a much lower price. That grouper sandwich at $11 is no more profitable than a grouper cheek Po Boy. Same fish, different cuts and sizes. Turn your nose up at chicken livers if you must, but one of our units recently sold twenty pounds of chicken livers on a featured special in one night. The cost - $.80 a pound! The price $14. Comfort food right out of the baby-boomer’s childhood, but I doubt we could sustain those sales for a long period.

The keys to implementing this strategy are;

• Meet with your suppliers. They can offer insight into product alternatives and hints at what others are doing.
• Look at the lower cost items in your pantry rather than the normal routine of controlling the top 20% of your purchased supplies.
• Use the Internet to search for ideas using keywords like rice, pasta, beans, chicken and pork as ingredients.
• Time is not on your side. Do it now, while the consumer’s plight at the grocery store is fresh in their mind. Don’t lose guests because you failed to respond.

Creativity and spending time focusing on lower cost protein items will give both you and the consumer reasons to stay comfortable in a difficult economic climate.

Larry Edger, Author

The Restaurant Ebook 

Most restaurants create their menu according to theme, demographics and functional abilities. This year the industry is facing external challenges unequaled in near term history. Many think we are either in a recession or close to one with spiraling inflation that has hit food costs harder than other business segments and less discretionary cash available to consumers that has reduced their restaurant visits.

It’s time for a menu makeover that includes more than just raising prices.

When uncertain financial times sweep across the country, several things, both consciously and unconsciously, alters the average person’s thought processes. Conserving disposable income becomes a forethought rather than an afterthought. While studies show that people may spend more time at the local pub, they also tend to change their eating habits to varying degrees. Upscale white tablecloth eateries will probably be hit the hardest, but all types of restaurants will feel the crunch.

Menu’s will be scrutinized more carefully than normal. People will look for perceived bargains and items they can’t possibly reproduce at home. At the same time, they will revert to feel good items - like comfort food.

To adapt your menu to uncertain financial conditions, here are a few tips;

• Bargains in the guest’s mind make take the form of smaller portions, a sirloin instead of filet mignon, a sandwich instead of a full meal or even split plates of larger portioned dinners.
• Comfort food may include classics from their childhood and foods they wouldn’t normally eat do to health concerns. There will be the tendency to be less adventuresome in their dining habits.
• Hard to find ingredients that cannot be purchased economically by the average customer may tempt the guest frequently. Examples include fruits like fresh red cherries and green tomatoes , vegetables like red peppers and Vidalia onions and meats like fresh turkey and pork tenderloin.

In every cloud there is a bit of silver lining. There are opportunities for the restaurateur to increase margins while catering to the guest’s whims in a difficult economy. Comfort food can offer great latitude for interpretation. Smaller portions need not mean lower margins and selective purchasing can offer unique specials that may not sell in other circumstances.

Get creative and add your flair and theme to old classics. When was the last time you saw hamloaf on a menu? How about potatoes au gratin? A green bean casserole doesn’t have to be served just around the holidays. If there is anyone who didn’t have some type of beans and cornbread while growing up, they missed part of their childhood! Who can forget the apple crisps and strawberry short cakes before fake sponge cake? Have you thought about mixing old favorites like spaghetti and pork chops? And, of course, there about a thousand ways to be creative with meatloaf. I can’t think of anything more comforting that corned beef hash with a poached egg on top. Macaroni and cheese has become a mainstream menu item that includes everything from truffles to tea leaves.

Now if you read the paragraph above and your mouth isn’t watering just a little bit, you need to move along to another site. The comfort food and ageless classics may be an opportunity waiting to happen for your restaurant trying to meet the customer’s expectations. Do you need to change your entire menu? Absolutely not. You only need a few creative items that gives the customer an alternative - nothing more.

Part two to Restaurant Menu Strategies will deal with a new way to look at profitability and pricing for this economy.

Larry Edger, Author

The Restaurant Ebook 

It’s clear 2008 will challenge even the best restaurant owners. Prices are rising faster than operators can respond. Cost controls  are essential, but how does the restaurateur get ahead of the trends? How can you adjust menu prices before the increases hit your bottom line because you are retroactive to the suppliers’ charges?

Here are some guidelines.

• First, check our commodity trends link in restaurant resources section. Weekly visits will give you an idea of where prices for beef, pork, chicken and dairy products are headed.
• Second, many major suppliers have a Trend Report that they will release to customers. These releases report notices of price increases from processors, manufacturing representatives and other purveyors.
• Third, try to negotiate locked in prices from any suppliers you can. Many will hold pricing for items that you can anticipate usage for the next 90 days.
• Fourth, listen to stock market reports and commodity prices. If a bushel of corn has an extended upward trend, you are going to feel it. If pork bellies look like the they are making a move, you are going to see your prices going up.
• Fifth, use common sense. If wheat and flour are increasing, bread is going up. If sugar takes a jump, desserts are going to follow suit. Oil prices will effect any petroleum products used in manufacturing everything from trash bags to portion cups.

Take these five steps and review your menu every month. You can stay ahead of the game and keep those numbers in the black.

 Larry Edger, Author

The Restaurant Ebook

The Internet is a beautiful thing! Behind the keyboard you can be anything you want. There is even a song that tells the tale of a guy who becomes 6 feet 5 inches tall, dark and handsome - online. He becomes a millionaire with big fancy cars and expensive habits - online. His fantasies become reality - online.

When it comes to finding help for ailing restaurants, its amazing to me that websites, blogs and articles hype the achievements of the fabulous marketing gurus who become magicians - online. They apparently have crystal balls, taro cards, boiling pots of potions and withered skulls that produce overnight results for anyone willing to pay. There are so many of them that I have to believe someone is believing their hype.

I may be a little naive when it comes to Internet marketing, but are there really restaurant owners who are hiring these online marvels? Are there really business people who believe there are quick fixes for sales, marketing and operational problems? What happened to knowledge, experience, learning and planning?

Visiting other websites and blogs have become my daily humor exercise. How can anyone not be amused by someone selling the restaurant “W.O.W. Factor” for $29.95 and offering a guarantee that if it doesn’t work, they will work for free (by email) until it does? More belly laughs can be had by the people who offer thousands of new customers by purchasing their mailing lists of people who are moving into your area. I don’t know where you live, but the real estate agents in my state are looking for jobs. I am wondering if these “thousands” are homeless and all the mail is going to shelters?

Of course, then there are the “marketing experts” who just came out of a national restaurant chain who were responsible for “397 multi-unit operations”. This person is now offering their “coaching” skills for as little as $25 per hour to give you the “secrets” of restaurant marketing. Now if you are sitting in Podunk, Idaho with a restaurant that just lost $10,000 last month, what do you think some character out of a public restaurant chain based in Atlanta can do for you?

Restaurateurs who fall for these voodoo, knee jerk pitches online should walk out the door, go to the closest McDonald’s, spend five bucks on a burger and shake and then just watch, look and listen for about an hour. You will learn more about marketing, service, cost control, customer expectations, operations and training in an hour than a $25 an hour witch doctor will teach you. There, I just saved you $20! Send me a fee.

To survive in the restaurant business you need knowledge, not quick fixes. You need to learn what marketing really is. You need to know what your customers expect. You need to know the differences between cash flow and profits. You need to find how to develop a marketing plan while tweaking your customer service system. You need ideas that work for your restaurant, not the chains. You need to know about analyzing you demographics. You need to find out why you have advantages the chains can’t match.

There is no substitute for experience. Of course, I am kind of fascinated by the thought of becoming a witch doctor. Might be fun concocting these quick-fix potions in some 40 quart pot. Maybe I can get the staff to do a little dance around the kitchen at the same time.

Larry Edger, Author

The Restaurant Ebook

Now is the time for independent restaurant to really show their skills in meeting the consumers demand. All the signs show that the average family will have to tighten their budget. Higher gas prices lead the way for inflationary pressures on almost every commodity your guests are buying.

Chains will take months to respond to consumer spending trends, but the independent restaurant can start now.

While food costs are are escalating, there are some comparative bargains that can be passed along to your customers. You can also modify your menu to include new items and serving methods that lets your customers know you understand. Economic woe’s are also the time when diners look for comfort foods. Coincidentally, comfort foods generally have the highest margins for restaurateurs.

Here are a few ideas to keep your guests coming back, but spending less;

• What are bargain foods? Pork, still a low priced protein. Ground beef has gone up, but the versatility can fill your menu.
• Many less expensive beef cuts can produce the best comfort foods like pot roast, corned beef, sirloin and chuck.
• Some seafood has remained steady such as shrimp. New fish species, both farm raised and wild, are being offered at reasonable prices.
• Try new serving ideas on your menu. How about a whole roasted chicken dinner? A stuffed pork tenderloin is an inexpensive entree with great presentation options. Family style servings of vegetables, potatoes and sides can reduce your plate costs, save time and reduce waste.
• Rice, beans and pasta continue to offer a value for the diner. Pasta servings can be produced for less than the cost of a candy bar and offers wide latitude for preparation. Now is the time for spaghetti, fettuccine and lasagna.

Now is the time to sit down with your food purveyors to seek out those bargains. They will give you ideas about what others are doing and new products that meet your goals. You don’t need to replace your entire menu, just find those dishes you can identify as pocketbook friendly.

By the time the chains respond to the trends, the economy will be improving if the cycle holds true to form. You will have built your loyal base through a marketing phase that will emphasize your economic friendly menu. The opportunity exists to build your brand as consumer responsive.

Larry Edger, Author

The Restaurant Ebook

Quick Service Restaurants (the politically correct words for fast food joints) have been a thorn in the side for many independent restaurateurs. They can decimate a lunch trade when two or three open up within a few blocks of your establishment. You can fight them or use them to build a better trade and niche.

Chains like Burger King, McDonald’s, Pizza Hut and Subway spend millions of dollars on research. They study food trends, marketing techniques, workflow, cost controls, equipment uses and even the colors that motivate people. The QSR’s have hundreds of employees working in various departments producing consumer information on just about any subject you can imagine.

How can you utilize this information? Try a few of these ideas.

• When researching new menu items, look at new products released by the chains. If they think smoked Gouda and pears are a hot combination, you can bet they spent tens of thousands of dollars to test the flavor combinations. You can use the flavor profiles they may develop to create an entirely new dish of your own.
• If you want to find the best brands and newest equipment technology, just look at the QSR’s. A few years ago Dunkin Donuts got into the lunch business with hot sandwiches. Most of their facilities and franchisees couldn’t retrofit their kitchens with traditional cooking equipment, so they went to the “Turbo” ovens that could turn out crisp hot sandwiches in seconds. The oven needed no hood, no vent and was affordable. Now these quick ovens are being utilized in a growing number of fast casual and upscale restaurants.
• Want to control costs? No one does portion control better than QSR’s. That is the only way they can produce a profit and maintain consistency. Watch what they control and how they do it, right down to the napkins.
• Watch economic trends by watching the fast service restaurant’s emphasis. This year, as some say we may be moving toward a recession, watch the advertising of more “dollar” meal values. They will cater to the consumer’s pocketbook. You may want to do the same thing.
• Want to redecorate your restaurant? Just look at colors used in QSR’s and DON’T use them. Fast food locations want to move people in and out. They have researched color combinations to the point where they know what colors and seating will keep the customer from being a fixture. They want to get them out the door!

How do you find out what the QSR’s are researching, marketing and releasing? Just check out their websites. There is a wealth of information you can use. Test markets for food, new consumer nutrition data, trends for cooking and even supplier data.

Remember, QSR’s don’t have a niche. They merely want to serve the customer quick with a value. You can find their weaknesses as well as their strengths. Use the weaknesses to build your competitive brand. Note what you don’t see such as fresh vegetables that spoil easily such as avocados, meats that take long cooking times and care like brisket, breads that have a short shelf life and quality desserts.

Studying the QSR’s can make their research and develop department a a part of your strategy.

Larry Edger, Author

The Restaurant Ebook

One way to improve service, food, procedures and get pointed feedback is to ask your servers and other employees what can be done better. Encourage anonymous responses to pointed questions. Examples may include:

• What is the food item most wasted on return plates?
• What do we get requests for that is not on the menu?
• What is the weakest item on the menu in terms of quality?
• How can we serve the guest faster?
• What procedures would you most like to see changed?
• How can we help you earn more tips?
• What would you change in the kitchen?
• How can we sell more beverages?
• If you were owner or General Manager, what would you change?

Your operation may have additional focus with the questions. Only use this about three or four times a year to be effective and not a regular bitch session. Give each employee an envelope that makes the responses private.

Finally, publish the results eliminating any personal names. Follow up with additional questions if some of the responses are unclear. These semi-annual forms have produced marketing ideas, menu changes and cost saving procedural changes many times in our operations. The ultimate beneficiary is the customer.

Larry Edger, Author
The Restaurant Ebook

All the projections are in. The restaurant industry is expected to be hit with upward spiraling food costs and lower consumer discretionary spending on dining out. The National Restaurant Association expects real growth of only .9% for 2008. Most sources blame the economy and gasoline prices.

On the street, I am hearing friends from Chicago to Florida that are showing dismal sales in the last couple of months. Food prices as escalating faster than you can change menu prices. Many restaurants are closing their doors after a lack luster year in 2007. One of the nation’s largest food wholesalers tells me their bad receivables are higher than they have ever been. Chains are are closing many weak performing operations.

What can you do? Stop the madness!

Take eight hours off - right now, to reverse the double whammy. Higher prices are coming. See an earlier post on controlling costs in 2008. At the very least, listen to the consumer, they want reasonable priced entrees. Use menu items where the margins remain high. Offer smaller portions, half size plates and focus on comfort food. These and other details are in the post from January 30, 2008 titled “Price Increases Threaten Industry“.

After getting your cost control plan in place, now focus on increasing sales. You must start now. There are no quick fixes. Implementing plans that will boost sales take weeks to produce long term results. Here are the steps to protect your restaurant in 2008;

• Write a Marketing Plan for the next six months.
• Address each of the marketing functions - communicating with prospective customers, selling those prospects and delivering your product.
• Once you have your plan, involve every staff member. Even if you only have a couple of employees, let them know your plans and get them involved.
• Implement your plan immediately. Many things in your marketing plan can be done overnight with little or no cost.
• Schedule a monthly review of your plan. Keep track of results.

If you don’t know how to write a marketing plan or are new to the industry, you can rely on The Restaurant Ebook to show you all the detailed steps. There are forms for a marketing plan and over 100 ways to increase sales and market your restaurant. Each idea not only tells you what to do, but exactly how to do it.

As an author and veteran of the restaurant business, I am not immune to the whims of economic conditions. My restaurants started an all new marketing plan in October, 2007. So far, we have not felt the downturn many other restaurants are reporting. Did I have a crystal ball and know that conditions were going to be bad in 2008? No, one of my restaurants had flat sales through the third quarter of 2007 and we embarked on a new marketing plan in October. It’s paying off now with sales above 2007 levels.

Again, stop the madness - right now! Turn the double whammy into a whimpering memory.

Larry Edger, Author

The Restaurant Ebook

Somewhere around 1997, just after retiring and buying my first restaurant, I was intrigued by a prep cook from Jamaica. He was, I thought at first, a little strange, quiet, hard working and very resourceful. He grew up in a place that most of us in this country would call poor to almost homeless. Shacks that blew down after each storm that passed through the island of Jamaica is what his family called home.

Food was scarce during the prep cook’s childhood days. He watched as his mother scrounged around the tourist areas for “fresh” garbage. The tops and ends from onions, the stems of peppers, seeds and discards from papaya, yucca peels and anything thrown out behind the restaurants where well heeled travelers stop for food. From these roots, our cook learned how to preserve, live and make some of the most awesome stocks you could imagine!

Everyday I would roam through the kitchen and see three pots on the stove. Each held a gallon or more of water and was distinguished by their contents. One always held the remnants of almost every scrap of waste from vegetables, another held all the shrimp tales, fish bones and seafood trimmings and the third had the fat, bones and skin from beef and pork waste or some days, chicken. By the end of the cook’s workday, he strained down the remnants of the three pots into two or three quarts of these cloudy looking liquids.

I discovered that he fed the entire staff. Cooks, dishwashers, servers and managers savored daily concoctions that generally ended up with lentils, beans, chickpeas or some other indescribable ingredient. To my amazement, these soups were far superior to the items available on the menu. The Kitchen Manager explained that most of our recipes were started from bases. Our Jamaican prep cook changed all of that. He not only revised our recipes, but started a daily soup that outsold the three already on the menu.

When looking for ways to control food costs, perhaps the place to start is the trash. What are you throwing away everyday that could be used? Many common restaurant dishes originated from food that otherwise would have found the dumpster. Potato skins and twice baked potatoes came from left over baked potatoes. Many great fish stews and gumbos got their start from carcasses of cleaned fish. Sauces made from broken pieces of shrimp, scallops and fish fillets are flavorful and easy to prepare. Bread crumbs and croutons made from stale bread have more flavor than commercial counterparts.

The bottom line is…… the bottom line! 

Larry Edger, Author

The Restaurant Ebook