Opening a Restaurant:  Great Restaurants Have “Soul”

Great restaurants have an extra dimension that take them from being a restaurant to being a magical place.  The word Restaurant is derived from a Latin word meaning to “restore”.  Great restaurants can be transformative.  If you are opening a restaurant you may wonder – But how do they get that way?

My family owned a seafood restaurant in Panama City, Florida for 30 years (Allen’s Seafood Restaurant).  Every day for 30 years my dad locked and unlocked the doors of that restaurant.  When I was born, I was taken first to the restaurant and then to the house on my way from the hospital.  As a kid I can remember two turns (400 guests) waiting outside in the summer heat for dad to go unlock those doors.  I grew up there and when the restaurant burned down in 1999, it was like we lost a member of the family.  I think it felt that way because the restaurant had a soul.

Sure, that may sound funny and nostalgic, but you have probably had that experience too. When you go to a restaurant and – sure, the food, the service, the atmosphere, all of those things are great – but there is something extra.  There is something magical. Like pixie dust.  Those are restaurants with soul.  It’s the little something extra you can’t point to that just made the whole experience feel, well, magical.

I think restaurants get that soul by the owner/operator literally opening a vein and pouring life force in to the place.  I’ve seen it time and again.  When there is a restaurant that has that extra “It” factor, there almost always is someone behind it with vision, unmatched passion, determination, and an unyielding force-of-will to make their restaurant truly special and unique.  All of that energy – physical energy, emotional energy, and maybe even energy of the universe channeled with focused effort – manifest an extra quotient of success.

The restaurant business is one of the most complicated and failed business sectors in the entire world.  But it is also one most driven and determined by the measure of passion.  Those really tremendous restaurants that leave us feeling restored and like we touched magic get that way by the effort of leaders who inspire and nurture the soul of their restaurant.  It is like the restaurateur and the restaurant merged to form a union.  When you get in to the restaurant business you have to plan on – and desire to – inject soul in to your restaurant.  Think of it like a battery.  To get it to turn over an engine, it has to have a jump start.  Your passion must be sufficient to power both you and your restaurant.  Sure, there are TONS more to it than just passion, but the other stuff (accounting, finance, marketing, etc, etc) can be learned or hired out. Passion can’t be taught or hired out.  Passion – really, REALLY deep passion – is required to help a restaurant find its soul.

Those of you already in the industry know this and those of you thinking of getting in to the industry and opening a restaurant must be sure you are ready to pour in passion at this level.  You can probably make a decent business without soul, but you can’t have a truly great “restaurant” without it.

When and why should a restaurant create a happy hour?

A happy hour program is typically associated with a bar program (restaurants with beer, wine and/or spirits) and it should be created with the highest purpose being competitive edge by differentiation and innovation, not by lowest price.  A well-conceived happy hour program can drive new trial, frequency, check average, party size, and reinforce important brand attributes.

What time and days are the best and what factors does that depend on?

Focus on peaks not valleys.  Happy hour programs should be created to extend shoulder periods rather than lifting sales valleys.  All business is cyclical.  When you focus on where you’re strong already, you can get better results than focusing on the down periods.  Often, a sales valley has much more to do with conditions outside of your control rather than circumstances which can be changed by marketing alone.

How do you best market a happy hour?

Different sells.  Innovative ideas will yield far better results than deep discounts.  The more creative and innovative a happy hour is the less it needs to be discounted.  Also devise ways to partner with groups (i.e. social, civic and charitable organizations, dinner clubs, professional organizations, associations, etc) that can help you reach wider audiences on thinner budgets.  Social networking and digital marketing should definitely be part of the mix too.

What is the least effective way to market a happy hour?

Mass media advertising a discount program is a double negative.  It costs more to execute and returns less than normal margins.  Other mistakes include sending messages out of desperation and launching same-old-same-old and expecting organic growth.  Dramatic and organic growth is best effectuated with buzzworthy programs that stimulate word of mouth, new trial and frequency.  There is an acid test for doing this which will be the subject of an upcoming blog post.

What should you offer in the way of food and beverages for your happy hour?

Salty, small finger foods, but avoid cliché mixed nuts and frozen/fried appetizers.  Menu trends are moving toward bolder flavors, ethnic foods with authentic preparation, and ingredients with more nutritional integrity (i.e. locally grown, sustainable, superfruits, etc).  “Fresh” is one of the most bankable words in modern foodservice marketing.  The most important thing is to leverage your points of difference and communicate in a way that is true to your brand promise, personality and positioning strategy.

How do you measure the success of your happy hour?

Growth via new trial, party size and frequency.  Be careful not to cannibalize the existing customer base.  A successful happy hour program drives buzz, stimulates word of mouth, and effectively communicates your point of difference.

Who should be the target customer for happy hours (general public, other restaurant workers, college students, etc.)? How is that determined?

Periphery audiences, not divergent audiences.  For instance, a college pizza joint with heavy users made up of local fraternities and sororities should target young professionals rather family crowds from the suburbs.  This is another example of building on shoulders rather than lifting a valley.  Also be sure to target “sneezers”.  A “sneezer” is someone who, if they catch a cold, would be most likely to give that cold to the highest number of additional people.  They are in contact with and influence wider circles.  The idea is – why try to convince 40 individual people riding a bus where to eat when you can convince a single person – the bus driver – that can then deliver the other 39?

When you’ve drawn in happy hour customers, how do you ensure their safety and not over serve them?

Professional training.  Documentation for every employee.  Back-up server decisions.  Also, consider independent ‘spotters’, service staff, and a cab service or free ride home program.  Be sure to have a crisis communications plan in place.  Establish your policies, have it reviewed by an attorney, and then make sure every employee is very clear on the protocols.  Tell them once, but then remind them a thousand times.

A few more thoughts…

The best advice I can offer when it comes to creating and executing a happy hour program is:  “Don’t use yesterday’s solutions to today’s business challenges.”  The term happy hour has become cliché and overused.

In reality, many happy hour programs become unexpected discounts for customers, not a pull-them-in promotion that reverberates throughout a community and reverses declining sales.  Happy Hour is “so 1980″ that it inspires few to change their habits.  Pubs in England are closing at a rate of 52 per week.  Are they just missing the American concept of happy hour?  No, not at all.  They are missing the bigger picture of innovation.  Yes, the recession is bad in England.  However, while pubs are closing in record numbers, liquor sales are still up in that country.  It’s a shift in behavior.  Running deep discounts for happy hour won’t save a failing pub.  Innovation just might though (if implemented early enough).

Endeavor to conceive a new drink your customers have never heard of or a program so cool, different and exciting that they can’t wait to sing your praises over their social networks.  Invest in tapping in to what comes after the cosmo and what comes after the mojito.  Better yet, invent the next one.  Consumers right now are seeking bolder flavors, cocktails with super-fruits, herbs, “kitchen to the bar”, etc.  Giving a two for one on a well drink isn’t what the profitable consumers are seeking.

One way to look at it is to envision two phones.  The first is one of those 1990′s huge Motorola phones (remember the big ones that first came out that were like holding a brick up to your ear?), and then on the other hand envision an iPhone.  Which one is more likely to sell at a higher margin, higher volume, and drive more word of mouth?  Yep, the iPhone.  Because it’s innovative and built with the Apple brand mantra of “Be different”.  The only way to sell a mobile phone made in 1993 is by discounting it.  When envisioning your happy hour program, think of this example and ask yourself – is this happy hour, as currently conceived, more like a 1993 cell phone or the latest iPhone?  Not in terms of product positioning or slick marketing, but in terms of its innovation and ability to drive sales and traffic based on being unique and creative rather than discounted.

Discounting, as we all know, is a sign of a desperate chain run by uninspired and ill-equipped marketers.  As Olgivy famously said, “Any fool can run a discount”.  In spite of the worst recession in decades, Steve Jobs created the fastest selling consumer product in the history of mankind.  Ever see an iPhone with a discount?  Whether you have one unit or one-thousand, approach marketing from the standpoint of being different while still holding true to your brand promise, personality and positioning strategy.  Oh, and be sure to send me an invitation to your new happy hour!

 
1. Recruiting – According to the National Restaurant Association, one of the top 10 most pressing restaurant industry challenges for the last 20 years has been recruiting and retention of employees. However, each time there is a recession, the restaurant industry is one of the greatest benefactors. With unemployment currently hovering at 10%, the restaurant industry is finding job seekers that we would not have seen during periods of low unemployment. While many may see the restaurant industry as a short-term solution until something “better” comes along, often a large number of them end up staying in our industry and making a permanent career switch. During recessions the restaurant industry benefits with greater supply and quality workers and this is the very best time to bring in new talent.

2. Reduced Rent – As much as residential property valuations were over-inflated, in many areas the commercial rentals are now above what the market can support. We are finding clients across the USA and abroad successfully renegotiating leases right now. The ideal “occupancy cost” for a restaurant (rent, C.A.M., etc) is 8% – 10% of sales. If you have experienced a big reduction in revenue or are paying more than this optimum range, now is the time to negotiate a rent reduction.

3. Locations – In recessions, new locations come available that were out of reach or budget before the recession. One client had his eye on a location for almost 20 years and never could make a deal happen. Half way through the recession he not only got his ideal location, he got a better deal on the rent and lease terms than he could have in any other scenario. While many restaurant companies are forced to contract, some have cash surpluses and are putting them to use by expanding. For those with money, the best time to expand can often be at the tail end of a recession.

4. Innovation – There is a saying, “Necessity is the mother of invention”. When our backs are against a wall is when we must prove our mettle. In downturns, we look at the P&L more closely, we engineer processes to be more efficient, and we look for new ways to be successful in spite of tough times. Generally people are motivated by the desire to avoid pain and gain pleasure. When we feel pain, we move with a greater sense of urgency and purpose. When the pain of a recession bears down, successful restaurateurs innovate. They bend like the willow. As Darwin said, “it is not the strongest of the species that survive, but those best adapted to evolve”.

5. Forces smarter buying – We all tend to shop differently in lean times. When cash is plentiful it can be underappreciated and misallocated. Scarcity compels a higher valuation on resources. During times of a recession, buyers can find better deals on products from suppliers that need to move inventory and service providers trying to keep their best employees fully utilized. Not only can you find better deals, a recession also serves as remedial training on remaining disciplined and diligent in purchasing decisions. This is the time to look at inventory par levels, menu yields and utilization, ways to introduce technology for greater efficiency, and much more. For a typical restaurant, 95% of the revenue coming in the front door goes out the back door to suppliers and vendors; leaving just 5% profit for the owner. Getting better at procurement and supply chain issues is necessity. Careful not to cut too much though (see 10 ways NOT to cut costs for your restaurant).

6. Pruning – As insensitive as this may sound to some, the fact is our industry needs recessions to keep us all on our toes and to prune out the underperformers. A rose bush must be pruned to be healthy; which means cutting away certain branches, blooms, and shoots. A forest must have forest fires to stay healthy. Forest fires seem devastating – and there is certainly collateral damage – but the greater good is served and this natural phenomenon is part of the necessary cycle. As an industry, we too need the cycles of recessions in much the same way a forest needs a brushfire. We as an industry get better. And as painful as it can be to see some not make it through, they too learn, grow, and often come back better than before. As my father always liked to say, Edison failed 20,000 times before he invented the light bulb.

There is a silver lining in ever cloud, even if it doesn’t feel like it at the time. You just have to look for it.

The good news is that all expectations are that 2011 will be the year we break out of the restaurant recession and the industry as a whole begins to prosper more fully.

Here are a few other blog posts I hope you may find interesting:

Never Give Up

Courage

No matter what you have or don’t have, someone else has more or less.
Life isn’t about what you have or don’t have; it’s about what you hope for others. It’s about what we’re grateful for.

There’s a line in an old Garth Brook’s song, “Sometimes I thank God for unanswered prayers”. While a catchy country-western song, the meaning there is universal.

There are some things in my life I thought I needed, wanted and deserved to have. There are some things in my life I didn’t want, didn’t think I deserved to have happen to me, and certainly didn’t think I needed at the time. Many of those times have turned out to be the very best in my life. Those were the times that shaped me, my views, and gave me a glimpse into divinity. It was in those times of desperation that – once I made it through – helped give inspiration both to myself and others. It was in those times I realized my purpose was to passionately seek out my purpose; even if my purpose was very different than what I thought it would be.

This blog post isn’t about me though. I mention my own experiences only as testament to what I believe to be true for all of us. Each of us possess a unique gift, unique set of circumstances, unique purpose; and if we are grateful for what’s happened to us, we can more openly walk in to what’s meant to be for us. One of the greatest examples of embracing what has happened, what could be, and delivering on an individual purpose is Nick Vujicic.

I hope you will find this four minutes with him as powerful as I did. Before I watched it, I had spent a week fuming over what someone else had or hadn’t done. After I watched Nick’s story, that all melted away; as it should. What we got isn’t as important as how we got there. And when you see someone like Nick realize that, it’s a lot easier to see how WE can and should realize that. Imagine four minutes of what you/me/any of us having to say being as powerful and moving as what Nick has to say. Imagine six billion of us having something as important to say. Well, we all do, if only we seek it out. And people like Nick can help us do just that.

Enjoy!

“Whether you think you can or can’t, you’re right” is a famous line from Henry Ford. Many times I have reflected on that notion. Whether as a high school wrestler getting creamed by a bigger/better opponent, or in starting a new business, or in helping save a faltering client’s business. What we can achieve is limited only by our beliefs. Often, our beliefs are shaped by our surroundings and closest friends; not by our own desires and aspirations.

I once heard – and tend to agree – that your income is the average of your five closest friends. You could extend that and say your health, your religious beliefs, your outlook on life; those too are often the average of your five closest friends. The question then is – do these belief systems and averages support our real opportunity and purpose in life?

Without digging much further in this simple blog post, I would humbly encourage you, me, all of us, to be more courageous and seek out the life we truly desire; not the life that is the average of our five closest friends. Each of us have a purpose and to meaningfully pursue that purpose we must be brave enough to think and act in a way that’s more inspired by what could be versus what is.

Never Give Up

Perseverance is one of the most underrated virtues for entrepreneurs. No matter what business you’re in, no matter what the economy is doing, there are going to be hugely challenging times – many restaurateurs are going through this right now, with the way the recession has impacted our industry.

When things look bleak, you might be tempted to quit. You might even have people whom you love and trust who are telling you to quit. But I’ve found in my own career – and there are so many examples of this – that often, if you hold on just a little bit longer, or try to do something just a little bit different, you’ll see much better results.

Some of the biggest names in business struggled with the prospect of failure before achieving their greatest success:

• Richard Branson: When he was trying to get Virgin Atlantic Airways off the ground, he got into a price war with British Airways. They almost drove him out of business. His advisers were telling him, “You have to sell one of your companies; you can’t keep both.” So he decided to sell his crown jewel – Virgin Records, for 500 million pounds. (This was in 1992, when the music business still made money by selling albums.) Selling Virgin Records gave him the ability to pay down the debt to support Virgin Airlines – and even though this was a tough, risky decision, Branson was confident that it was the right thing to do. He was committed to offering something better in the airline industry. His advisors wanted him to give up on the airline, and they couldn’t believe that he chose the airline over the record business. Later he said this was the best decision he could have made – he got out of the music business at just the right moment.

• Steve Jobs: He has become a hero of the modern business world, but back in 1985, Steve Jobs suffered a very public failure. Years after he founded Apple Computers, Jobs was pushed out of his own company and resigned as CEO in 1985. Fortunately, he didn’t give up – he came back to Apple in 1997, and transformed the struggling computer maker into the most admired and envied personal electronics company in the world. Everyone who has ever worked with Steve Jobs testifies to his relentless, uncompromising, demanding expectations of himself, his company, and everyone around him. Steve Jobs rebounded from failure to create the iPod, iPhone, and iPad – monumentally breakthrough products that have changed the world.

• Southwest Airlines: Southwest is one of the most profitable U.S. airlines and has a great reputation for customer service. A few years ago I spoke at a conference where one of the other speakers was a former CEO of Southwest, and he told a story about how after 9/11, Southwest took a huge hit (like the rest of the airline industry) and was down to a dangerously low level in their operating accounts (he said just a few hundred dollars in their operating account – amazingly candid and powerful insight into what they were really going through at the time). Thousands of customers were asking for refunds, afraid to fly in the days after the terrorist attacks on America. Other airlines were refusing to issue refunds, afraid to lose money. Southwest took a different approach – they honored their customers’ requests for refunds, and sold hugely discounted tickets just to get people in the seats and get people flying again. It was a risky move, but it worked – Southwest was one of the first airlines to recover from the airline downturn after 9/11.

When you look at all of these stories, there were probably lots of times where these people and their companies hit roadblocks that could have been deal-killers – where people around them were saying, “It can’t be done, it’s impossible.” The mark of a successful entrepreneur is that they hear that feedback, and then they say, “Okay, so it’s impossible. But if it were possible, how would we do it?”

Times right now have been tough for the restaurant industry – with the Great Recession and the slow recovery, there are lots of people in our business who are feeling beaten up and tattered. But let’s not give up. Let’s keep looking for ways to innovate and do things better.

The “Never Give Up” cartoon attached to this post was once hanging on my dad’s office wall at his restaurant in Panama City, Florida – I remember seeing this cartoon over the years while I was growing up. My dad was one of the most important voices that encouraged me to stick with my consulting business back when I was just getting off the ground.

I could have given up, but I didn’t – and I’m glad that I held out a little bit longer. I’m living proof that sometimes, even at your bleakest moments, things get better.

There are no successful entrepreneurs that are also successful nay-sayers. If you want to cultivate a spirit of perseverance as an entrepreneur, you need to surround yourself with people who believe in you, but the most important voice to listen to is ultimately your own. Pay attention to your own intuition, hunches, your internal compass. This will guide you in the right direction.

For Entrepreneurs, Impatience is a Virtue

People often tell me that I walk too fast. I’ll be out walking somewhere with friends, and I’ll find myself five paces ahead of them – and my friends have to tell me, “Hey, wait up!”

In this sense, I’m not a very patient person – it’s just the way I’m wired.

I can’t help it. I have an internal sense of urgency. The way I approach anything entrepreneurially is to have impatience with the situation. Once I know where I want to go, I want to start getting there as soon as possible.

To be a successful entrepreneur, you need to have a sense of impatience. Impatience is synonymous with ambition, with motivation, with a drive for results. There’s an old saying in sales, “You eat what you kill” – if you have a goal, if you want to succeed, you have to go out there and get it. You can’t wait for success to come to you.

Steve Jobs is famously impatient – everyone who’s ever worked with him testifies to his impatience with product development time, his constantly pushing the envelope on designs, always demanding more, better, faster – and this sense of impatience is what helped Apple transform a slow-moving telecom industry that previously hadn’t had a lot of innovation since the wireless phone.

Was President Kennedy patient about putting a man on the moon? (People said “it can’t be done, we have to wait, the science is too complex…”)

Was President Obama patient about getting health care reform passed? (People said “slow down, it’s too much to do at once, the politics is too complex…”)

There are certain times when you should be VERY patient – with people, employees, family, and people’s feelings – there are many situations where you need to be patient and understanding.

And being impatient doesn’t mean you should get angry about the weather or the flight delay or other things that are beyond your control.

Even when making business decisions, you shouldn’t be impatient all the time; there are occasions where you need to think things through, do your due diligence and avoid leaping too quickly into uncertain situations. Being impatient doesn’t mean being reckless; you need to take smart, calculated risks.

But when it comes to going out and getting what you need – you have to be impatient. Don’t be patient when it comes to pursuing your dream. Don’t put off until tomorrow what you can do today. Be impatient. Be restless. Be hungry. Be determined to create your own luck, not wait for good fortune to land in your lap.

Entrepreneurs frequently walk faster than everyone else – I swear I’m not the only one. We tend to have an internal sense of urgency in all that we do.

I’ve consulted with hundreds of restaurant companies, big and small – and most of the time, the entrepreneur who built the company is in the room with me. From my experience, you can definitely see patterns in the type of people who have achieved a great deal of success. One of the common traits is impatience.

There’s an old story about how you can boil a frog to death just by slowly heating up the water – it happens so gradually that the frog doesn’t notice until it’s too late. An “impatient” frog wouldn’t sit there and take it – an impatient frog would have already hopped out of the pot to go find something else.

One other caveat – impatient entrepreneurs need to have a clear objective. Aimless impatience is counterproductive; you need to focus your impatience on a goal, and then once you have settled on a goal, you can take clear and immediate steps toward its attainment.

At almost every consulting project that my firm works on, we start with a planning session – helping the client and their company identify what their biggest goals and deepest motivations really are. These aren’t necessarily financial goals – it’s a process to marry emotion to these corporate objectives, build a “backwards road map” to get to the top of the mountain – we work with these executives, and we ask them, working backwards from your dream, what is the first step that you need to take to get there?

I’ve noticed that with the people who are really successful, once we identify their ultimate goal, they want to take that first step forward RIGHT AWAY. Their attitude is, “Now that I know what I want, I’m going to go get it!”

Successful people are eager and impatient to take that first step. Others get paralyzed contemplating it: soon the momentum and excitement wears off, and then they’re back to their old patterns and old results.

Business is about more than quantifiable objectives, tactics and numbers – there’s also an element of passion and commitment. Part of getting entrepreneurs to focus on their ultimate goal is dredging up some serious emotional commitments. You have to facilitate a conversation and help people realize the answers – and really commit to taking that first step.

I’ve come to realize that my role as a consultant is often about helping people find their “cause,” not just their business goals.

But the most successful entrepreneurs, once they find their cause, are impatient to take the first steps toward fulfilling it. In the best sense, that’s what “impatience” means to me – it’s about maximizing your life, exercising your influence on what you can control and change, following your passion, and making the biggest possible difference in the world.

I know, I know – SORRY for the horrific photos of my body and condition.  I am only trying to be authentic (despite the embarrassment) of what it was like to experience Hong Kong head-first.

Hong Kong is not China.  As an American I thought they were the same.  It’s like saying New York City is America or Dubai is the Middle East.  The are quite different in culture, cuisine and currency.

As an international restaurant consultant I can say with confidence that Hong Kong is one of those places anyone in the trade should see first hand.  I feel it is just scratching the surface though.  Perhaps one day Mandarin will be as common place as English.  We should all start warming up to the cuisine not just because it’s likely to be a global cuisine in 20 years but because it’s a wonderful cuisine and culture steeped in history, tradition and delightful culinary sensation.

Restaurant Consultant Aaron Allen

November 2009 Cairo Egypt

Cairo is such a unique place in all the world and it was a thrill to at long-last check it off my list of travel goals.  A city with more than 25,000,000 people, Cairo is burstling with energy.  The ancient is juxtaposed against the modern.  The old world pyramids of Giza transport us back to a different time (and then the lazer shows that happen nightly in front of the pyramids bring us crashing back to the modern day).

One rumor I can confirm with certanty is the use of car horns.  As one cabbie put it “Here we can drive a car that has no lights, no radio, no seats, but we would never drive a car without a horn”.  There are few street lights, cars not pedisterians have the right of way, and as a result the honking of a horn is the most dominent and frequent sound throughout the expanses of the city.  You hear honks of anger, honks of hello, honks of “watch out or I’ll run you over”, and honks that seem to be made just as a matter of muscle memory habit like blinking an eye.  The pyramids seem to stand in patient persistance in the noise and commotion all around them.

The food in Egypt is a melting pot of Middle Eastern flavors.  There are approximately 23 dialects of Arabic spoken in the Middle East.  It is hard for an Egyptian to understand the Arabic of a Saudi national.  This creates an interesting dimension for the traveler seeking to go deep into the culture and understanding of the region.  Sadly, many Americans see an Asian and think they are Japanese or Chinese and don’t think much further.  The cultures of Asia are as rich and dierse as can be found anywhere in the world and they can’t be lumped together in such a way.  Similarly, the Middle Eastern Arab nations and cultures have their own uniquenesses of culture, tradition, heritage and beliefs.

While Egypt is on the continent of Africa, it is an important part of the Middle East.  Egypt is not representatie of the entire Middle Eastern experience.  Countries such as the United Arab Emirates, Bahrain, the Kingdom of Saudi Arabia, Jordan, Lebanon, Kuwait and Qatar are all starkly different in many important ways.  A similarity they share is the unique Arab Hospitality that has been passed down for thousands of years by the Bedouin tribes that roamed the Middle East.  Arab Hospitality is about lavish generosity.  There are many stories of families selling their most important and prized possessions to pay the costs of hosting a guest.  In Bedouin tradition, even enemies were given refuge and were hosted graciously.

There are many misconceptions of the Middle East.  There are also many story-lines that are currently going unnoticed.  For instance, while China is leading the world in growth in manufacturing and India is leading in outsourcing, few know that the Middle East is the fastest growing hospitality market in the world.  More posts on that coming soon.

Hope you enjoy the slideshow!

Aaron Allen

Middle East Restaurant Consultant Aaron Allen