This article could be just one line long. If you are not joining the scheme, you are a fool.
When I first asked my followers whether this offer could swing them to go out on a Monday, Tuesday or Wednesday, a lot replied "no, I'll stick to my normal plans". I found this very strange, who doesn't like to save a tenner? As we are normally closed on a Monday I shelved any plans of opening and maybe doing a special night. But now I can see that people are starting to book for those evenings. Never mind I will be doing my bit to save the economy by going out both for lunch and dinner on Mondays.
As a small operator I think it's a good idea to offer specials and other off-the-menu dishes that are a bit more expensive. This is a good chance to use premium produce and ingredients and become fancy. Customers will also be willing to buy a better wine or an extra starter in the knowledge that they will be saving up to £10 ahead.
As to how to implement this offer I think the easiest way to think about it is:
Take the alcohol off.
If the per-customer spend (children count as diners) is:
less than £20, apply 50% off
over £20, give £10 off
You will need to keep a record and also tally up the till at the end of the night, because although the customer is receiving a discount you will receive the balance from the government.
In our case we are very lucky to use a POS (point of sale) called GoodTill and these guys have created a button that calculates the amount of discount and tells you the balance your customer needs to pay. This was a big relief as I was already imagining my staff struggling with calculator and jotter!
A few days a go I read a post on Facebook where the owners of The Ollerod (Chris Staines - whom I used to work with - and his partner Silvana) wrote an open letter explaining why they would not pass the VAT cut on. It made a lot of sense. Hotels and restaurant have been one of those businesses hit the hardest by Covid19 and even when reopening there are so many constraints, restrictions and guidelines that it is hard to see how we will ever get back to normality.
Sure large companies have been very quick to pass the cut on and go out all bells and whistles to announce it. But small restaurants don't have investors, share holders, venture capitalists etc to rely on or ask for more money.
Before Covid19 we used to spend £40 a month in disposable gloves, now we spend £160. And then there is the sanitisers, the signage, the masks, visors, partitions etc. Tables need to be spaced out, reducing the amount of covers one can serve.
In my case we also have the challenge of having enough staff for deliveries, which are going still strong compared to pre Covid) and eat ins which require an under utilised waiting staff.
I think the word of the year is "flexibility". We operators, our staff and our customers all need to be more flexible and understanding. Fixed hours are a thing of the past.
A couple of days ago I saw a post on a pizza chef page on Facebook (Pizzaioli in UK) where someone said they were moving to Nottingham in the autumn, were planning on finding a job in another sector and then opening a pizza takeaway with someone else, and they were looking for this someone else on Facebook...I found this puzzling and I commented on this post that starting a company with someone you don't know is like jumping off a plane without checking whether the parachute is working.
Having run a few companies with partners I know for a fact that even with the best of intentions it's not easy to get along. When there is money at stake people change. Throw in pressure, stress and possibly substantial debts and it's easy to imagine why a lot of partnerships fail. I started my small restaurant with one of my best friends. We went to school together and even lived together in London. I knew him to be very passionate about food and to be hard working and very well organised. He was one of those chefs that finishes the evening with a clean apron! Unfortunately I had never worked with him and thinking I am laid back and easy to get on with I thought any possible hiccup or difference could be easily resolved. I was wrong. He turned out to be very stressed at work, serving our customers for him was like going to war, he was constantly pushing and stressing our staff out. In the end I said I could not work with him anymore and we should either sell or I would buy his share. Once I bought his share, I felt like I had grown a pair of wings. I was free to experiment, change the menu, change the opening times and prices without having to fight all the time. Of course I have my faults as well and one should always listen to the two sides of the story, but this goes beyond the point here. The point is that whether we take my side or his side of the story, the partnership did not work, and I had known him for more than 15 years. That's why trying to find a partner on Facebook seems crazy too me.
On the other hand, without a partner, life is really hard. All decisions, all responsibilities and all the weight are on you. It can feel lonely at times. But most importantly is virtually impossible to expand or to take some time off (without having to close) without a person that you can trust to run the restaurant like you would. Somebody that's pushing in the same direction and has got the same goals and ambitions.
So, how do we find a business partner? This is hard to say, there is no magic formula. The only thing I know is that you always have to prepare for the worst. You have to put down in writing:
If you look at a random person's wallet you most likely will find a few loyalty cards (chances are you'll find loads more in a woman's purse, but please don't get me started on this). I have a Club card from Tesco and a club card from the Coop. Does it mean I make my decision on where to shop based on club card points? Would I travel farther afield to get a bigger discount? Why do ASDA don't operate a club card scheme? Personally, and I don't think I am in the minority here, I just use the club card based on where I go and not the other way around. I go to Tesco because they are close to where I live and convenient. If there was a Sainsbury's closer to me I would use that instead. On the other hand I tend to use the same barber, the same Indian restaurant and the same farm shop, because I like them. None of them used to offer a loyalty card but the farm shop just started last month which made me think about this topic.
In my opinion you should only offer loyalty cards if you sell a product that is:
1. hard to differentiate
2. readily available in close proximity to you
For example this is the case with coffees. Can you really tell the difference between a Starbucks and a Caffe Nero? Probably not, but you may be keen to get your free coffee using your loyalty card.
On the other hand my local farm shop offers excellent produce, it's family run and the customer service is very good - if nothing else you get a smile and a chat every time you go. I could certainly drive to another farm shop or maybe use the butcher close to my restaurant, but I have now built a relationship with them so I am loyal. That's why I was a bit surprised when they started offering a loyalty card. Now every time you spend more than £10 you get a stamp, and after 10 stamps you get £5 off. That's more of less 5% off. Will that increase customer retention and loyalty? Will it bring in more customers? That's very hard to say. But I assume that a lot customers would have used the shop anyway and this loyalty card is just a whole in their pockets. This is not the sort of shop where you go to save a fiver.
You should aim at creating a restaurant where people come for a variety of reasons, and not price, special offers or vouchers. People will only look at those things when they can't see any other form of value, i.e. customer service, quality, unique products etc.
Entire books have been written about pricing (one of my favourites being "Priceless" by William Poundstone), so it's hard to keep a blog article on this topic succinct. But I will try. I will start with a funny anecdote taken from the aforementioned book. A souvenir shop in a touristic village sells quartz necklaces in various colours. The blue quartz one is not selling. The owner goes away for the weekend and leaves a note to the store manager, asking her to half the price of the blue quartz necklace. For reasons unknown to us, the store manager mistakenly doubles the price! And you know what happens? When the owner comes back on Monday the shop has sold out of blue quartz necklaces!
This is just a simple anecdote to show that price is not just a number, but rather a marketing tool. When we set a price we are in fact sending a message or sometimes making a bold statement.
Would you price something on your menu at £9.99 or rather use £9.95 or £10? And why have you chosen this price? Is it based on food cost? Or is it based on perceived value? Have you checked your competition? Could you have priced it any higher? What will you increase the price to when your costs inevitably rise?
If we are opening a restaurant there are a series of factors that will influence our prices. And hopefully we will have made all these considerations before actually signing the lease!
The first thing we should look at is our competition. This will give us an idea of what price range is our target audience used to and how far we can go. If you are based in a working class neighbourhood, opening a classy bistro with high priced dishes is probably out of the question.
The second consideration should be our food cost. As this is a blog for small restaurant owners, we don't necessarily want to create cost cards for every dish, but we need to have a good idea of what our basic ingredients and most popular dishes cost.
Then we should go on and set our prices. In my opinion 9.99 and the likes are better left to fast food and cheap and cheerful outlets as the convey a message of "cheap" and "bargain". Exclusive restaurants (for instance Michel star ones) will normally just use whole numbers as their clientele is not price sensitive. For our small restaurant we can either use whole numbers or possibly 9.25, 9.50, 9.75 and 9.95/10. I find 9.95 way more elegant than 9.99 and portraying an image of quality more than justifies losing the 4 pence. One of the advantages of using this progression is that often customers won't notice the difference if prices are increased as people tend to look at (and remember) the first digit.
When we set our prices is very important that we consider the VAT. I very often see owners miscalculating their profit margins as the fail to remove the VAT from their prices. If your dish sells for £12 and the food cost is £2.50, you are not making £9.50 gross profit, but rather £7.50 (12/1.2 - 2.50).
When we finally get to our theoretical price we then want to consider whether we can actually use a slightly higher price. Are we using ingredients that justify a higher price (meat from the local farm shop, free range, an expensive cut of meat or veg? Are we offering a dish that normally commands a higher price than our theoretical price, for instance a burger or a steak? A good method to test your customers price sensitivity is to add one or two high priced dishes on your menu and see how they perform. As long as customers can understand why a dish is expensive and they perceive value, they will be happy to pay for it. You may be surprised at what people are willing to spend. A high priced dish will often have a higher food cost percentage, but in this case, as described in my post about food cost we should rather look at the absolute gross profit. If you do this, and see that customers are willing to pay higher prices than you thought, then you should increase your prices! If your pizzas sell well for £10, why not try £10.75 or £11.00?
A lot of owners have mental barriers that they are worried to push. £10 sounds good and fair, and give us a good profit margin. But £10.75 is better! Although this may sound cynical, we are in the business of making money and we should maximise our profits. We can always give back to society through charity and other good causes. Owners often fail to look at the big picture. You may think "why bother increasing a price by 50 pence? What difference is it going to make? On one count they are actually right, your customers won't care or even notice a 50 pence increase. But you will, when you read your profit and loss statement at the end of the year. if you sell 10000 pizzas a year, a 50p increase will generate an extra £5000 in revenues! Also because this 50p if above your theoretical price, this is literally £5k extra profit (well £4166 removing the VAT). Not too shabby.
Finally always consider that increasing prices dramatically from one day to another is not feasible. We should start with carefully thought of prices, choose a range of possibilities and price at the higher end of the range. Price based on value and not cost. If you have to increase prices by a lot, your best strategy is to introduce new dishes, gradually if you can, or to change the whole menu.
The short answer is no.
Of course we need to keep an eye on our food cost and of course we need to know what our dishes cost (more on this later) but only looking at the food cost or beverage cost as a percentage doesn't help us. For instance in large companies is very common to set the food cost at around 25% and this will most likely be a Key Performance Indicator for the Executive Chef and the one thing he will receive the most grief for.
This is especially true when we look at individual dishes, rather than the whole menu. For instance you may have a dish with Lobster or and expensive cut of beef and selling it at 4x cost (plus 20% VAT) may just make it too expensive or not competitive. Say for instance this dish cost you £5 per portion, you should sell it at £24 (£5x4cost +20% VAT)but as this would be too much you decide to sell it for £19.95 or £16.63 + VAT, which is 30% food cost (£5/£16.63 x 100).
Now take a normal dish, say a pasta, which costs you £2.00 per portion and you resell at £2.00 x 4 +VAT = £9.60.
PASTA DISH GROSS PROFIT: £6.00
LOBSTER DISH GROSS PROFIT: £11.63
Now let's pretend these are both pasta dishes, one with Bolognese and one with lobster. Your customers will only have one pasta dish per meal. Which one would you rather sell? You can play with the figures but the idea stays the same, sometimes we need to look at absolute profit rather than food cost as a percentage.
On a little side note, I think it's very important to maintain some sort of minimum price for all our dishes in a certain category. For instance your pasta category. If you have a pasta with tomato sauce on the menu you don't want to just look at the food cost to set up your price as the price (and the gross profit) may be too low and if you end up selling loads of this dish, yes you will have a very low food cost at the end of the month, but your bank balance will be very low too!
Too many times we think that all that could be invented as already been invented, but time and time again we are proved wrong by the latest innovations. The vacuum cleaner had been around for more than 50 years when Dyson decided it was not happy with it's vacuum cleaner suction and he would then create one without a dust bag! On the other hand we don't always have to come up with earth shuttering new ideas to be innovative in our market, we can just copy someone else's idea and maybe put our twist on it to make it a little more personal. This is especially true if you are based in a smaller town where trends don't move as rapidly as in bigger cities, your competition is slower to react - or sometimes just doesn't care at all - and customers may have not heard of the latest trend yet or maybe just didn't have a chance to try a particular new dish.
Innovation keeps our menus fresh and our customers interested. The latter is especially true when your customer base is not particularly price sensitive and one way to get that extra order is to come up with specials that are "Instagrammable" and sound delicious. Innovation of course is very helpful to accumulate more followers on social media too.
In my case my restaurant is based in a small town, about 50 miles from London. A lot of people will commute to London for work but they will spend their weekends at home and eat locally. A great example of this is when I was watching "Gordon, Gino and Fred: Road Trip" and Gordon Ramsey went to this old pizzeria in Naples and asked to cook a sweet pizza. He put on it: Lemon Curd, creme fraiche and basil. My first thought was "how can we put an Italian twist on it? Why not use mascarpone cheese instead of creme fraiche?" This can work for many other dishes, you just have to ask yourself "how can I put a twist on it?"
Books like "The Flavor Bible" can help you work out what ingredients go well together and find some unexpected and surprising combos.
Nowadays is very easy to keep your hand on the pulse just by looking at Instagram, following hashtags that a relevant to you and your sector or type if cuisine, following accounts that feature a lot of creative ideas. Also let's not forget to go out, travel, discover and experience ourselves.
So install a note taking app on your phone or jot down your ideas. Set a time aside to experiment or make time before or after the service - or during if quiet. Don't be afraid to try, to tweak and try again.
1. Reduce your menu
Wastage is like an invisible disease: it's hard to see and quantify and sometimes it does irreparable damage. This is especially true for restaurants that have a large menu, but don't have a large number of customers. A few days ago I was reading a comment on a Facebook page for pizzaioli/pizza chefs where someone was doing a trial shift at a pizzeria and they were describing how difficult it was having to memorise the 120 pizzas that are in their menu, in a pizzeria that only does 60 pizzas a day. Somebody else pointed out that it should not be to difficult as they have 250 pizzas on their menu! I'll leave the rant about long menus and the paradox of choice for another article, but suffice to say that too many items will lead to increase wastage.
2. Start a waste list
In some restaurants I worked for the head chef would put a list by the bins and chefs had to enter whatever they were throwing away (or instance out of date food). This practice can help you to be more aware of dishes that are not selling or if your team are making batches that are too big or maybe they are not rotating the stock/supplies in the right way
3. Check expiry dates
You need to make sure that the ingredients you buy have a decent shelf life. Sometimes suppliers won't tell you some items are in their "clearance list" as they are near expiry date and the will just send them you! This is true both for ingredients like mozzarella for pizza - that normally have a couple of weeks shelf life and you can afford to buy in slightly larger quantities as what you don't use this week you can use the next - and highly perishable foods like salads in which case you want to pick the bags at the bottom of the crate, which will be newer and hence will expire later.
4. Plan on how to use off cuts
Can you make a fishcake with your fish trimmings? A pie with your meat trimmings? A pasta bake with your cold cuts off cuts? A soup with your veg unwanted bits? On the other side of the medal can you afford not to have a perfectly square turbot or diced carrots so that you can use all of it?
5. Join an App or offer a Surprise Box
The internet has made cutting waste a bit easier. Nowadays we have apps like Too Good To Go that can help you get rid of the last few portions at the end of the night/week. The main problem with those Apps it that you don get that much - typically 33% of the menu price, or in other words customers are paying £3.33 and expect to get £10 worth of food - and you pay, in percentage, very high fees - around £1.18 on the £3.33 purchase. I had a go at this myself but in the end I gave up as ti was just not worth the time and hassle, also because you have to list how many surprise boxes you will be giving away the day before, if you don't have loads of left overs - for instance you own a restaurant where most items are prepared to order as opposed to a carvery or Sunday roast venue - you may end up having to give away fresh food! An idea around this could be to offer your own surprise boxes that you can advertise on your social media or app, offer a "mystery dish" ( a bit like Lastminute.com hotels) or offer discounts at the end of the night or week so that when we close the doors there is very little left in the fridges.
I don't how I stumbled upon this search in Google, I certainly did not enter it myself, but it's obvious that people must google these sort of questions. The answer in brief is: not much. Certainly not running a small restaurant. Often if you count the hours you put in - and this must include all the admin work, trips to the cash and carry, phone calls etc - the hourly rate is not that high. This said, one can make a comfortable living as a owner-operator with a restaurant of about 35 covers, plus takeaway. Also as discussed on my previous post "is opening a restaurant for you", running a restaurant is, and must be, about passion and fulfilment.
Just the other day I was listening to Carol's Haidar's podcast "Your Table's Ready" (which by the way I highly recommend) where a restaurant owner was saying that you can hardly expect to make any money with just one restaurant and that's why concepts need to be scalable. This in my opinion it's BS and crazy. I appreciate running a restaurant in a capital has high costs, but betting on expansion and outside investment to eventually hope to make some money it's a risk strategy. Unsurprisingly Hacker Young accountants reported a 25% increase in insolvencies in 2019 compared to the previous year and over the same period the UK top 100 restaurant made a collective £82 million loss!
And that's exactly why I am passionate about small restaurants. If you open you must make money and if you don't, there is something wrong with the business that needs to be fixed.
You have been thinking about this for ages. You have a real passion for food and customer service (I hope) and now you want to take the plunge. You start thinking you have to quit your job, and what about the mortgage?
Running even the smallest of restaurants is no small feat. Apart from the rosy part where you serve fantastic dishes to smiley customers, there are a ton of things to think about. From compliance e.i. health & safety, food hygiene, fire safety to dealing with your suppliers, utility suppliers, staff and your landlord.
A lot of these things you can learn along the way, some you can Google and some you can find in forums or simply by asking around. But one thing you need to be damn sure about is your commitment. Your first year will likely consist of long days and long weeks and in general a lot of hard work.
If you are the kind of person that gets easily stressed, can't handle a bit of pressure or gets tired really quickly, this job is not for you. Most restaurants make 65% of their money at the weekend - talk about surges in demand! And even then all this orders are concentrated during 3 hours of Friday and Saturday!
Even if like me you have been working in hotels and restaurants for 20 years before opening your own, running your own small restaurant is a totally different ball game. The first thing you realise is that you are missing the infrastructure you were used to, the help you get by your colleagues and your superior and the company as a whole. I remember thinking, as the restaurant was small, how to best utilise the space. Should the counter be against the wall or in the middle, should we have a partition between kitchen and restaurant, how many tables and seats can we really fit in. In the end you realise that when you had launched a new concept/bar/restaurant in London, you had help from corporate designers and architects and you only had to give some practical input as they mainly design pretty things and you need functional "things". In the end for my first restaurant I used a designer I found through a friend of mine and for a modest fee he helped us maximise the space and gave us an idea of what we could do.
You will be in in front of customers and dealing with people most of the time, so you'd better be a cheerful, smiley person or at the very least someone that can put a mask on when problems arise, when your new baby or puppy kept you awake all night or you just had an argument with your partner (in business or life)
All in all this is a very hard decision you are making, so jot down some ideas, maybe a business plan, have an in depth look at your finances and an even deeper look at your self.
if you want to bounce some ideas or need some advice post a comment below or send me an email at email@example.com
Alan shares his experiences, struggles and tips to help other small restaurant operators.