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Get the Right Data to Manage your Restaurant Effectively

Let me guess: You have a full house, you think you’re making money for your restaurant. Diners are cleaning their plates, you think you have your customer base under control. Your servers are pulling in the big tips, you assume you have a successful staff.  All of this might be true – or it might not. Using these metrics to run your restaurant means you’re missing key facts to help you make smart decisions for your restaurant.

Do customers recommend your restaurant? Word of mouth recommendations tell you so much more about your customer cultivation efforts than a clean plate. Your consistently full house? It doesn’t mean you’re maximizing profit per turn.  And tip percent? You are measuring how much your staff earn, but not how much your staff are earning for you.

Successfully tracking restaurant operations metrics like guest satisfaction, profitability and server performance means putting in place a data capture and reporting system — not a hard integration but one that does require work. Sadly, few independent restaurants bother.

If your POS isn’t helpful, try services like GuestMetrics and Avero. Or see how much help OpenTable or other restaurant-specific CRM tools might be. There are no excuses for ignoring key metrics to help manage your restaurant!

Every restaurant needs a loyalty tracking system that tells you how likely your customers are to recommend you and how often they dine with you. You should also know the gross margin per item and have tactics to promote high margin items. And you definitely should track your servers’ success in driving high revenue, high margin turns in addition to tip percent.

If you know these numbers you’ll make smart decisions for your restaurant based on the right metrics. 

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Three Metrics to Beat Sales Fatigue for Restaurant Operators

We talk to many restaurant operators. All of them are suffering from sales pitch fatigue. The steady flood of daily deals solicitations, loyalty program offerings, and social/local/mobile ad listing opportunities has taken a terrible toll. The problem is that there are some pretty good services on the market; tools that can really help a restaurant attract, engage, and retain customers. The key is moving quickly to separate the worthwhile from the worthless.

There are three numbers every restaurant operator should know cold. In combination, these three numbers make for fast and fairly accurate assessments. Adopt this quick analysis technique for restaurant sales tool decisionmaking, and I bet 95% of sales pitches can be cut off in 5 minutes or less. The three metrics are:

  1. Trial Volume (the number of new customers generated by a program)
  2. Retention rate (percent of new customers who become loyal) 
  3. Frequency of purchase (number of times a loyal customer dines with you)

Since you already know your gross margin per customer (right?) and you can apply your sniff test to the sale person’s assumptions, you can easily compute the value of a program.

Gross Margin x Trial Volume x Retention rate x Frequency of spend.

If this number looks great relative to the program cost and other things you can do, you have a winner. If not, move along fast.

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The POS Industry: A Three-Part Rant

The phone I grew up with was clunky and served just one purpose — talk to someone. My monthly costs were high, and long distance calls were expensive. If something broke… major trouble. Today I have an iPhone. I can do a million tasks on it easily and intuitively; apps make it infinitely customizable; and while I may pay more each month, the expense is pegged to my usage- to my satisfaction.

The POS is a nerve center of a restaurant but no matter how much improvement you drive everywhere else in your operations, the majority of POSes are at best like the old phone.  There are three big issues that need to change to bridge the divide between today’s POS and the POS of our dreams. 

1. Elegant, attractive design, once consider frivolous, is now known to improve user satisfaction and return on investment. System complexity leads to errors and long training times. And those fancy features you paid extra for? No one uses them because no one remembers how. There is a new generation of App-based POS with great user interfaces (notably Lavu, Breadcrumb, and OwnPOS), but the vast majority of restaurants still use outdated systems…and pay dearly for it. 

2. My new phone is not just pretty. It is open. Third party developers have access, building apps that provide specialized service. I use Instagram for photos and Dropbox for file sharing. Not only does this free Apple to focus on their core capabilities but I am more - not less - dependent on the phone. POSes today offer a tiny selection of third party apps (like one or two choices for online ordering) but otherwise force you to rely on their usually inferior native tools or use third party apps without POS integration. Close your eyes and imagine  a world with an easily installed MailChimp and Fishbowl email apps linked in real time to your POS. Now open your eyes. Reality stinks.

3. Perhaps worst of all, most POS companies use a sales + service financial model. You pay up front, then again for maintenance and service, and if you need something special or have a problem you pay even more. Sometimes much more. Last year, 68% of Micro’s revenue came from service. My phone, on the other hand, charges me for use: The more I use it the higher my data bill. Shopkeep, one of the better App-style POSes, has a light-weight pricing model. Not the same as pay-for-use but at least strong value.  If restaurants had a choice of POS apps I bet usage, satisfaction and ROI would go up. Would you rather pay for success or failure?

The restaurant industry is waking up to the idea that the old model serves the POS industry but not consumers or restaurants. And when a new generation of operators looks at the phone in their pocket and the POS terminal on their host stand, they are going to demand change. Easy, open, financially aligned. This is not too much to ask for. Why do most POS companies serve pink slime and call it sirloin? Demand better.

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Your Point of Sale is Heading Out the Door and on to the Web

The big number from the National Restaurant Association’s infographic on restaurant tech is this: 36% of diners have ordered food online. Which means no matter how pretty a restaurant’s Facebook page or active their Twitter account, it won’t matter — not if they’re not integrating online ordering into their services. Their potential customer’s purchase has already been made. And restaurants without online ordering weren’t even in the running for their dollars.

People in sales know their ABCs: Always Be Closing. Don’t let the prospect think too long about the purchase, never let them walk away. But with the fast growing power of tech to interrupt your conversation with a customer, not to mention all the other restaurants on your street, the only sure way to own that customer is to get their order before someone else does.

When a customer sees your menu or reads a great review you are not done — you need to close. Get that order RIGHT then. You need to close…or someone else will.

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Restaurants Pick Up the Social Media Gauntlet — But There’s Much More on the Way

It’s becoming increasingly clear that restaurants need to push their marketing further out from their restaurant to capture and retain customers. According to a nifty infographic from the National Restaurant Association, 28% of customers use social media to choose a restaurant; 27% use consumer-driven review sites.

Frankly these numbers seem low, and are low I am sure when you look at younger demographics- the customers who could be with you for the long haul. But even these suspiciously low numbers paint a powerful picture.

This means the decision-making process is happening long before customers walk into your restaurant for dinner.  They did it before they left their office or while surfing their phone. They did it while chatting or texting with their dinner companions while checking restaurant listings and reviews.

Restaurants are not blind to what this means — 9 in 10 restaurant operators say social media will become more important and 95% expect to be on Facebook within two years (if they are not already).

But the percent of diners who are driven by social media and consumer reviews is not the most important data point for restaurant operators. There’s a new digital landscape for restaurants to take advantage of emerging, just as they begin to master social media.

Any guesses? We’ll be posting part two with the answer later today. 

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Better Restaurant Websites: 3 Dos, 3 Don’ts

For those of us who sit in front of a computer all day it can be hard to remember that much of the world does not. They stand in front of customers or pace around work sites. The computer is secondary to how they work.

Mobile is changing this. People who previously engaged tech briefly (if ever) at the end of the day are now consuming content and information continuously via their phone. We’ve blogged about this before. But while restaurants are learning to consume information via technology, creating engaging, helpful content is another story.

A study by Restaurant Science, a restaurant data provider, reports that only 5% of restaurants have a mobile-optimized website, and only 40% have their menu online.  TechCrunch has a good synopsis.  Get with it, people! Such a loss to not have quality restaurant marketing for such a vital channel.

A good restaurant website can be built in a day by following a few simple rules. Some quick Dos and Don’ts:

Dos

  • Contact info: It ain’t sexy but many site visitors just want to know where you are or ask a simple question - an address, map and phone number should be prominent. 
  • Menu: You should have a menu on your website and it should be up to date. If you have the holiday specials listed in February, you fail.  And no PDFs! Downloading a PDF is an iffy proposition. The menu should be regular text.
  • Content management: You should be able to update and change the content on your site easily. If it isn’t easy, you won’t do it.  And definitely make it readable on a phone.

Don’ts

  • Music. Many people search for restaurant info from their job. When your carefully chosen playlist launches automatically, they’ll get annoyed, close the browser window in half a second, and never come back. 
  • Flash: Flash was sexy in the 90s but is slow to load and unsupported by some technologies. Unsupported means visitors can’t see flash elements. It is like putting a big, expensive blank hole in the middle of your site. Bad.
  • Text: Be to the point and stop. You wouldn’t camp out at a table and chat up a customer throughout their whole meal. You’d make quick, warm contact and leave them alone. Same online.

These Dos and Don’ts should simplify your restaurant website, making it easier, faster and less expensive to build and maintain. It is easy to do online restaurant marketing right. So do it right.