By Dean Small
There’s a bit of slang from the nautical world that can be used to describe what can happen to a restaurant brand in these competitive and challenging times: “turning turtle.”
Turning turtle, or turtling, is when a boat completely capsizes and is positioned hull to the sky and mast to the bottom of the sea. A skilled captain can keep it from happening but once a boat has shifted past the point of no return, the boat falls into a death roll, and there’s nothing the crew can do to prevent themselves from going over. In a small sailing dinghy, it’s pretty easy for a couple of people to lean on the rails and pull the boat upright, but in a larger vessel, turning turtle often spells the end.
I was thinking of how apt an expression this is for restaurant failure when I recently found myself dumped into the water from a Hobie Cat while on vacation, embarrassed but unharmed after having done everything wrong: flying too much sail, steering erratically, not paying attention to the shifting winds.
It seems like a lot of restaurant brands have turned turtle lately, or are barely hanging on, for a lot of the same reasons. In many cases, cash flow may be the only thing keeping these places going, especially in small three- or four-unit chains.
At Synergy Restaurant Consultants, we see this all the time. A couple of entrepreneurs open what they think is The Next Big Thing, and it starts out really well—guests come, the place is jammed all the time, and they are making lots of money. So they let out a bit more sail so to speak and open a second unit.
But guess what? It’s not going so great at the second unit and they blame a bad location or a bad winter or a bad manager—a fluke. All those things may be true, and despite the underperformance of the second unit, they go ahead and roll the dice that it’s not their concept that’s bad, and they open a third unit. Next thing they know, it’s only the cash flow from the original unit that’s keeping the other two afloat; turns out it was the first one that was the fluke. That’s when many new restaurant brands call us, and we use our proven strategies to keep them from going under.
Then there are what I call the Walking Dead, those restaurants that are just surviving, netting 4 to 5 % net operating profit, just barely making ends meet. You’ve probably seen them, too, the ones that are steering their ship erratically by trying a little bit of everything—bigger menu, smaller menu, couponing, reduced hours—hoping to hit on the thing that will keep them in the race.
To really thrive in the restaurant business—doing 10 or 12 or even 15 percent net operating profit—your brand needs to operate like a well-oiled machine. You’ve got to have systems standards, controls, procedures and strong management in place. Sure, the brands that thrive have the same challenges as everyone else—high food costs, crappy weather, and the biggest one of all: labor, but they can anticipate the shifting winds and they have a solid but nimble ship.
They can do things if their food costs edge up or the minimum wage increases, like remove problematic menu items, raise prices or decrease portion sizes or consolidate labor functions. Their ship is basically sound.
At Synergy, we specialize in helping turtles turn back upright and mere survivors become thriving, profitable businesses. We’re the experts at innovation and efficiency in the restaurant industry, and we’re better at this than anyone else.
Watch this space for more ideas and solutions in the weeks and months ahead.
Boat photo credit: Andy license CC by 2.0