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February 2012 Newsletter

Feb 28, 2012

Greetings!

This month, we cover off on several topics that operators need to be paying special attention to these days. At a time when more seats are chasing after fewer keisters, we start with an article on customer loyalty, presenting 12 ways that you can keep the customers you have coming back more often, talking you up to their friends and colleagues, and maybe even spending more when they get to you.

And while you’re working to build relationships with your customers, why not extend that good energy to your employees? After all, your staff is often the “first-line” protector of your brand and standards, and their job satisfaction can translate directly to your customer’s.

We also take a look at how to put your data into actionable form via Bill Taves’s discussion of “Finding the Right Recipe” for accounting and operational data. Following his advice to establish exception-based reporting can help you identify problems quickly and take steps to correct them.

To your success,

Dean and Danny

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Creating Customer Loyalty

The goodwill of regulars and other good customers has never been more important, and there are right ways and wrong ways to create it. (The owners of the Costa Concordia cruise ship, who recently offered survivors a 30% discount on their next cruise, might want to pay attention.)

According to a recent article in Ad Age, simple prizes are no longer enough to reward today’s sophisticated consumer, who is bombarded with opportunities for freebies, benefits, points and prizes at every turn. The incentives have to be more creative these days, whether or not they are dependent upon technology like social media, mobile apps and iPad scanning.

1. Chains should consider creating a menu item that speaks to the local market, as smash-hit Smashburger does with offerings like the Colorado (topped with grilled, fresh mild green chilies, melted cheddar cheese, pepper jack cheese, lettuce, tomato and mayo on a spicy chipotle bun) and the Brooklyn (a Reuben stand-in with grilled pastrami, Swiss cheese, pickles, onion and yellow mustard on a pretzel bun) in their respective locations.

2. Get regulars involved with menu decision-making by soliciting their input at the very least, and preferably inviting them to a tasting or even an in-the-kitchen R&D session—nothing makes people feel more special than being an “insider.” You may even find that their real-life insights are invaluable.

3. Investigate a formal loyalty program, which could be as simple as a punch-it card (or smart phone app) for Buy-Five-Get-One-Free, for instance, or as involved as a multi-brand setup like the Ultimate Dining Card offered by Atlanta’s Buckhead Life Restaurant Group.

4. Make sure loyalty efforts are concept- and demographic- appropriate. Several established brands—including Taco Bell, Red Robin and Quiznos—are teaming with loyalty-marketing start-up Plink to create a Facebook-based program that allows users to accrue credit toward social gaming rewards. Can you say “appeals to core market of twentysomethings”?

5. Wooing back customers with a special LTO meal deal can work—provided it’s done in a way that doesn’t erode brand value—as Red Lobster is proving with its four-course, $15 Seafood Feast. The success of the promo inspired a similar $12.95 program at Olive Garden.

Be cautious, however, with the price-loyalty equation: A recent COLLOQUY study suggests that these kinds of incentives can actually diminish loyalty by devaluing the brand.

6. Spend as much money as necessary on improving the guest experience. I hardly ever go to one of my favorite Italian restaurants because it’s too hard to park in the neighborhood—yet the restaurant’s cost for a valet or even an agreement with the bank across the street to use their parking lot at night would be more than offset by just one additional table a night.

7. On the flip side, even the smallest little nod to a regular’s status can create a big boost—for instance, having the chef come to say hello, or sending out a complementary dessert or after-dinner drink to thank them for their patronage. Other examples include prime seating or the chef creating something special for the table.

8. “Old-fashioned” touches like sending a birthday or anniversary card or email are still great strategies for building loyalty—and planting the seed to come celebrate the event at your place. Collect this information in any way possible, from asking regulars to fill out a card, to having a server let you know if a good customer is celebrating something.

9. Think twice before eliminating guest favorites from the menu, especially if it’s just because the kitchen is tired of making them. Switch out accompaniments, tweak the formula a bit, or offer it as an off-menu special that your regulars can request.

10. By the same token, do keep growing and changing if it means offering more value to the customer. Foursquare’s recent decision to include menu details in its restaurant postings practically guarantees more relevancy—and loyalty. It’s a great lesson for restaurants themselves to emulate; perhaps you can offer gluten-free menu items, for instance, or more specials (which also happens to be a great way to test core menu additions).

11. Do nothing to violate trust, which is the single most important thing you can offer customers compared to the competition. This can extend from the simple (don’t make people wait at the bar for a table if you can seat them immediately; make your menu as transparent as possible) to the philosophical (treat staff members well and pursue sustainable measures such as recycling or waste reduction).

12. Finally—and perhaps most important—treat all customers like potential regulars. As much as you offer perks to your VIPs, keep the spirit and quality of service and food the same for all.

For more loyalty-building ideas, contact Synergy Restaurant Consultants.


 

Building Employee Relationships

If you think building trust, communication and empathy between management and employees is just a human resources issue, you can stop reading this article right now.

Successful employers treat employee relationships with as much care and thought as they devote to customers. Happy employees help make for happy customers—and who doesn’t want happy customers?

Unhappy employees? Well, for one thing they might quit, which could end up costing you an average of $7,000 per employee, according to the National Restaurant Association, in new recruiting, screening, training and other costs.

For another thing, an unhappy employee could also cost you customers. A recent study by management and marketing professors at two different universities found that when customers witnessed co-workers behaving badly to each other, they wanted to punish the company that employed them. The study’s authors theorized that this stems from a kind of personal moral code that includes how people should be treated, and that lack of respect to one another on the job is an indication that the employees are not being treated correctly by their employer.

It bears repeating that your staff members are your brand ambassadors, first and foremost, particularly in this era of social media, when many of your employees will be sharing Twitter and Facebook space with potential customers.

And keeping staffers focused, engaged and content can be a big challenge, especially in an industry that tends to go a little short on such “perks” as sick days, paid vacation, health care, and advancement opportunities.

In its new report “Optimizing Employee Engagement,” Technomic identified trust as the most important of four key factors in building employer-employee relationships, followed by clarity, common purpose and growth. Managers can help inspire trust in the following ways:

• Include employees in the decision-making process as much as possible by soliciting their ideas and feedback
• Give them the tools to do their job, be it training, or simple resources like enough cups to reset table
• Be open, honest and truthful; share company news and goals, both good and bad
• Adopt a problem-solving mindset; implement systems but don’t just do things because that’s the way they’ve been done in the past
• Provide relevant and consistent direction
• Help employees meet their job and career challenges
• Respect their private lives, including time for family, friends and other activities

For more Human Capital Solutions, contact Synergy Restaurant Consultants


 


Accounting and Operating Data: The Right Recipe

By Bill Taves, Finance and Accounting, Synergy Restaurant Consultants

When you’re managing and monitoring the many facets of restaurant operations, it helps to have the right information at your fingertips. But what is the right information?

Systems today provide endless amounts of information. Too often accounting, reporting and point-of-sale systems offer hundreds of reports that can be overwhelming to understand and cause “analysis-paralysis.” The proper setup and use of both accounting and operational data can be a tremendous help to any operator.

Identify and Use Key Metrics

Idetifying the key drivers of your restaurant’s performance is essential to establishing sound reporting. There is more to learn about sales than looking at your income statement and comparing sales to prior year or budget. To be useful, any sales comparison should be measured by its key metrics: guest counts, average check, and sales mix.

This distilling of accounting data (sales) into operating data (average check, etc.) is critical, because accounting data is rarely “actionable.” Actionable data tells you where the issue or opportunity exists and can be a guide toward what needs to be done to improve operations and cash flow. For example, a common reaction to a sales shortfall can be to raise prices; without knowing the cause of the shortfall (for example, lower guest counts), however, raising prices could exacerbate the problem.

Budgeting and Planning

Budgeting is an essential tool in any business. Just like a road map (or GPS in today’s world), you can get lost without one. However, budgeting can often seem fruitless months down the road. That is often because the approach to budgeting is not founded using the same metrics that being using to monitor and report on operations.

A useful budget is founded on key operating metrics, such as guest counts, labor hours, and so on. A budget built from the ground using key metrics can be compared to actual results using those same metrics. This allows for a clearer understanding of performance to expectations and any corrective action that needs to be taken.

Exception-Based Reporting

The most efficient way to keep your fingers on the pulse of your operations is to establish benchmarks and thresholds using key metrics, and then design reporting so “alerts” are provided any time operations go beyond or outside of those benchmarks. Examples where this approach is commonly used include voids and overtime hours, but it can also be used for labor hours, sales, average check, promotional programs, and many more.

It is not necessary to produce a void report every day if you have an acceptable threshold for voids. Many reporting systems provide alerts in the form of an email or text that is sent when voids exceed a given threshold and thus require your attention. Using systems to inform you of a problem or “exception” can eliminate hours spent running through reports looking for problems.

Need help setting up any of your accounting systems or procedures? Contact Synergy for a free consultation.


 

Tip of the Month

Looking for new ways to incent repeat customers without resorting to daily dealing and other price discounts? Check out this article on cnbc.com, which goes beyond Groupon to explore Strategies for Long-Term Customer Loyalty.