One Operator's Adjustments in Weathering the Economy

Okay, I think we can all face the facts. The current U.S. economy is in a slump, if not a full-blown recession. The effect this situation is having on independent restaurant/bar operators is dramatic.

The Great Plate Bar & Grill is located in Tracy, a Northern California town in with a population of 88,000, and we definitely are feeling the pinch. The summer of 2007 reflected good sales and numbers, but the onset of September brought serious declines in lunch and dinner numbers on the weekdays. California in particular seemed to be the first in feeling the backlash of the housing crisis, with so many homeowners unable to keep up their mortgages and going into default. This in particular has taken a toll on the people who did have enough disposable income to enjoy a lunch out one or two times a week.

The fallout of this problem effects many service businesses, which are laying off workers who are no longer needed to answer the lack of demand. The mortgage/lending sector has been hit so hard that local offices and chains are going under. Car sales are in a huge slump. We have a local long-time Chevrolet dealership that closed in 2007 and went up for sale.

Unfortunately 2008 has brought much more of the same: weak sales numbers through winter and spring with a decent increase for the summer. Now that school is back in session, we are really feeling it.

First Things First

So what do we do? First off, we have to take care of our own. Make sure that your property looks great, that the inside of your building looks sound and in repair. The restrooms need to be well maintained and attractive. The staff needs to be in tip-top form. Your food and drink quality has to be better than ever with an emphasis on presentation. Cleanliness is paramount. Do not give your guests any reason to want to choose a competitor.

Assuming that these problems can be solved, there are other steps that can be taken to help insure your survival. Completely examine all of your scheduling and cut the fat. Bring on your staff later, and cut them earlier. Get rid of any bottom 10 percent employees you may have. They were dragging you down anyway.

Consult your best staff members. Many of them may be willing to take on more days. The shifts are now shorter due to your scheduling expertise. More money is available to be made because you have less staff dividing up the number of guests who actually can afford to come in.

Build Loyalty

Another way to continue to enjoy success is to provide your guests with some kind of rewards/loyalty program. It pays to mine your own gold. We tried a couple out of house-maintained programs and found that they were too expensive with their maintenance costs for us to continue. The money we made from more frequent guest visits was spent on the maintenance of the program.

We have had some form of program running for the past few years where guests receive a free birthday meal from us during their birthday month.

This is a beneficial program. Very few people will go out and celebrate alone. A decent offer gets them in with others to spend, and you get to make a fuss over them to make them feel loved, translating into more loyalty from your guests.

In 2007, we started a loyalty program based on guest spending. Each time the guest spends a dollar they get a dollar value attached to their account. When they reach $200 spent they get a $10 certificate from us, usually by hand or regular mail. E-mail has proven problematic because some guests will continue to print the certificates until their expiration date.

The guests usually are thrilled to get the reward, and some are even in competition to see who can get the most. The key to success with any in-house-run program is to make sure your staff is fully on board and keeps track of who is part of your rewards/loyalty program, and to continue to keep signing up new people so you can keep the flow going. I will spend time each week with as many staff members as possible and hold people accountable.

Have the staff ask every table if they are interested in joining the free program. Design a short form for the guest to fill out that gives you the information you need: name, address, phone, e-mail and birthdays for the whole family. Typically I will spend about four hours a week managing all aspects the program.

We make the certificates in-house, and they are simple, effective and specific to our company. Some conditions apply such as, "not good with any other offer" and "dine-in only." The offers are dated to have a short shelf life, to maximize the effect and stimulate spending within a short period of time. The certificate numbers change for each one sent to help with accountability and with a specific guest's name on it you can monitor fraudulent activity.

Everybody wants to be cared about, and this is one way we accomplish part of that concept.

Maintain Quality Service

I hear disturbing things from my staff that tipping has gone down in our area. Servers who used to get 15 to 20 percent now are getting 5 to 10 percent, without changing their style of service. The indication is that guest disposable income is at a very low point.

The first thing to go in a recession is the fun dollars. Our staff makes the effort to provide our style of quality service, which must be maintained to even get the substandard tips from our guests. Choosing the alternative is tantamount to financial suicide as an institution.

Fortunately for us and our industry, the public will party on in a recession. What really is holding us viable in the market today is the weekend nightlife. People continue to show up in great numbers to let loose on the weekends and holidays. Easily over 50 percent of our sales are on the weekends.

This is holding true for the people who still have disposable income and those who don't. With that in mind, make sure you hire the right DJs and bands and maintain your sound and lighting systems to their maximum efficiency.

This trend may drive us to the decision to alter our operation radically and go strictly as a club with moderate food offerings. Stay tuned for the outcome!

Mike Corbett is marketing and banquet director with The Great Plate Bar & Grill in Tracy, Calif., founded in 1998.