Gearing Up and Gearing Down Part 1 – Knowing your sales cycle will make you more money
By David Scott Peters
The difference between making money and losing money in the restaurant business depends on how well you gear up and gear down. Proper planning truly has a major impact on your profitability.
Take Into Account the Season
Restaurant owners and managers throw around a common phrase to explain their fluctuations in business – “we’re in season” or “we’re out of season,” and they’re not talking specifically about winter, spring, summer or fall. They’re referring to the time of year when they have the most, or least, customers.
Every restaurant has its own season. For restaurants in high tourist areas, being in or out of season can account for huge swings in customer counts and sales. In fact I have members in resort towns that have in-season sales increases as high as 300 percent. There are also areas of the country that have a large influx in winter visitors with customers trying to escape their cold climate in exchange for warmer weather. These situations pose some serious staffing challenges for restaurant owners.
The Importance of Gearing Up
Proper planning is the key to profitability. You have no chance of hitting your target numbers without knowing what kind of sales to expect on a daily basis. Projecting sales allows you to staff and purchase product properly. It allows you to best manage your cash flow. It allows you to hit your budget. And most of all it allows you to make money.
Generally restaurant owners tend to be reactive in nature instead of proactive. Let’s say you’re a restaurant owner in an area that is affected by large increase in customers for a portion of the year. For example, you know that when it starts to snow in the Midwest, like clockwork every year, your sales volumes will start to triple. If you run your restaurant reactively, once winter visitors come, lines will start to form at your door and then you start to search for help to handle the sales volumes.
The problem with this scenario is the missed opportunities. It’s not just about having enough help; it’s about having enough well-trained help. If you don’t have enough people on the floor, you miss out on sales. If you don’t have enough people in the kitchen, you have long ticket times and frustrated guests. Both represent lost revenue for that day and the future, because you’ve sent customers to your competition for the rest of the season. Even if you have enough staff, if they aren’t trained well before the season is upon you, you might as well be short-staffed because a poorly trained team can create the same scenario.
Consider the opposite scenario. As a proactive owner, you know it takes six weeks on average to rehire and sufficiently train your seasonal staff. So two months out you put your recruiting program in place, update your training manuals and menus to be prepared.
Being proactive and prepared in advance of your season will increase costs up front because of the additional training wages and staffing up before the rush of winter hits. However, it’s pennies on the dollar compared to dealing with the nightmare of running your restaurant in a reactive nature.
Come back next week for Part 2 of Gearing Up and Gearing Down. Here I will provide tips to help you identify your seasons and forecast sales for your business.
David Scott Peters is a restaurant expert, speaker and founder of TheRestaurantExpert.com. He specializes in teaching independent restaurant owners how to use systems for increased sales and increased profits. He is the nationally acclaimed restaurant coach whose unique “SMART Systems” approach to boosting profits has earned him the title of, “The man who can walk into any restaurant in America and find $10,000 in undiscovered cash before he hits the back door – Guaranteed!” Learn more tips, tricks and secrets in David’s free weekly e-newsletter, “Instant Action Systems.” Simply sign up to receive the e-newsletter at TheRestaurantExpert.com.