Restaurant Stats – Are You Among the Survivors?

 In 1. David Scott Peters, SMART Systems, workshop

By David Scott Peters

According to a report issued by the NPD Group, there are 4,000 fewer restaurants today than there were a year ago. Read more about it here.

There is a quote in the article that I have to share with you because I could not have said it better myself:

“It’s clear that independent restaurants and smaller chains have been most impacted by the slower economy,” said Susan Kleutsch, director, product development-foodservice at NPD. “The recession appears to have weeded out restaurants performing poorly prior to the economic downturn, and this seems most true for independents and smaller chains that are likely having a hard time competing with the resources and marketing power of major chains.”

That’s what I’ve been saying!

The good news is this: If your doors are still open, you have not allowed the recession to weed you out. Fantastic!

The bad news is this: People’s eating-out habits have not returned to the seemingly freewheeling style that restaurant owners had become accustomed to prior to the recession. And some experts say they never will. (I’m not sure about that, but we’ll see.) So how are you going to ensure your doors remain open no matter how your customers and potential customers choose to spend their eating-out dollars in this continuing recession?

The answer? Use systems to slim your costs down as low as possible.

Restaurants that have a prime cost that is higher than 65% MUST find ways to trim the fat. There are so many systems that I teach that help you do this that I can’t list them all here. But the areas where I find independent restaurant owners are able to have the most impacct?

  1. Labor
  2. Inventory
  3. Cost of goods sold
  4. Menu pricing, just to name a few

Using systems, I work with independent restaurant owners to get their prime cost (Add your total food cost dollars, your pour cost dollars and your labor cost dollars together. Take that number divided by sales and you will get your prime cost percentage.) down to 60%. In a lot of cases, I’m pushing for 55%.

Try it. See if you can figure out your prime cost. Where do you fall? Above that 65%, or in the recommended range of 55-60%?

If you’re in the safe range, I bet I can shave a few more points off that for you. If you’re above the safe range, then you and I need to talk.

How are you going to keep yourself from getting weeded out? In today’s market, the chains once again have all the resources, the deep pockets to make changes, buy up property, launch new concepts. How will you rise above the competition?

One way is to make sure your operating costs are at the lowest percentage possible.

Gratuitous self-promotion: In September I’m hosting my semi-annual workshop, “How to Run a Profitable Restaurant: from Soup to Nuts”, where I teach all the SMART Systems I’ve developed. Every single one of them. And right now, if you register before August 15, I’ll give you a $1,000 discount off the price of tuition. September 14-17 in Las Vegas. Come. It’ll change your business and your life. If you don’t come away with systems to shave at least 1% off your operating costs, then you were sleeping! (1% in a $1m operation is $10,000. And that savings is yours year after year! I have independent restaurant owners who save 10-15%, and some as much as 20%.)

David Scott Peters is a restaurant expert, coach, trainer and speaker, specializing in systems for independent restaurant owners. 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!” Visit for more.

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