Does it pay to buy used equipment?

The National Restaurant Association's Manage My Restaurant has articles in categories such as Marketing and Sales, Workforce Engagement, Food and Nutrition and Operations. Visit Manage My Restaurant here for this and other helpful tips.

Buying used commercial foodservice equipment can save you a bundle in the short term. But is it a good investment? Tackle these 10 questions before deciding whether to buy new or used.

1. What are your equipment requirements?
Start by determining your operation’s needs, recommends Joseph Carbonara, editor-in-chief of Foodservice Equipment & Supplies magazine.  Ask: Can the equipment help you execute your menu? Can it handle the volume? Is it simple enough for your labor pool to operate? Consider any growth plans, like increased volume or menu expansion. He recommends investing in new equipment for cornerstone items, such as a brick oven for a pizzeria.

Tip: Familiarize yourself with the available equipment options by visiting local dealers or the NRA Show. Then decide what features you need.

2. What does it cost to purchase the item new?
“If a used item costs more than 50 percent of the price of a new one, I would strongly suggest looking at new,” says Carbonara. Expect better bargains at auctions, but buyer beware.

3. What is the total cost of ownership?
To determine whether you’re getting a good deal, consider the total cost of ownership. Factor in the expected lifespan, the cost of service/repairs and operational costs. “The initial purchase price is just the tip of the iceberg when it comes to the total cost to own and operate an appliance,” says Richard Young, senior engineer and director of education for the PG&E Food Service Technology Center.

The cost of energy and other commodities, such as water or fryer oil, often exceeds the initial purchase price by many thousands of dollars. You might think you’re getting a great deal on a low-cost piece of equipment, but you potentially are throwing away big dollars on the operating side, Young says. FSTC offers an online calculator to help you estimate life-cycle costs.

Tip: To slash your energy and water bills, look for equipment that qualifies for either Energy Star and/or California Energy Wise incentives. See the lifetime cost savings of buying new Energy Star equipment vs. new conventional equipment. Unfortunately, it’s often difficult to find used Energy Star equipment, notes Jeff Clark, director of the National Restaurant Association’s Conserve program, which focuses on environmental sustainability in the restaurant industry. “Be sure to ask your equipment dealer though; you might get lucky,” says Clark.

4. Has the equipment been reconditioned?
Some dealers recondition used equipment before re-selling it, replacing parts and making repairs as needed. Ask specifically what work was done. Reconditioned equipment comes with a higher price tag but lower risk than equipment bought “as is.” You also could consider buying remanufactured equipment that has been stripped down and rebuilt.

5. What type of warranty is provided?
Used equipment generally sells “as is” from auctions and individual sellers, so don’t expect a warranty. In contrast, dealers often provide a 30-day warranty on parts; some might give 60 or 90 days on parts and labor. If you want the security of a lengthier warranty, consider a remanufactured or new item.

6. Can I get someone to service and replace parts?
Make sure parts are available and that a local technician can service and repair the equipment. Your chances are best with an American brand-name product, says Tim Schrack, vice president of purchasing for Omaha-headquartered Hockenbergs Foodservice Equipment & Supply, which has 10 locations throughout the country.

7. Who was the previous owner?
If you luck into finding equipment owned by a church or a school, it will have less “mileage” than the same piece operated by a high-volume quickservice restaurant. “It’s like buying the car that grandma drove once a week,” Carbonara says. 

8. How well does the equipment operate?
“Ask to see the equipment operate,” says Hockenbergs’ Schrack. “We’ll hook up any piece of equipment on request … It’s tricky to buy anything used online.”

Tip: Ask an authorized service agent to inspect the unit to ensure that it is in good operating condition, Carbonara suggests.

9. Is the seller reliable?
Work with sellers who want to establish a long-term relationship with you, Carbonara advises. “You want someone who is concerned that they’re putting their name and reputation on the line and wants to be good with you for a whole bunch of deals, not just this one.”

10. Does the equipment stand the test of time?
Look for equipment built to last, with brand names know for endurance, says Jameel Burkett, president of Burkett Restaurant Equipment & Supplies in Toledo, Ohio. For example, Hobart mixers and slicers can last for decades, he says, as can items like stainless steel tables and shelving, which have no mechanical parts that break.

Convection ovens and ranges tend to stand the test of time, Schrack says. But be wary of steamers, dishwashers, ice machines and other equipment that use water because they can develop lime buildup. If not maintained properly, aging refrigeration equipment can become energy-guzzlers and lose some performance FSTC’s Young says. “If the refrigerant has leaked, the unit has been overcharged or the coils are damaged, then that unit will probably not perform to spec.”

Leasing terms: up for negotiation

The National Restaurant Association's Manage My Restaurant has articles in categories such as Marketing and Sales, Workforce Engagement, Food and Nutrition and Operations. Visit Manage My Restaurant here for this and other helpful tips.

If you're ready to sign a lease because you've agreed on a monthly price, think again. The typical restaurant lease is 20 to 40 pages with provision after provision. When negotiating a lease, look beyond your monthly payment to ensure you protect your assets and control your costs.

An experienced retail commercial broker can help negotiate terms, often at no cost to you, because landlords typically pay broker commissions. It’s also wise to have a lawyer review the lease. You might be living with this document for 15 years or more, given renewals.

“It’s worth paying an attorney up front to make sure you have the best protection,” says Richard Muhlebach, a retail broker working in the Seattle and San Francisco areas. This article isn't intended as legal advice; seek legal counsel as needed.

“When negotiating lease terms, you must decide what’s essential, and be prepared and willing to stand your ground. It’s rare that you have to be at a particular site,” says attorney Gregory Apter, president of Hilco Real Estate, where he’s helped hundreds of clients negotiate leases. “Prioritize, weigh the costs and benefits before making concessions and then be willing to stick to your plan,” he advises.

Here are nine negotiable items to consider before signing on the dotted line:

Percentage rent. Some leases require “percentage rent.” Once a tenant’s sales reach a certain level, the tenant must pay the landlord a percentage of the restaurant’s revenue. “I’m not a big believer in percentage rent if it can be avoided,” Apter says. “It’s generally no one’s business but yours as to how you are performing.” Sharing this information can hurt future negotiations. “If the landlord knows the financial performance of a particular retail location, it can materially­—and negatively—impact your future flexibility,” he says. Nonetheless, percentage rent is fairly common. If you ultimately agree to it, negotiate the terms.  

Exclusivity and radius restrictions. Try to preclude direct competition in the same shopping area. It’s unusual to block all restaurants, but you might negotiate exclusivity within a category, such as pizzerias or burger joints. On the other hand, your landlord might want to impose radius restrictions, preventing you from opening another unit close-by. “Try to avoid these restrictions, which impinge on your business’s flexibility, Apter says. 

Assignment and subletting clauses. You’ll want the right to sublet or assign the space to another tenant, should you need to close or sell your restaurant. Avoid restrictions that require the transferee to have the same net worth or experience as you, advises retail broker Muhlebach. 

Option to renew. “Negotiate for as many options as you can get,” says Muhlebach. “An option is an obligation for the landlord and a right for the tenant.” Avoid making renewal contingent on your remaining the tenant, or your resale value will plummet, advises real-estate consultant Lewis Gelmon, president of Gelmon Enterprises based in San Diego.

Tip: You can negotiate renewal terms, rather than automatically taking your option to renew. Gelmon suggests starting negotiations early. “If you don’t like the way negotiations pan out, you still have the right to exercise your option to renew.”

Future rent prices. Negotiate future rent terms. Prices tend to be based on percentage increases or tied to fair market value. Given a choice, opt for percentage increases because they’re easier to budget for, Muhlebach advises. Otherwise, you could be shocked with a large increase.

Kick-out clauses. Consider negotiating for a kick-out clause, giving you a one-time right to cancel a lease after a specified time period if your sales haven’t surpassed a certain amount.

Start date of rent. Many landlords will waive rent payments during the build-out period. Typically they’ll waive payments for 60 to 90 days or more, or until you open for business, whichever comes first, says New York City restaurant real estate broker Frank Glasgall, of Glasgall & Associates. Consider asking to delay the clock from ticking until you get a building permit, Muhlebach advises.

Change of use. Try to maintain flexibility so you can change concepts if needed or can sublease/assign the space to a different business, Apter says.

Operating expenses. Negotiate whether you or the landlord are responsible for operating expenses, including property taxes, insurance and management fees. “Some landlords add in zingers that aren’t industry standard,” Muhlebach says. Watch out for administrative fees and capital improvement costs. “You’ve got to catch those things,” Muhlebach urges. “Once they’re in black-and-white and you’ve signed the lease, you have to hold up your end of the deal.”

Benefits of electronic payments for your alcohol purchases

The National Restaurant Association's Manage My Restaurant has articles in categories such as Marketing and Sales, Workforce Engagement, Food and Nutrition and Operations. Visit Manage My Restaurant here for this and other helpful tips.

Alcohol trends in restaurants closely follow today’s food trends: local sourcing, food-cocktail pairings and fresh ingredients.

While alcohol is an instrumental part of many restaurants’ success, the rules and regulations of the alcohol industry are as complex as ever, varying both by state and by product. Whether you operate in more than one state or own a casual or fine-dining establishment, the alcohol purchasing and payment process is always complex and cumbersome.

Electronic payment and data systems can streamline alcohol payment-processing, compliance and reconciliation. They also can help you operate more efficiently, spend more time with your customers and worry less about deliveries. Here are some other benefits:

•   Eliminates the need to pay cash on delivery or write checks and money orders

•   Replaces prepaid and escrow accounts

•   Speeds deliveries by an average of 15 minutes

•   Guarantees invoices are paid on time and according to state regulations

•   Allows you to track purchases with electronic reporting and customized data files

•   Heightens security and loss and fraud prevention

This article was contributed by NRA partner Fintech, a secure, convenient method of electronic payment and data for alcohol purchases. 

Take the worry out of weekly food inventories

The National Restaurant Association's Manage My Restaurant has articles in categories such as Marketing and Sales, Workforce Engagement, Food and Nutrition and Operations. Visit Manage My Restaurant here for this and other helpful tips.

Most independent restaurants calculate their food cost only once a month, but virtually all of the major chains calculate theirs each week.

According to industry averages, chain restaurants ‑ before corporate expenses ‑ are two to three times as profitable as independent restaurants. While weekly food costing isn't the entire reason for that profitability, it's part of it.

To accurately calculate your cost weekly, you'll need to take inventory weekly as well. The only method for computing accurate cost of sales is to take physical inventories and then calculate the value of inventory on hand. Many operators erroneously believe that what they spend on food and beverage purchases is their cost of sales. While this may be true in the long run, for specific-period analysis it is inaccurate.

The correct formula for calculating cost of sales for each category is this: Beginning Inventory plus Purchases minus Ending Inventory equals Cost of Sales.

Taking weekly inventories doesn't mean you have to spend half the night to do it. Here are a few tips to help you take inventory quickly. Properly applied, these principals will help you to be more accurate and should reduce the time spent counting your food inventory to under two hours.

Get organized. It is virtually impossible to take an accurate inventory when the stock room or walk-in is in disarray. Be sure all store rooms, shelves and refrigeration units are organized and clean. Product should be easy to see and count. Labels should be used for hard to identify product. Don't put items in incorrectly marked boxes or containers.

Count it on Sunday. Most restaurants are open seven days a week. A natural tracking period is from Monday to Sunday. Also, inventory levels will be at their lowest on Sunday evening. If you are closed Sunday, then count it on Saturday evening or early Monday morning.

How to set expectations with your employees

The National Restaurant Association's Manage My Restaurant has articles in categories such as Marketing and Sales, Workforce Engagement, Food and Nutrition and Operations. Visit Manage My Restaurant here for this and other helpful tips.

To help employees reach their full potential, leaders should clearly let workers know what they expect. If your employees don't understand what you expect of them, they won't have realistic goals or a path to grow in their positions. You can't trust and have faith in your team if they're not progressing over time. Setting clear expectations ensures everyone is on the same page and working toward the same mission. 

Improve communication and raise the performance level in your restaurant by trying these strategies:

Establish good behaviors from the beginning. Take time with each new hire to discuss exactly how you want things done; you'll reduce problems and frustration down the line.

“It is important to be upfront from the get-go when setting expectations with employees,” says Marilyn Schlossbach, executive chef and owner of five dining locales along the Jersey Shore. “We always review the core values and mission of the company with interviewees and new hires so that they truly understand who we are and what we expect from our team members.”

Put things in writing. Eliminate doubt by putting information into writing, and encourage employees to thoroughly read manuals and handbooks. Documents serve as a point of reference for everyone and offer quick guidance as well as black and white “proof” of what you expect. Similarly, posting written notes from staff meetings can reduce confusion over what was or wasn't said.

Make sure you’re as attentive to the rules as you expect your team to be. All the talk of requiring people to be on time or dress appropriately is useless if employees witness co-workers “getting away” with improper behavior. Workers look at your actions as a guide, so respond and model appropriately.

“Wavering instills a lack of confidence in those being led,” says Dave Weir, CEO of the Los Angeles-based firm Leadership Optimized. “It gives employees a perception that the leader does not know what needs to be accomplished and where to take the organization.”

Offer feedback. Don't assume your employees know what they're doing is right or wrong. Positive feedback encourages behaviors you want continued and lets employees know they’re meeting your expectations. Constructive criticism pinpoints areas that need improvement. Most employees want to do a good job, and your feedback is an essential tool for making that happen. Don't put it off.

5 mistakes new managers make

The National Restaurant Association's Manage My Restaurant has articles in categories such as Marketing and Sales, Workforce Engagement, Food and Nutrition and Operations. Visit Manage My Restaurant here for this and other helpful tips.

Moving up the professional ranks is a common goal for employees in most industries. Receiving the trust and endorsement of your boss to lead a team is no small feat. That’s why new managers are often so eager to please their supervisors, get along with their employees, and solidify their reputations as true leaders. Unfortunately, this excitement can often lead to a few missteps. Be on guard against these common errors first-time managers make, and you’ll be well on your way:

Thinking relationships can remain the same. Moving from your current role to a managerial position is going to change dynamics in and out of the workplace. As a manager, you need to focus on respect and top performance from your team – not friendship.

“The vast majority of restaurant managers are promoted from the ranks of line employees,” says restaurant consultant David Scott Peters of TheRestaurantExpert.com. “They are usually one of the best at their position – someone who shows leadership skills and demonstrates a desire to do more in the business. The challenge is when they first make that move into management; they still want their peers to see them as their buddy.”

While scaling back on outside socializing and being “one of the gang” can be difficult, doing so is critical to getting others to follow your directions and take you seriously as the one in charge.

Holding friends to different standards. Similarly, a manager must treat all employees the same to gain trust as a fair leader. Matt Heller of Performance Optimist Consulting, who specializes in developing leaders in the hospitality industry, says new managers can have trouble with this issue on either side of the coin – favoring their friends by not holding them to the same standards as other staff members or expecting more from their pals to show  they aren’t playing favorites.

New managers need to make expectations clear to all staff members and then follow through. Friends pressuring for special treatment or leniency may need to be reminded privately of a manager’s obligation to be impartial.

What to do when a food safety inspector visits

The National Restaurant Association's Manage My Restaurant has articles in categories such as Marketing and Sales, Workforce Engagement, Food and Nutrition and Operations. Visit Manage My Restaurant here for this and other helpful tips.

Don't panic when a food safety inspector arrives. Think of the visit as a learning opportunity that will benefit your operation by making it as safe as possible.

To make the inspection a positive experience, follow these guidelines:

•  Ask to see the inspector's credentials if the inspector doesn’t volunteer his/her credentials first. In some cases, people have tried to pass themselves off as health officials. If you're unsure of the person's credentials, call the local health department or the inspector's supervisor for verification. Ask whether the purpose of the visit is a regular inspection or due to a customer complaint. Train your employees to check identification before allowing anyone to enter the back of your operation.
• Don’t refuse an inspection. In doing so, the food safety inspector likely will obtain an inspection warrant, which allows him/her to inspect your establishment without your consent.
• Tag along with the inspector and take notes of any violations he or she finds. This gives you the chance to correct simple problems on the spot, and the food safety inspector will note your willingness to fix problems. Be prepared to provide any information or records that the inspector needs and answer the inspector’s questions truthfully.
• Refrain from offering any food or any other item that can be misconstrued as an attempt to influence the inspector's findings.
• Sign the inspector's report after the inspection. Signing it doesn't mean that you agree to the findings; it only means that you received a copy of the report.
• Ask the inspector to explain his findings to your staff, or share the inspection results with your employees and offer suggestions on areas that need improvement.

Now that you have had the inspection, consider appropriate follow-up and be prepared for your next inspection.

Fishbowl's Top 10 Email Tips for Restaurants

The National Restaurant Association's Manage My Restaurant has articles in categories such as Marketing and Sales, Workforce Engagement, Food and Nutrition and Operations. Visit Manage My Restaurant here for this and other helpful tips.

Email is one of the most effective ways restaurants can build relationships with customers, increase sales and get the most bang for their marketing bucks. Here are 10 pointers to ensure you make the most of your messages:

1. Be relevant. Personalize your message and make your email’s content relevant to your customers. Give them what they want: Create a “VIP” experience by offering promotions you don’t provide through other channels.
2. Be creative. Announce exciting offers, news and events with messages that will grab your customers’ attention. As the quantity of commercial emails increases, make sure your email stands out in guests’ inboxes. Encourage customers to come to your restaurant for special events, holidays and unique promotions such as “Mother’s Day” or “Father’s Day.”
3. Select your vendor wisely. Find a vendor that follows responsible email practices, is easy to use, and has quality customer service. Deliverability is a key component of your email program: Don’t overlook its importance to your response rate. Make sure your vendor is white-listed, so your email isn’t caught in spam filters.
4. Integrate on- and off-line channels. Let your customers know about your email program in your store, through community events, in print and online. Provide incentives for your staff and customers to help spread the word about your program. When all these channels work together, you increase the effectiveness of your online marketing program.
5. Authenticate your email. Support email authentication initiatives and make certain that your service provider complies. That ensures your messages get in the inbox and not in the spam folder.
6. Identify yourself. In every message, include your restaurant’s contact information and familiar branding. Your guests will feel more comfortable when they recognize you. If they have questions about your offer or need directions, your contact information helps them easily reach you.
7. Be open and responsible. Let your customers know about your email privacy policy. Tell them about new practices and technologies you implemented to safeguard them from spam. Being open about your email operations helps build customer trust.
8. Manage message frequency. If you over- or under-email your customers, you run the risk of them unsubscribing. Send one or two messages per month to keep them interested but not overwhelmed.
9. Shape customer experience. What you say and when you say it does more than informing a customer about your product: it helps create a customer experience. Remember that for each email you send.
10. Integrate with social media. Don’t miss the opportunity to extend your relationship with guests. Add links to your social media profiles on Facebook, Twitter and other networks. Collect “likes” and followers’ information from social sites, and funnel new guests into your email program. Use social media publishing tools to post from a single platform and streamline your online marketing activities.

This content was provided by National Restaurant Association partner Fishbowl.

To control food costs, start at the cook line

The National Restaurant Association's Manage My Restaurant has articles in categories such as Marketing and Sales, Workforce Engagement, Food and Nutrition and Operations. Visit Manage My Restaurant here for this and other helpful tips.

The cook line is, perhaps, the most volatile area for controlling food cost. Whereas theft can occur anywhere, and vendor prices and proper preparation practices certainly can have an equally negative effect on food cost, it usually is on the cook line that many restaurants lose their profits. Common issues include incorrect portioning, waste and overcooked or cold food resulting from the kitchen getting slammed with orders, items being prepared without a food ticket, or unrecorded sales, and communication failures between kitchen and service staff that can result in incorrect orders.

Review these proven tips to control your food costs:

No ticket, no food. This is perhaps the singularly most effective policy for controlling food and beverage costs. By employing a policy that all orders must be rung up on the point-of-sale system or cash register before they can be made, you eliminate the possibility of unrecorded sales. If your POS or cash register doesn't have the ability to print orders to the kitchen and bar ‑ often called requisition printing ‑ then you may want to start shopping for one that does. It is common knowledge among POS vendors that restaurants using requisition printers typically enjoy as much as 5% or more in cost savings than those that don't.

Keep a waste log. Every restaurant experiences some degree of waste, but it is a controllable expense. Create systems to both minimize and record wasted product, such as meals returned by the customer, kitchen mistakes and spoilage. Keeping an accurate accounting of the value of wasted product can help to account for variances between ideal and actual food cost.

Portion control tools. Poor portion control is one of the leading causes of food cost variances. Consider that your ideal food cost is based on the premise of exact portioning for each menu item, including the portioning of each ingredient within a menu item. If your prep and line cooks have gotten in the habit of "eyeballing" measurements rather than sticking to the exact recipes, chances are your food cost variance could be as much as 5% or more. Proven portion control strategies include the use of portioning scoops, scales and measuring spoons and cups. Pre-portioning can be effective in controlling costs by using portion baggies and a scale to pre-weigh product before stocking the cook line.

Recipe quick-reference charts. The fast-paced environment at most restaurant kitchens makes it impractical to use the recipe manual for every menu item. Characteristically, cooks are required to memorize the proper portions and steps for preparing each item on their station. The recipe "quick reference" is used as the name implies ‑ providing the cook with an at-a-glance list of ingredients, portion size and proper portioning utensil for each preparation step. Optionally, recipe references can be accompanied by photos of the finished product. Proper portioning and adherence to recipes, along with a visual reference of the properly prepared menu item help to ensure consistency in both taste and presentation.

This article is presented courtesy of RestaurantOwner.com, a source of operational and business resources for independent restaurant operators. For more information, visit www.RestaurantOwner.com.

Training staff on kitchen equipment

The National Restaurant Association’s Manage My Restaurant has articles in categories such as Marketing and Sales, Workforce Engagement, Food and Nutrition and Operations. Visit Manage My Restaurant here for this and other helpful tips.

Restaurant personnel often lack proper knowledge of the equipment they use each day. Whether it's programmable fryers, high-tech combination ovens, or sophisticated video order systems, equipment designers have put more emphasis on ease of use rather than comprehension of how it works.

Nevertheless, managers and kitchen managers should have a working knowledge of how each piece of equipment works, how to properly clean it, and how to perform periodic maintenance.

Common sense plays a role when it comes to preserving equipment longevity. For instance, refrigeration equipment relies on airflow to remove heat. Staff should be trained not to stack boxes so close that it could cut off air circulation, causing the compressor to work harder.

Likewise, staff should be instructed to turn off equipment not in use. Or, let's say you use a char broiler that has two or more burners. Turning off one side during slow times not only saves unnecessary wear and tear, it also reduces the amount of heat.

Consider providing new managers with basic information on how to maintain and clean equipment to provide longer use. This includes an overview of the common parts, such as coils and condensers, etc. Potential corrective issues they can check before calling a repairperson also should be offered.

Managers should know the location of breaker panels (each breaker should be clearly marked), gas shutoff valves, quick disconnects, water shutoff valves, and grease traps. It can give them more confidence about how to handle repair issues when they are running the store.

Whether you're in the startup phase or if you've been open for years, it's never too late to improve your training. Even a simple addendum containing copies or excerpts from your equipment manuals can prove to be valuable training material that can save you money in the long run.

How to resolve employee conflict

The National Restaurant Association’ s Manage My Restaurant has articles in categories such as Marketing and Sales, Workforce Engagement, Food and Nutrition and Operations. Visit Manage My Restaurant here for this and other helpful tips.

Conflict is common among all people. It can become particularly problematic in the workplace if not managed correctly.

With the right ideas, attitude and procedures, you can resolve conflict at your restaurant and create a positive, welcoming atmosphere for employees and customers alike.

Maintain positive customer perceptions

Seeing employees fighting is awkward for a customer. It also makes a restaurant seem unprofessional. Managers need specific action plans to deal with such situations.

Trying to break up an employee argument in public can lead to worse confrontation in front of customers. In the event of a conflict, develop a companywide hand signal or verbal cue for gathering as a team in private. This can help shield customers from embarrassing situations that might affect how they perceive your restaurant.

Next, approach any customers who may have been close to the argument. Apologize to them and let them know it’s not the norm at your restaurant.

“Determine if something needs to be resolved right away for a guest; making guests feel comfortable and providing them with an incredible experience is a priority,” says National Restaurant Association Senior Vice President of Human Resources Dawn Cacciotti, who has 20 years of experience in operations, training and human resources. “Smooth things over as well as you can. Based on the needs of your guest, provide a free round of drinks, offer dessert, comp their meal, or better yet, invite them back for another visit in order to demonstrate the impeccable service for which you are known.”

“If you don’t need to attend to a guest, determine if the conflict between the employees should be resolved right away or if it’s something that can be addressed after their shift. In either case, give them time and space to cool down, if possible.”

In the event of violence, Cacciotti emphasizes following company standards, one of which should be to call 911. If you perceive an immediate threat to you or your employees, clear from the area.

Achieve balanced resolution

Once they are away from customers, take conflicting employees aside and ask them if they realize the impact of their behavior.

One approach can be to probe the problem with both employees present and work with them equitably. In some cases, speaking to one at a time could give an unfair advantage to the more persuasive storyteller.

Is it time to raise your prices?

The National Restaurant Association’ s Manage My Restaurant has articles in categories such as Marketing and Sales, Workforce Engagement, Food and Nutrition and Operations. Visit Manage My Restaurant here for this and other helpful tips.

Making sure the price is right for each menu item is no game — it takes lots of work. Before adjusting your prices, consider the following eight factors:

1. Food costs. “You’ve got to know your costs before setting a price,” says restaurant consultant Linda Lipsky of Broomall, Pennsylvania. She recommends that food costs run about 33 percent of menu prices, on average. This can differ per operation, with fine dining restaurants typically posting higher food-cost percentages and casual pizzerias running lower percentages. The percentages also vary widely from item to item. “A soup could cost as little as 18 cents per serving to make, but you’re not going to sell it for 54 cents,” Lipsky says. Soups, appetizers, desserts and alcohol tend to have lower cost percentages than entrees, she notes. Consider your sales mix when pricing items.   

2. Margins. Food-cost percentages are only part of the equation. “The biggest mistake I see operators make is that they rely too much on food-cost percentages and not enough on food-cost margins,” says Dennis Lombardi, executive vice president of foodservice strategies for WD Partners, Dublin, Ohio. Take an expensive item, such as lobster. If operators base their menu prices strictly on food-cost percentages, they might price the lobster too high to sell. If they determine they want, say, a $9 margin on entrees, they can price the lobster to sell with a profit. 

3. Additional costs. Don’t forget to factor in your labor costs. The cost of baking and decorating a chocolate cake in-house — rather than buying it premade — is more than just the price of the ingredients. Include the price of any giveaways, such as bread and olive oil, and the cost of food waste and spoilage.

4. Volatility. Food costs can change at a moment’s notice — based on anything from world politics to weather conditions. While large chains might sign contracts that lock in prices, smaller restaurants usually don’t have that option, Lombardi says. “Give yourself a cushion for volatile items,” he notes. Limit items, particularly those with volatile ingredients, to specials or seasonal dishes, he advises. Lipsky recommends printing your menu in-house, so you can easily reprint it if your costs suddenly soar. “If your menu looks the same, your guests probably won’t notice the price change,” she says.

5. Competitor’s prices. When was the last time you dined at a competing restaurant? If it’s been a while, you’re missing crucial information that can help you set your prices. Find out what your competition offers and their price points. Don’t look just at online menus, Lombardi urges. Go in person so you can see the portion sizes, the preparation, the presentation—all factors that impact the value perception. 

6. Menu mix. Lombardi recommends analyzing your menu composition by sorting the items into a matrix like the one below:

	Low Margin	High Margin
High Volume
Low Volume

Using this format, you can spot places to adjust prices, push sales or drop items. For example, can you increase the margin on a high volume/low margin item without losing significant sales? Can you increase sales of a low volume/high margin item by placing it more predominantly on the menu or giving servers a sales incentive? Remember: Different spots on the matrix play different roles in building your business. “You need a couple of  items that are priced low enough to avoid the ‘veto vote’ from those in a group who want to go out but don’t want to spend a lot,” Lombardi says.

7. Ingredient adjustments. Before raising a menu price, consider whether you can make the dish for less, Lipsky recommends. Can you select a less expensive vendor, substitute similar but more affordable ingredients or make the portion size smaller? If none of these are feasible, you might need to raise prices. “But that doesn’t mean you have to raise the prices on your whole menu,” Lipsky says.

8. Historical data. Review your menu prices at least twice a year, if not quarterly, Lombardi recommends. Be sure to examine previous price changes, and see how they affected your bottom line before enacting your next set of changes.

As food costs are rising, small measures can help ease pressure

The National Restaurant Association’ s Manage My Restaurant has articles in categories such as Marketing and Sales, Workforce Engagement, Food and Nutrition and Operations. Visit Manage My Restaurant here for this and other helpful tips.

About one-third of sales in a typical restaurant goes to food and beverage purchases, making cost management in the kitchen critically important to maintaining profitability.

After jumping more than 8 percent in 2011 – the strongest annual increase in more than three decades – wholesale food price growth has slowed, but prices remain elevated. And overall, average wholesale food prices have jumped nearly 30 percent in the past six years.

Meanwhile, menu prices have not risen at nearly the same pace, putting additional pressure on restaurants’ bottom lines. In fact, food costs are cited as the top challenge by more than one-quarter of restaurant operators this year.

In the What’s Hot in 2013 survey, the NRA asked professional chefs how to best handle the pressure of elevated food costs. ”About one-third said that changing menus would help do so, while one-quarter said that adjusting plate composition could help ease the pressure. Another quarter said that they explore new sourcing options and suppliers to offset elevated food prices. Only 4 percent said that raising menu prices is the way to go.

While restaurateurs can’t control the commodity market, they can control which ingredients to use and how to use them in their own kitchens. Some ways to alleviate food cost pressure are:

• Closely monitor what food is left on consumers’ plates. If your guests are consistently leaving the same items – like salad garnish, french fries or salsa – you can serve less of it or eliminate it altogether. Not only will this save on costs, but it also helps the environment by cutting back on waste.
• If you don’t want to change a core menu item completely, consider adjusting parts of it. For example, if one type of lettuce is becoming more expensive, substitute a different type. Or, if the price of milled rice is spiking, use other grains.
• Serve free items only upon request rather than having them on counters or automatically served by staff – for example, condiments, bread, crackers, chips and salsa.
• Wholesale beef prices increased at double-digit rates between 2009 and 2012, and are still rising. When planning new menu items, explore underused cuts like shoulder, cheeks and skirt steak, as these are often more inexpensive, but yet full of flavor.
• Use fresh produce that is in season, as supplies are more plentiful and prices typically lower. Consumers are also attracted to freshness of ingredients, so this can be a marketing opportunity as well.

Why color is the main ingredient for brand integrity

The National Restaurant Association’ s Manage My Restaurant has articles in categories such as Marketing and Sales, Workforce Engagement, Food and Nutrition and Operations. Visit Manage My Restaurant here for this and other helpful tips.

Choosing a specific color or palette of colors for your restaurant's brand can be a daunting task. Ultimately, your brand's color will define your image as a business. When a person sees a particular color, he or she relates to it in certain ways. One color might make a person feel refreshed and relaxed, while another might make him or her think of stressful situations or powerful moments. That’s why it’s important to evaluate the tone of your menu and atmosphere of your restaurant before making a decision on the primary color of your brand.

Why is color important for my brand?

• Color defines your brand's perception, and consistency of that color is key. Color consistency builds trust among your customers and increases the value of your brand.
• Color consistency also eliminates confusion surrounding your brand. People will recognize your brand and know what your company stands for when you achieve color consistency.
• Color consistency provides you with a better competitive advantage. It allows you to stand out against your competition, which might not manage its branding as strongly.

How can I achieve color consistency success in my printed material?

• Choose a qualified printer. Not every printing company understands the importance of color consistency when it comes to brand management. Find a print provider that specializes in color management and is G7 certified. Be certain your print provider has a dedicated team to ensure color consistency across all print devices and substrates.
• Choose one trustworthy print provider and stick with that provider. That eliminates the risk of printed items not matching each other.
• Always establish a “golden master” either as LAB color, or use Pantone colors in your artwork. Make sure your provider knows to match to them. Pantone is a standardized color reproduction system in the form of a printed guide and allows your print provider to have an accurate reference for matches.
• Make sure you have greater brand control by using a marketing asset management tool. It allows you to better manage your marketing and brand identity in one place, giving you the control you need over your brand.

There's much to consider when it comes to choosing a brand color for your restaurant, and knowing your target demographic can help. Many brand managers don't realize senior citizens are drawn to blue and green. If that’s the group who frequent your restaurant the most, it might be something to consider when creating your branding strategy.

Perhaps you don't have a set demographic, and you generally want to attract a wide range of diverse diners. In that case, blue might be the color for you. Adults worldwide favor blue more than any other color. Once you decide on a color for your brand, stick with it, own it, and develop your brand around it. That’s the first major decision you have to make when launching your brand identity, and it will have a big impact on the overall success of your restaurant.

This content was provided by Primary Color. For more information contact Paul Wartman at 949.370.4255 or paulwartman@primarycolor.com.