The economy may be showing signs of life, but your business is still in the doldrums. Here are some simple ways to survive the worst and position your restaurant for growth during the better days to come.
You might think hyping your restaurant through text or e-mail messages is a bit geeky or intrusive. In reality, many of your customers would welcome the intrusion.
A survey done by Harris Interactive found that 42 percent of 18- to 24-year-olds and 33 percent of those 35 to 44 years old are at least somewhat interested in receiving opt-in mobile alerts from their favorite businesses. They were particularly keen on hearing from restaurants, mentioned by 53 percent of the surveyed group. Respondents also wanted to receive offers in the separate categories of pizza, fast food and happy hour or bar and nightclub offers.
We got the lowdown on direct digital marketing from Bryce Marshall, director of strategic services for Knotice, an Akron company providing software and services for direct digital marketing. For the uninitiated, direct digital marketing implies e-mail and text messages.
Marshall: I think SMS (short message service) text messaging is probably one thing that will have the most overall return for the lowest investment.
A larger win comes from the integration of e-mail and text messaging. With either of these channels, two things need to happen: first, you need to build a database to make these programs worthwhile; and second, you need a way for people to respond. If you're sending out e-mail communications, it's sort of passive. You're letting them know about new menu items, seasonal promotions and new locations, but there is very little you can do with that e-mail that will drive people into the store. One tactic might be to place a coupon in the e-mail. That's an incentive, but it doesn't drive people into your restaurant. If you send a promotional code to a mobile phone, that's more direct.
Marshall: There needs to be an understanding of how quickly habits, perceptions and the role of mobile devices in our lives are changing. If you look at data from 12 months ago, it's dramatically different from now. More and more people are getting on board with these technologies. A lot of people are requesting that coupons be sent to their mobile phones, and for a growing audience that is a more effective and convenient call of action than asking someone to print out a coupon.
Marshall: If you already have an e-mail database, you can use that to drive the users to a form where they can opt in for text messages. The benefit is if you have any other data associated with that address, for instance, if you know their zip code, or whether they have a family — that's a huge win. That means you can start marketing at a local level with offers for a family.
When have both (e-mail address and mobile numbers), you can do segmentation and targeting through both channels.
Marshall: In addition to messages with offers and promos, a chain can help people find locations through text messages. Within a chain or group of restaurants, direct digital technology can give individual store managers the ability to impact the performance of a store on a day-to-day basis. Text messages are timely.
Let's say it's a slow day, and you are thinking of sending waiters and bussers home. You could send out a message with an offer: Tonight until 9 p.m. you get a free appetizer if you buy two entrees. If something like that brings in 5 or 10 tables, that could be a huge win.
Marshall: I think restaurants consistently undersell themselves in terms of the impact they can have through direct digital marketing. It seems to be based on a fear of trying new tactics outside the old reliable mailers, coupon clippers and radio ads. I don't think they realize how ready the consumer is for these new kinds of communications. I think technophobia is a huge issue.
The dark days of the recession have spawned a troubling new issue, one that could cripple organizations even as we head into recovery. The looming problem? A widespread loss of employee engagement.
“Even if companies haven't literally lost their employees, many have lost them psychologically,” warns Jon Gordon, speaker, consultant, and author of the new book The Shark and the Goldfish: Positive Ways to Thrive During Waves of Change (Wiley, September 2009). “Too many Americans are beaten down, burned out and completely de-motivated. And if leaders don't strive to change that — to create a positive culture that energizes people — there will be dire consequences,” he says.
Many Americans have mentally checked out of their jobs. They are simply doing what they need to in order to hang on until something better comes along. In fact, a recent study by the Workforce Institute at Kronos shows that in organizations that have experienced layoffs, 40 percent of employees report that their productivity has suffered. Of that 40 percent, two-thirds think that morale has been negatively impacted and that they aren't as motivated as they once were.
“For leaders, now is the time to improve your company's culture and get inside your employees' heads,” Gordon insists. “You need to personally make sure that your company is a place where people want to work. You can allow the current economy to crush your morale, confidence and spirit, or you can choose to proactively shape your organization into one that is positive, resilient and prepared to take on challenges.”
Here are eight strategies he suggests to help you boost morale and engagement in the current economy:
True, there are a lot of numbers to worry about — investments, the bottom line, profits — and it's easy to become fixated on those figures. If your brain is spinning with strategies on how to stay out of the red, Gordon suggests that you take a step back and remember that your company isn't what shows up in the spreadsheets — it's the people. Ultimately, an organization's failure or success is determined by the moods, innovation, energy, thoughts and behaviors of the staff.
“It's not numbers that drive people, but the people that drive numbers,” Gordon points out. “Too often, worried leaders approach this relationship backwards. However, this is not a time to ignore your people. Place your attention on them and on the process.“
Leaders set the tone for how employees respond to situations. They can inspire, or they can extinguish. For example, if you greet a worker cheerfully even though you've both had to come into work an hour early, he's likely to mirror that attitude.
“Leaders need to be humble and hungry,” Gordon explains. “Humble in that they seek to learn, grow and improve every day, and hungry with a passion to work harder than everyone else. Now is not a time to be barricaded in your office. Now is a time to be in the trenches with your people, leading, working and building a successful future.”
That doesn't simply mean the absence of overt negativity. It means remaining purposeful in the face of adversity. While it's important to acknowledge the obstacles you are facing, don't dwell on them in meetings or in individual conversations, and don't bring up bad news before you've pointed out one or two things that are going well. Instead of being disappointed by where you are, optimistically focus on where you are going.
These are uncertain times. Employees are questioning how the economy will affect their jobs. They're unsure about what actions to take. Unfortunately this uncertainly creates a void, and Gordon's theory is that where there is a void, negativity will fill it. In the absence of clear and positive communication, people start to assume the worst, and they will act accordingly. As a leader, you must personally meet with your employees and continually communicate, communicate, communicate.
“Make transparency the norm, not the exception — after all, the more you communicate, the more you foster trust, and the more loyalty is built,” asserts Gordon. “Talk to your team members often, and let them know where they stand.”
No matter how many pep talks you give or good behaviors you model, your efforts won't go far unless everyone is on the same page. That's right: everyone. You might be tempted to think that a few non-conformists and cynics won't prove to be a major problem if the majority of your people begin to share in your positive vision, but Gordon insists that you'd be wrong. He calls those who are a constant source of negativity “energy vampires” because they suck the energy and life out of everyone around them. Their presence can have a highly detrimental effect on the team's morale, confidence, and overall performance.
Even if your biggest complainer happens to be your highest performer, his negative energy outweighs his positive contributions, Gordon says.
All complaining. Yeah, that'll happen when pigs fly, you're probably thinking. But Gordon is serious. Successful organizations with great cultures focus on solutions, not on complaints. The rule is simple. Let your employees know that they are not allowed to complain unless they also offer solutions.
“Remember, banning complaints is tough love for the good of the whole organization,” reminds Gordon. “When you boil things down, complaints are just noise and nothing more — but each one does represent an opportunity to turn something negative into something positive.“
Gordon firmly points out that both heroes and victims get knocked down. The distinction between the two groups lies in the fact that heroes get back up while victims simply give up. Help your employees to realize that they are not victims of circumstance. Rather, remind them that they have a significant influence over how things turn out.
“In a rapidly changing world, it's important to choose faith over fear,” Gordon insists. “The two share a future that hasn't happened yet. And the main thing that separates them is hope, or a lack thereof. Faith believes in a positive future and creates heroes, while fear believes in a negative future and creates victims.
The key, says Gordon, is to always place your attention on those little, ordinary, nonspectacular “wins” that add up to big successes. His credo is to expect success, look for success and celebrate success. When you focus on small wins, you gain the confidence to go after and create the big wins.
If employees are discouraged or burned out, it's especially crucial to highlight and celebrate the small wins to foster loyalty, excitement and confidence, Gordon urges. After all, championships are won as the result of many small wins.
These are uncertain times, and no one can predict what the future will look like. Realistically, even if you devote yourself to helping your employees think their best and be their best, some might still find themselves better suited to positions outside your company. That's okay. The main thing is emphasize to your team that the world is full of opportunity for those who are willing to stay positive, work hard and find it.
For restaurants, labor and food represent the two easiest costs to target when the economy goes south. But Bridget Grams, a principal with the real estate and financial restructuring firm Huntley, Mullaney, Spargo & Sullivan, suggests taking a look at a third cost category: occupancy, which is basically a total of your monthly real estate costs.
While occupancy costs may entail multiple decisions, you have the potential to reduce costs without impacting the customer experience. Grams answers a number of questions operators should be asking when reviewing options for cutting their occupancy costs:
Occupancy costs include rent, common area maintenance, taxes and insurance. On average, you want occupancy costs to be less than 10 percent of total sales. The sweet spot is 7-8 percent.
Everyone is asking for a rent reduction or some kind of concession these days. You would qualify if you have negative four wall cash flow, or a significant decline in sales. If you can illustrate a good story, you could probably qualify for a restructured agreement. You have to create a story line for the landlord, and looking at the sales trends and cash flow are the quickest way to qualify. Three years ago, if you had a decline in cash flow and sales, you would qualify, but today that's not the case. Landlords are being stricter about who they're giving concessions to. They are willing to give concessions on an existing lease for one to two years. Before, they would allow three to four years. Because everyone is asking for concessions now, the rules have changed.
The good news is that landlords are more willing than ever to work with tenants to keep their tenancy because they have so many other vacancies. They would much rather keep a tenant than deal with another vacancy, even if the vacancy still results in a rent check.
There are a lot of vacancies out there right now. If you can't negotiate a reduction in your rent, there are other things that may have value to you as a tenant that might be easier for the landlord to give you. That may include additional signage on the building or directional signage. Is the landlord willing to contribute to highway signage? Signage is expensive, and lot of tenants have found things like that definitely help. Another possibility is to request an upgrade of the property. Does the parking lot need to be restriped, does it have potholes or is the lighting lacking? Those are the kinds of things that have enhanced benefit for you as a tenant.
One of the biggest things a landlord can do for an existing tenant is help them with tenant improvement dollars to enhance the space. A lot of times tenant will go to the landlord and say, “Times are tough. But we want to stay competitive and relevant to consumers, so here are some things we would like to do. We would like to spend $100,000 upgrading our facility, and we want you to pay for half of it.“ Usually the property owner will ask for something in return. They might want you to sign an option to extend the term right then. They might ask that you do a heavy marketing program, or even a grand reopening.
A lot of tenants contribute to a marketing fund as part of their lease — maybe 50 cents per square foot. This is a good time to ask the landlord where those marketing dollars are being spent. Is there a way to quantify whether those dollars are being well spent and if the return on investment benefits the whole center?
Especially in casual dining, with a lot of competitors going out of business and business slowing down, this is an opportunity to upgrade your facility and give consumers something to be excited about. When the downturn is over, you will be ahead of the curve.