A Thinking Person's Menu

Menu fads come and go but intelligence seems to stick. More consumers are starting to think with their conscious as well as their palate when it comes to menu content. Whether it's supporting local farms, sustainable agriculture, fair labor practices, good animal husbandry, or environmentally fished seafood - it's not just a hippie fad anymore. It will take a movement to make it happen but it is slowly but surely happening. One of the country's largest distributors, Sysco, is incorporating local farm pick-ups in their plan. It costs a bit more but these costs can be made up through menu engineering techniques such as menu paring and portion sizes. Most of us would choose quality and intelligence over quantity. Growing your business can come in many different forms-appealing to the intelligence of your guest is a no-brainer!

Grow at DIA

Doing business at DIA as a restaurant or bar may not be as far out there as you think. Current and future trends suggest that the leases for food and beverage locations are involving quality local and national establishments such as Elway's, Udi's, Que Bueno, Woody Creek, Root Down and New Belgium Brewing. DIA is committed to superior business commerce development support services while maintaining the highest degree of transparency. There is a Concessions Opportunity Outreach session on Wednesday May 30, 2012 in the Webb Building, 201 W. Colfax, Room 4.F.6 from 9-11am. RSVP to concessions@flydenver.com by May 25.
Grow, Inc. specializes in consulting/project management for all areas of this sometimes daunting process. We are the independent, economical alternative from proposal to build-out to bottom line sustainability. Call for more information-720 556 5101.

Why Competitive Bidding Leads to higher Food Costs

The Easiest Way to Cut Your Food Cost 10%

While there are few absolutes in this business this is one - "Engaging in ongoing competitive bidding practices to get the lowest prices actually leads to higher food costs, not lower."

That's right. Contrary to what most of us, who have grown up in this business have been taught, having an ongoing purchasing process that revolves around using lots of vendors, comparing bids, price shopping and buying from the lowest bidder NOT only doesn't save you any money but ends up costing you in several ways.

To prove my point, how many professionally managed, large chain operators employ ongoing competitive bidding practices? ZERO, NONE, NADA! Every large chain uses one primary purveyor to supply 80% - 100% of it's food products. How many independent operators do this? Probably less than 10%, easily less than 20%.

And who makes more money at the restaurant level, the typical chain or independent restaurant? According to industry averages published by NRA the average independent nets about a nickel or 5% of sales before federal and state income taxes. Having worked with several chain operators and from perusing the annual reports and 10-Ks of many publicly held chains, the average restaurant level net income before corporate overhead and income taxes is around 12% - 15% of net sales.

The fact that chain restaurants are 2 to 3 times more profitable than independent operations may not be entirely due to purchasing practices but I'm sure it's a factor, possibly a big one.

Distraction from High-Return Activities

Another factor to consider is the amount of time it takes to constantly evaluate bids, deal with lots of vendors and put away lots of deliveries, lots of small deliveries, that is. Using a prime vendor frees up management time that can be better spent on high return activities like taking better care of your customers and developing your people. In my mind, trying to save 25 cents on a case of green beans is hardly a high return activity worthy of much owner or management time.

What Determines Supplier Prices?

There are four basic elements that go into the pricing formula of most suppliers.

Product Costs: What it costs the vendor to purchase the products from their suppliers such as manufacturers, growers and other wholesalers. The more they buy, the lower their costs are so there's a built-in incentive for suppliers to move lots of product.

Administrative & Selling Costs: Includes the cost of servicing the account and processing the orders. Factors that can affect these costs include order processing time, lead time, order frequency, number of invoices processed, specialty products needed and credit terms. Another point is that these costs are basically fixed and suppliers want to spread these costs over as many sales dollars as possible.

Delivery & Handling Costs: This boils down to cost per drop. The drop cost to deliver 1 case to your back door is about the same as it costs to deliver 100 cases. To a supplier, bigger orders mean less delivery cost per dollar of product delivered. Number of deliveries per week and the time of the day you will accept deliveries can also affect these costs.

Profit on the Account: This is the percentage mark-up or gross profit in dollars the supplier needs to make an account profitable after considering all the factors discussed above and the potential volume on the account.

The key point is that if you find ways to lower the vendor's cost of servicing your account and give them the opportunity to make more profit "dollars", they are usually willing to work on a lower "mark-up." As a result, you get lower overall prices and other important benefits too, which I'll discuss further below.

Give Suppliers the Opportunity to Make More Money on Your Account

Yes, you read that right. It's in everyone's best interest to position a supplier to make more money on your account in return for something . . . LOWER PRICES! Here's how it works . . .

Smart suppliers don't just look at the percentage mark-up on an account. What's more important is the potential total gross profit in dollars they can make. For example . .

Assume you buy around $600,000 of food a year. You currently spread your purchases around to 2 or 3 broadline distributors and several specialty suppliers. You spend about $100,000 a year with Distributor A and Distributor A is adding a 20% markup to everything they sell you  (Case 1). Do you think Distributor A might be willing to work on a smaller margin percent if they could get more, a lot more of your business?

As you see, it makes economic sense for Distributor A to work on a smaller margin % IF it means converting you from a $100,000 account into a $500,000 account. You can see in Case 2, Distributor A has the opportunity to more than double their gross profit dollars on the account even though they gave up a large slice of their average markup % to get more of your business.

Bill Marvin
 

Colorado Restaurant Association TailGate 2012 Flyer

The Athlete/Restaurant Brand Bond

Is there a better way to instantly create a brand than to throw a famous face and name onto a menu and a building? I think not. It has been going on for as long as I have been around. It used to be that athletes needed to supplement their contracts. Fuzzy Thurston's in Green Bay Wisconsin is a great example of how a retired player created a successful business by integrating his uplifting personality into his restaurant. People wanted to meet him and it became a fixture. The list is long with male coach and quarterback steakhouses dominating the scene. Will we ever see a Mia Hamm.....Burger Joint open up? or how bout a Billy Jean Breakfast King?  Which is your favorite and why? Let Grow know.
........and, oh yeah, there might be a better way to brand. Just ask Emeril or Bobby Flay.....cause it's always about the food,booze,service,atmosphere,location..... no matter how many rings you may have.

Fearless for Life

Sometimes in life, you just have to take a risk.

You have to put it all on the line and face the fact that you might fail. But in failure is not the worst thing. To me, the worst thing is not trying at all.

Fearless for Life: Thinking Backwards

What are Your Goals?

What do you want to do? Think of this as the adult version of “What do I want to be when I grow up?” If you’re anything like me, this question seems to pop up all too often. It happens a lot when we face challenges that make us stop and take some time to reflect. These can be the most difficult times, but they’re usually also the most rewarding. You are not alone.

Once we have the answer to the previous question, the hardest part is knowing what to do next. This exercise will help.

Start Thinking Backwards

Start at the end of your life. That’s right, your death. After that nothing else will change in your life, so that will be the starting point. Thinking backwards, run through how you think things should turn out. Once you get to where your goal comes in, work backwards from there, finding each step that came before.

Let’s say your goal was to run a marathon by age 35. Starting at age 35, having run the marathon, what did you likely do before that. A marathon is 26.2 miles, so chances are you ran 25 miles successfully before that, and 20 before that and so on. So now, when you go out and run half a mile, you know where it will lead, and just how it will take you there. Little by little you add on, and before you know it, you’ve run 10 miles. At 13.1 you’re halfway there.

Looking backwards it is very clear what steps need to be taken to achieve your goals. It works not only for long term lofty goals, but short term problems as well. See the solution first, and work backwards from there to solve the problem.

A Great Quote from Theodore Roosevelt

“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly; who errs and comes short again and again; because there is not effort without error and shortcomings; but who does actually strive to do the deed; who knows the great enthusiasm, the great devotion, who spends himself in a worthy cause, who at the best knows in the end the triumph of high achievement and who at the worst, if he fails, at least he fails while daring greatly. So that his place shall never be with those cold and timid souls who know neither victory nor defeat.”

 

 

 

Denver Restaurant Consultant

Your Restaurant = Your Brand

As soon as someone Googles, Yelps, Facebooks, goes to your web site, parks in your lot or walks through your door-your brand is up for praise, dissection or never mind. A restaurant can have the most up to date web site that creates excitement but if I walk in the door and have to wait to be greeted and seated due to indifferent employees then I am not going to spend as much money and may even turn around and leave. If the bathrooms are trashed I will likely leave sooner...the list goes on and on.I have professionally witnessed a brand grow from 50 locations to over 1300 during the last fifteen years. They are an industry leader and they do it by brand integrity. They care about employee culture, they care about renovating and updating their look, they care about service and they care about food. They understood at the beginning that when they created a concept they were creating a brand. An integrated brand where all visual and verbal messages had integrity and were communicated consistently and effortlessly-and they found financial success. Solo owners take note- there is help out there for you if you want it.