Changes

For the past month or two I've been trying to get a handle on my two biggest costs; Labor & Food. Not knowing or thinking that I would need anything different, I started my restaurant with just a simple cash register. You have no real way of managing your food costs. I am going to blog about this later, but if you ever do something like this, spend the money on a good Point of Sale system. I just pulled the trigger on an Aloha P.O.S. system. It will be a few weeks before we are using it because of programming in the menu, pricing, portions etc.. But I am hoping to save myself some real money over time by using this. Again, this will be in another blog in the next few days/weeks.
I have also trimmed my labor back. Gonzalo is now gone. Bo and I are going to rotate in and out on the line with Chocho. I hired a new guy yesterday named Alfredo who is going to work part time 35 hours a week. He is going to work 4:30 to close and all day Saturdays. Chocho is leaving on May 1st. When he leaves I will hire another guy to work the same hours as Alfredo to close nights. That should save me $600.00 a week in labor. I'll post on the benefits of a POS system in the next few days. I might even have a guest blogger on the subject, if I can talk him into it.

The week

By now you might have listened to the new audio blog in the previous post. It was just a trial run and has no content, just wanted to see what it was like. Its a cool new feature that Mike Causey has turned me on to. I will only audio blog only a couple of times a week for general content. The business blogs concerning my experiences opening a BBQ restaurant will still be in type form. I'm looking forward to the audio blog, it enables me to blog on the fly. In the next few weeks we're going start adding some video content as well.
This past week ended up being a really good week. Again, sales are all over the place and have no rhyme or reason to them. Wednesday night was a very, very slow day. I started to anticipate us having a really bad week. Thursday picked up, Friday was o.k., and then Saturday hit. Saturday, thanks to a couple of small catering orders that added about $500.00 to the day, we set a new record day in sales. To set both gross sales records in the month of February, which is the absolute slowest month in the restaurant industry, is a very encouraging sign for the year to come. I am going to revisit extending the porch on the front of the Joint to make it a deck for this spring. I'll submit an application for that this week with the city. The picture is of singer/songwriter Kaci Allen. She played a few weeks ago.

Mobile post sent by MartinsBBQ using Utterz. Replies. mp3

Biz Blog#1-A: Inflationary Pricing

My last post was about location and what you need to make per square foot (as a general rule of thumb) to succeed. Towards the end I discussed my own place and how I need to capture more money per order this calender year to sustain and hopefully increase my 2007 price per square foot level. To increase it I plan on going after off-premise sales pretty hard, which should add about 30% give or take. But to just sustain it I will have to increase some menu pricing to reflect my suppliers price increases on to the consumer. I have added an article below that came out a month or so ago in the New York Times discussing the surge in prices, which is affecting all of us as consumers and business owners. Its affecting you at the pump, the restaurant, etc. Some things you notice immediately such as rising fuel prices. Some are more subtle, such as a restaurant like mine raising some of the menu prices. Some restaurants wont raise their prices right away, especially those that lie in the "Full service" category. They will make other little subtle changes. Remember that free bread they used to bring to the table, notice you have to ask for it now? Wheat is up 270%+ this year....a year ago bread was so cheap they could afford to give you some for free, now its relatively expensive.....why give you free bread if they dont have to? Remember all that butter that used to lay next to the salt & pepper shakers? Where is that now? Milk has also seen a HUGE % increase and is expected to rise another 40% in the coming months, milk based products are included in that figure. Why would they leave a pile of cube butters on the table for you dump 4 of them on your baked potato to stuff your head-hole with? How about creamer for your coffee? Why would they leave creamer on the table for you now.........so you can dump 5 of them in your venti coffee? Not to mention the parents of that little bastard kid at the table next to you whose opening the creamers up and drinking them straight, or that good ol' sweet "christian" grandma who never leaves the restaurant without stuffing her purse full of your complimentary creamers. Thieving wench.
Why this is happening is another blog that I dont have time to explain, but a lot of it is due to the high demand for ethanol. You'll notice these things now and if you are going to open a place up you cant just sit idle and pay attention to whats going on in the world markets. They affect you directly, and if you are not paying attention they will sting your ass. If you dont your sales per square foot will start dropping, and the next thing you know you'll be in trouble. Read the Wall Street Journal and/or Business Day in the New York Times. Every weekend pick up a copy of Barron's and read it. Keep up with whats going on......you'll be glad you did........trust me.

Check this article out........

http://www.nytimes.com/2008/01/15/business/worldbusiness/15commodities.html?_r=1&scp=1&sq=commodities%27+relentless+surge&st=nyt&oref=slogin

Biz Blog #1: Your Location

Dude I'm not really concerned about your location. The old marketing adage "location, location, location" is true dont get me wrong, but I think its like everything else......its all relative. Assuming we are talking about somewhere within a reasonable distance of the masses, whether that be a city of 1,000,000+ or a town of 10,000. To me it all depends on what you are serving, what genre of food your place is. I think that most restaurant genres fall directly under that old marketing rule, but I believe that a few do not. I also would like to mention that those "few" are indicative of the area of the country you are in. Here in the South If there are two types of food that people will drive way out of their way for its BBQ and Cajun food. I have a conservative estimate that (marketing info) 35% of my customers drive from Nashville to eat at my place. Thats a 1 hour round trip in the car for BBQ. That is very flattering to me but it goes to show that in this day and time, with all the choices consumers have, they want value and quality in the money they spend. In other areas of the country it may be a great Pizza place, a burger joint, whatever. If your food is extremely good, they will find you. There might be some that disagree with me on this, and I may be wrong......but I doubt it. If you are reading this thinking about opening up a BBQ joint, and you live in say Hartford, CT then your location MUST be very important, has to be! But if you are in say, Columbus, MS it is not. In Columbus, MS you can afford to lie on the outskirts of town or even farther than that and be successful.......if your BBQ is really and truly great! This is not to say that there are not some exceptions to the rule. As we all know nothing is a guarantee, there are a few places that had good food but for whatever reason just did not make it. Maybe the service was bad, Parking sucked........there are all kinds of reasons but thats for another post on down the road. Right now I'm talking in very general terms. When shopping for a location you do have to weigh them against each other. In Macroeconomics one of the first terms a student will learn is "Opportunity Cost". What does it cost me to choose to do business at location A instead of Location B? Considering all the demographic figures, traffic counts, sales tax returns from other restaurants in the area you are considering and all that other crap.....if location A should yield $17,000.00 a week in gross sales and location B should yield $10,000.00 per week, then your opportunity cost is $7,000.00 per week. In other words its costing you a potential $7,000.00 a week to choose B over A. That doesnt mean option B is not a better choice though.......lease rates, certain clientel, all weigh in on it.
Try if you can to NOT open a BBQ joint in a strip mall. You limit yourself so much in terms of creating an atmosphere. If you must then at least get one of the "book-end" locations so you have options for a patio or deck. If you can find a stand alone building you are far better off!!! If you are buying the location then your annual sales to start-up costs should be 1 to 1. If you are leasing then it should be 1.5 to 1. To help you decided on the space you should consider this rule of thumb for profitability (limited service restaurants......full service would obviously be higher I would think, but my place is a limited service so that is all I can comment on):

1) $200.00 or less you are losing money like an open siv
2) $200.00 to $300.00 and you are breaking even
3) $300 to $400 means you are making a moderate profit
4) $400.00+ means you are flat out skinnin' it back!

Last year my place did $380.00 per square foot. We have a lot of room to grow. We do very, very little catering/off premise sales, which should add 30-40% to that square footage number. Also, my menu prices are very low compared to my competition. Add to that what has happened over the past year with commodity prices and I have lost potential income. I have not reflected those price increases on my menu yet and it is really hurting me. I plan to change that in the next few weeks. Commodities have really hurt some restaurants. Especially anything made with milk (cheese, slaw mix, potato salad, etc.), certain vegtables like potatos, or beef product (brisket). I will never structure my menu prices to be on the higher side of the scale, because I want to provide my customers a premium product at a real value to them, especially the folks of Nolensville! But to be profitable you have to reflect inflationary price increases on to your consumer. So to keep up with my square foot average last year I will have to do that. To grow it past he $400.00 per square foot mark we'll have to grow our catering.