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Gordon Ramsay: The Restaurant Black Widow

Celebrity chef Gordon Ramsay’sshow Ramsay’s Kitchen Nightmares USA has been a huge hit, garnering thousands of American viewers and elevating the chef’s celebrity even further.

Unfortunately, the restaurants he’s supposed to be helping are dropping like flies in the wake of his black widow touch.  The show’s premise is to bring Ramsay’s expertise and creativity into a struggling restaurant and turn the place around.

But it was revealed recently that over half the restaurants that have appeared on the show have since gone out of business.

Some owners and managers complain that Ramsay’s management style, which includes making everything fresh every day and using high-end product and ingredients, created a standard too expensive to maintain in a down economy coupled with rising food costs.

Other victims of the show are less diplomatic, calling Ramsay a jerk who thinks he can impose his lofty standards on any restaurant.  Some are even suspicious it doesn’t really matter to him whether a restaurant on the show makes it or not, as long as ratings remain high, which they have through multiple seasons in the U.S. and the U.K.

Perhaps the most important lesson to take away from the Ramsay “kiss of death” is that every restaurant is different, and managers and owners have to account for the many divergent factors that make up the success of any establishment.

Of course, the ideal situation is to be able to attain Ramsay-style high standards and still make a profit, but any restaurateur will tell you that the situation on the ground is hardly ever ideal.  Instead, being highly adaptive, creative, and flexible are the traits that will eventually spell success in the food service industry.

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Social Media Marketing’s Dark Side

Plenty of national food service companies have been eager to wade into the social media world as a way to engage and recruit customers.  Dunkin’ Donuts has tens of thousands of friends on Facebook.  Other restaurants, large and small, have pumped up their online presence in recent years and the internet has become a very important medium for advertising.

But social media also has a dark side, because once you throw your brand out into cyberspace, anyone can praise it.  Anyone can also tear you down.

Take the Jack-In-The-Box example.

The national chain ran a Super Bowl ad this year in which their long-time mascot, Jack, was hit by a bus.  Jack-In-The-Box followed the ad up with a social media marketing campaign that allowed users to post get well cards for Jack.  The chain leveraged several social outlets, including YouTube, Twitter, Facebook, and Flickr.  Thousands of people responded, and a good portion were great for brand-building.

However, a significant percentage were vulgar, brand-bashing, and downright offensive.  In the “old days” (read: anything more than 3 years ago) relinquishing power over what could be said publicly about a brand was pure marketing sacrilege.

But progressive marketers these days have recognized a couple key sea changes, especially as the Millennium Generation gains buying power.

First, people 30 years old and younger in this country have been bombarded with advertising since birth.  They know when they are being pitched and they are likely to be skeptical.  Second, anything that lacks authenticity is Dead On Arrival, and a waste of marketing dollars.

Hence Jack-In-The Box’s willingness to let consumers drive their campaign, even if it meant allowing Jack to get beat up in the process.  In the end, the ultimate authenticity is a surrender of control over a brand.  The most authentic marketing is word-of-mouth, and in an era of unprecedented connectivity, word-of-mouth can travel at lightning speed.

Campaigns like the “Get Well Jack” one are ways to harness the powerful, if unpredictable, world of electronic communication.  Just be ready to experience the dark side of social media marketing, where brands are passed through the ringer by anonymous pranksters.  Luckily, most brands come out the other end bruised but truly “authentic.”

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The Golden Gate Restaurant Association Denied By Supreme Court

The Golden Gate Restaurant Association Denied By Supreme CourtThe Golden Gate Restaurant Association (GGRA) petitioned the Supreme Court recently to prevent the city of San Francisco from enacting legislation that would require employers to pay a fee to provide health coverage for their workers.

On Monday, the Supreme Court refused a temporary stay on the San Francisco legislation.  All businesses in the city with 20 or more employees would have to meet the new requirements.

The law in San Francisco was originally passed in 2006, but has since been held up by a successful court challenge by the GGRA.  A federal appeals court decided the law could be enacted temporarily last year, and now the GGRA is appealing to the U.S. Supreme Court for an emergency injunction to prevent the law from going into effect this year.

Similar legislation in New Jersey and Maryland were struck down by other Federal appeals courts, setting up a conflict in the lower courts that usually means the Supreme Court will weigh in.

However, it is also noted that the Court does not like to get involved in current national policy issues, and the Obama administration’s lofty health care goals for this year could prevent the Supreme Court from weighing in on the San Francisco petition.

The $1.17 to $1.76 per hour per employee healthcare fee has been decried by business owners in the Bay Area as putting an undue burden on business.  Business owners also claim the law violates a federal act that prevents local government from enacting separate pension and benefit plans from national ones.

San Francisco lawmakers counter that healthcare for the city is a necessary, progressive service that benefits everyone.  They also say the hourly fee can be applied in multiple ways, including towards a company’s health premiums, the city’s Healthy San Francisco program, or employee health accounts.

The question of how universal health coverage will affect business in the United States is only now heating up as progressive policies are being considered at all levels of government in the U.S.

Will universal health care wreck business and entrepreneurship?  Or will it create a progressive, egalitarian society for the 21st century?  Somewhere in between?  Weigh in with your opinion below!

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The Economics Of Free

The Economics Of Free

Should everything be free in the new economy???

Google has profoundly affected the way business is done the world over.  Besides becoming a frequently used verb (meaning “to search”) in multiple languages, the internet search and advertising giant became an international success on a business model that has never been attempted before.

Google offers its primary service, internet search, for free.  Ten years ago, when Google started, offering anything for free was unheard of, unless you were hocking towels on an infomercial.  Google’s success has shown that such a business model is not only viable, it’s the wave of the future.

While restaurateurs probably won’t start giving away their entire menu for free anytime soon, new economic realities have forced some innovative approaches to luring customers back to the food service industry, and free has played a huge role.

Denny’s kicked off the new approach to restaurant marketing with a Super Bowl ad announcing that Grand Slams would be free for one full day after the big game.  The success of that promotion has encouraged other chains to get in on the act, including Quizno’s, who recently wrapped up a million sub giveaway through a specially created site called millionsubs.com.

A café owner in Ohio even removed prices from his menu and allows customers to pay what they want for the coffee and breakfast items he serves.  Sales and customer visits have shot up as a result.  The practice of pay-what-you-want was invented in Europe, and has become even more popular since the economy started going south.

Of course, it may not work so well if a guest can rack up a few hundred dollars worth of entrees and bottles of wine.

And there are hundreds of more examples of restaurants finding the benefits of giving something away for free.  In a larger sense, however, the advent of giving away products and services for free has become rooted in consumer culture, and once consumers get something for free, they’ll want other things for free in the future.

But the economics of free also make sense, even if they seem a little counter-intuitive at first.

First of all, your customer appreciates the gift, and if they get one thing for free, they are more likely to buy other things from you, either in the future or at the same time they redeem their free item.

Secondly, nothing should ever be free.  If your customer doesn’t pay money for the thing they get for free from you, then they should either be counted on to buy something else either directly or indirectly from the free thing or you should get something from them, like an email address or a survey.

In an information age, collecting data about your customers has become vitally important to the success of any company.  Giving something away for free is one of the cheapest ways to get the information you’re looking for.

Finally, giving something away for free is a great way to create buzz around your brand.  The free publicity chains like Denny’s and Quizno’s have gotten out of their free food promos has more than made up for the cost of the giveaways.

The economics of free are the economics of the future, and the business you can generate from giving away something for free can far outweigh the cost.  And making more money than you spend isn’t anything new: it just makes good old-fashioned business sense.

The Economics Of Free

Giving things away for free can mean more sales and customer loyalty.

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Restaurant Marketing: Can Facebook Help Your Sales?

Restaurant Marketing: Can Facebook Help Your Sales?As social media matures and becomes one of the leading elements of Web 2.0, business owners, including those in the food service industry, have started to look for ways to engage customers through sites like MySpace and Facebook.

But just how effective is it to make a Facebook page for your restaurant?

Dunkin’ Donuts launched a two-day Facebook event recently that allowed fans to weigh in on the national chain’s new line of healthy menu options, including bagels, lite specialty coffees, and healthy breakfast sandwiches.

The purpose was to engage customers, boost email signups for Dunkin’ Perks, which runs promos for local markets and reinforces national Dunkin’ Donuts messaging, and get feedback on new items.

Their Facebook page has been up for a year and Dunkin’ has 370,000 fans.  They won’t reveal how many people are on the Perks email list, but it’s at least that many.

Those are some pretty impressive numbers.  Independent restaurants are starting to get in the game as well, with more and more pages popping up for local eateries across the nation.

So are sales going to go up the minute your Facebook profile goes up?

Well, maybe, maybe not, but the bottom line is having a profile definitely can’t hurt you, and may very well help.  If you don’t start bringing in loads of new customers, you’ll at least improve retention among existing ones.

That’s because you can easily keep a conversation going with loyal customers through social media like Facebook.  A Facebook profile can be a great way to collect information about your customers and get feedback about your restaurant.  You can leverage this information to connect with customers in new ways and expand your email marketing and other campaigns.

You’ll also have a direct way to find out what’s wrong with your establishment and what needs fixing.

And as your restaurant’s Facebook page gains popularity and fans, more people are bound to find out about you as friends of your friends end up on your Facebook page.  This form of marketing is still in its infancy and remains an inexact science.

The beauty is that Facebook costs nothing but your time, and at that price a little experimental marketing is too cheap to avoid.

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Do Public Smoking Bans Affect Restaurants?

Do Public Smoking Bans Affect Restaurants?

Smoking bans are coming to your restaurant. Are you prepared?

Despite the objections of many groups in the food service industry, public smoking bans have been passed with increasing frequency over the past five years.

Restaurants and bars are primarily concerned with losing business as a result of these smoking bans.  Advocacy groups claim that the health benefits of banning smoking far outweigh any other concern.

As a restaurateur, you are probably either already under a public smoking ban or will be soon, and it’s important to understand the pros and cons of these bans on your business.

For starters, research has shown that bar and restaurant revenue did not show an appreciable drop after the introduction of a smoking ban.

Smokers just don’t go home after a smoking ban is passed.  Instead, they cut down on their smoking and go outside when they need a smoke.  Some food service businesses actually saw a rise in business after the ban was passed as new customers ventured out because of the new smoke-free environment.

However, specific segments of the industry do not follow this general trend. In particular, blue collar establishments take the hardest hit when a new smoking ban is passed.  Bowling alleys and small local bars have seen as much as a 50% decline in business after the passage of a smoking ban.

While it is unfortunate that some businesses take a huge hit when a smoking ban is passed, the health benefits that are a direct result of banning public smoking are significant, and should really outweigh other concerns.

Heart attacks in public places drop as much as 40% after the enforcement of a public smoking ban.  The air quality of restaurants and bars goes from “dangerous” or “extremely unhealthy” classifications to “normal” and “good” overnight.  The body of evidence linking even small amounts of second hand smoke to short and long term health problems is now overwhelming.

For the food service industry, smoking bans are a reality that must be dealt with.

If you have the bad luck of operating in a segment that will suffer from the passage of a smoking ban in your area, start to develop a strategy for the day the ban arrives, because it will be here sooner or later.  If you have already found yourself under a smoking ban, tell us how it has affected your business.

What are the benefits?  The drawbacks?  Do you oppose or support introducing smoking bans in other states?

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Card Check Unionization Bill Stirs Up Controversy

Card Check Unionization Bill Stirs Up ControversyThe list of opponents to the Employee Fair Choice Act (EFCA) is a long who’s who of business in the United States, including the Chamber of Commerce, nationally known corporations like Home Depot and Walmart, and most notably for those in the food service industry, the National Restaurant Association (NRA).

What is EFCA? It’s a law that would allow employees to form a union at a place of business if a majority signed a card voting for unionization.

Current legislation requires that a secret ballot administered by the company must result in a majority vote for unionization.

Many small businesses would remain unaffected by the new legislation, since the minimum requirement for unionization is a business with $500,000 in gross annual revenue or at least 3 non-supervisory employees.

What’s the big deal? Well, both sides claim that coercion is the problem.

Business owners, including many in the restaurant industry, represented by the NRA, claim that employees will be coerced into signing card checks for unionization by union activists, especially since the card signing occurs in public.

Union supporters say the coercion that goes on currently under the secret ballot procedure is the real inequity in the system.

They say businesses routinely intimidate and even fire employees that push for unionization leading up to a secret ballot vote, and even though these practices are illegal, the penalties are not very harsh and are not regularly enforced.

Needless to say, Democrats support this legislation and Republicans oppose it.  President Obama spoke in favor of this bill on the Senate floor last year and its passage was a routine campaign promise last fall.

EFCA already passed the House of Representatives last year on a strict party line vote but could not attain cloture in the Senate.

With Democrats ever closer to the magic number of 60 in the Senate, the Employee Fair Choice Act is looking more and more like it will become law, probably within the first six months of this year.

The NRA’s opposition to this bill is explained as a defense of worker’s rights to a secret ballot.  They also say that EFCA will hurt small businesses.

With the passion on both sides running high, it’s hard to say who will benefit the most from this bill.  Both proponents and opponents claim to be defending workers’ rights.

In the food service industry, the leading association has taken a tough stand against this bill, but that doesn’t mean everyone agrees with the NRA.

The reality is that most restaurants will remain unaffected by this legislation because of the minimum requirements for unionization.  The ones most at risk, like national chains, are the most vocal opponents driving NRA action.

Tell us what you think about card check legislation!  Leave a comment below.

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