Stress Straw:

“the straw that broke the camel's back” is the oft quoted phrase to describe when the accumulation of factors is sufficient to cause action. In the normal course of life there are events that occur that are totally insignificant, minor annoyances along the path. However, when the perfect storm of these little insignificant events rises to the level of the final straw, the pressure becomes unbearable and action occurs.

Human beings are instinctive creatures under stress. We respond because evolution has equip us with a vast arsenal of survival mechanisms which are fine in the jungle, however leave much to be desired in the workplace or the home. The only advantage that we have is the prefrontal cortex, the reasoning portion of the brain. When circumstances overwhelm our reasoning and we are about to lose it, envision the “Stress Straw”. Focus on that last straw about to break the camel’s back are realize it is an accumulation and not the event that caused the problem.

Breathe! Relax!, you are now free to roam about your restaurant.

Replicating:

The viability of any scientific finding is the ability to replicate the results independently. If the methodology is not reproducible the results are suspect. Reading books and blogs to garner new ideas is valuable, however the specific recommendations might not apply to your business.

Brian McCann authored Managerial Economics and offered these comments in his blog,

” First, you can't really learn anything about what causes success unless you study both successes and failures.”…“Now that everyone knows about it, no advantage is possible. Competitive advantage flows from having something that competitors can't easily duplicate - you're not likely to find these on the shelves of your local bookstore.”

The statement “successful café’s sell hazelnut coffee” would lead most people to deduce that if you want your cafe to be successful you must sell hazelnut coffee. McCann makes two points: First, though it works for someone else in a particular situation, it may not work for you. Second, once everyone copies it, the process does not offer a competitive advantage.

Your restaurant must continue to differentiate and innovate. There is a constant need to experiment with new ideas whether or not they worked for others. Look at each suggestion with a fresh open attitude and do not dismiss anything out of hand. Weighing factors helps determine whether the idea has merit to your situation.

It is very confusing reading a variety of literature, because all manner of direction is espoused in multiple paths. The essence of entrepreneurship is the continual balancing that is required for motion. The analogy of riding a bicycle fits well here. Starting a business requires a lot of balance shifting from left to right and back to left until an equilibrium is achieved for a brief instance until the next pedal and the process of shifting weights begins anew.

Specialization of Labor:

Specialization of Labor is the key to your productivity and happiness.

Entrepreneurs as a group have this notion that they can do everything themselves. It is possible that one or two can, the rest however need help, “that’s OK”. The biggest contribution to the expansion of business, standard of living in the world, and the historical march from the agrarian societies of ten thousand years ago to the present is the concept of specialization of labor.

What is it? You are a wiz with a spatula, however, the Quickbooks software on your computer is foreign. Aromatic scents waffle through your kitchen, however your electrical skills max out a turning on the kitchen wall switch for the light. You get the idea, you will not be able to master everything, culinary skills, marketing, management, accounting, legal issues, infrastructure issues etc.

Jim Collins in the book “Good To Great” ascribes to the notion that “you must get the right people on the bus “, to accomplish your goals. Bringing people in that enhance your restaurant and lead it to greatness is the magic of specialization. By specializing people are able to do what they want with passion. Passion makes people more productive. Yes, you could learn that Quickbooks software, however will that create customer advocacy, by utilizing your time in the best possible fashion? No, you would be much better off hiring someone to do the things that currently you do not have a skill set in. Focus your energy on the areas where you have passion. This helps to create customer advocacy.

Specialization of Labor is a powerful concept, use it everyday.

Toxicity:

Seth Godin posts on toxic employees and bosses reminds everyone, how relationships affect our work and personal lives.

Toxic bosses make the job unbearable. They create an environment where it is impossible to grow and flourish. The customer experience suffers because the staff expends vast amounts of energy avoiding contact with the toxic boss.

Toxic employees influence the energy level of the other members to spiral downward. They bring their bias and unhappiness into the group dynamic and derail your efforts to create a cohesive customer centric team.

The wisdom of an earlier post was to “Hire Behavior” should be the guiding principle in adding staff and managers. If you’re the entrepreneur toxic boss, close up now because you are only forestalling the inevitable.

Hire Behavior:

The primary responsibility of Human Resources, Talent Acquisition, Personnel, people management or whatever fancy title your department has, is to match the person, to the culture of the company. The most important aspect of creating customer advocacy is having people who can execute your vision. The common criteria, "if they can fog a mirror" is responsible for many negative issues within a restaurant. The correct way to hire is to determine the behavioral aspects of someone who is successful at the position and simply hire individuals with those behavioral characteristics. A vast majority of functions in a restaurant can be taught, while only a few aspects of the behavioral traits in a restaurant can be learned.

Therefore hire behavior.

Non Linear:

Tom Peters’ blog today addresses the need to be gentle on yourself because the world in non-linear.

“But if history is any guide, there will indeed be "outlier" events that confound the current process. We digressed to Nassim Nicholas Taleb's "black swans" [The Black Swan], my favorite digression these days. Ever so much of where we are at a given time, personally or organizationally, is determined by the tiniest set of "black swans"—outlier events not imagined, or even imaginable, until they have become history.

So, "the word" for the day (any day! Every day!): non-linear.

Life is non-linear.
Progress, if indeed there be progress, is non-linear.

A very, very few black swans will break you—or make you. The "trick," then, is to be more or less prepared for the unpreparable”

You can plan, analyze, synchronize, and make allowance for every probable circumstance, and yet stuff happens!

Never lose sight of the fact that the universe is expanding at an accelerating rate and no one can explain this! Do not worry about things you can't control

Entrepreneurs by definition are comfortable with ambiguity. If not comfortable, they have a much higher tolerance.

“Life is Non-Linear!”

Summer:

It’s August, most of the northern hemisphere is on vacation except restaurateurs.

Long exhausting days are the norm. Restaurateurs love their work so it is a lot of fun to work fifteen hour days, seven days a week. The convention is in town, were short staffed, we booked this big party, till we get to a certain daily revenue, minimize costs, and my personal favorite “If I do not do it”, all valid reasons why we work and work and work.

The body and mind need Sabbath (rest). Your effectiveness, usefulness and judgment drop precipitously the longer you go without rest. Going on a week long vacation is out of the question for an overstressed, overworked struggling restaurateur, however day a off or shudder thought the thought, two days off in a row is doable. Create a habit today, to take one day off a week minimum. The viability of your enterprise requires that your cognitive abilities be sharp. You will not recognize opportunity or diagnosis area’s that need improvement if you are habitually exhausted. Long hours have an uncanny ability to narrow your focus (tunnel vision). Long uninterrupted hours will have you searching for trees in the midst of a forest. Companies now routinely require their employees to take their vacation time, no exceptions. The employees who rest, are more productive, have higher sociability ratings, more positive than those who consume themselves with work.

Today is August 1…take the day off! Make it a weekly habit

Business Liability Insurance:

Insurance is a required business expense, whether you leased or bought restaurant space. Leases or mortgages come with extensive insurance language, that every employee, director, outside contractor, owner, manager and anyone else with a passing interest, be indemnified in case of a claim. Why all this hassle about additional insured you might ask? You as a restaurateur have purchased the requisite policy with the limits require. Everything is covered right? Wrong. The reason landlords, bankers and business owners have become so anal, is because unless someone is specifically, by name or title insured under the policy, they are not insured. Claims tend to cast a wide net around anyone with an interest in the restaurant, (bankers, accountants, landlords, directors, employees, owners, and managers). The effect of not being covered under the restaurant policy is that the individuals have to provide their own defenses, in a suit involving your restaurant. Having been seasoned in the crucible of experience, these participants now require coverage under your policy. An open discussion with your agent is necessary to insure that you, employees, investors, and outside contractors are in fully covered under the policy.

Inconsistent Pricing:

Caffe Latte extra shot…$2.99 from Employee A, Caffe Latte extra shot…$3.54 from Employee B, Caffe Latte extra shot…$3.25 from Employee Z. Your guest in all three cases was not overcharged because the correct price is in fact $3.54. Your guest however, feels like she is being cheated and that is a huge issue you as the proprietor are oblivious to. The guest can read the menu board, they no doubt purchase the same item on a regular basis, the correct price is hard wired into their brain. Even when they are not being overcharged, your guest feels real uncomfortable with the differential pricing because they do not know walking in which price will be charged today. There are many moments when guests welcome surprises, alternate pricing schemes is not one of them.

Restaurateurs invest in elaborate sign boards, POS systems with all the bells and whistles, train employee’s to upsell and bang one employee thinks it’s unfair to charge for the extra shot, another give discounts based on the tips the customer leaves and another completely forgets to ring in the extra shot. Further, unless a guest specifically mentions to you the disparity, you are unaware of it. The restaurant is losing sales ($$$$) and antagonizing the guest. : (

Ongoing training and testing of simple things like menu prices are a critical component to insure a fantastic guest experience. The details that you think you have covered are actually an irritant that works virulently against customer advocacy.

Signing the Lease:

The lease document sits on the desk in front of you. The lengthy exhausting process of arriving at agreeable terms is behind you. Maybe? You are not completely comfortable with all the terms, however this is the best alternative to no agreement. Before you lays, the work necessary to open the restaurant within the timeframe of the agreement. Before you lays, interminable meetings with general contractors, subs, inspectors, original equipment manufacturing reps, the upholstery contractor, designers choosing the table, the chair, the colors, the lighting, the counter top, the art on the walls, the décor. The opening date draws closer, the staffing, the purveyors, the tasting, the run through, the mock service, the tweaking, the adjustments, the final clean, and the soft opening. Why are you doing this again? The check is in your hands and you are about to turn it over to the landlord as a security deposit.

Just Do It! …Now the fun begins!

Contagious:

Gina Kolata New York Times Article “Study Says Obesity Can Be Contagious” has gotten everyone talking.

Seth Godin says “The most important thing you can do is choose who you're hanging out with. The second high-leverage thing is to put dynamics in place that reinforce the ideas you'd like to see spread. Celebrate the heroes. Make it easy for those ideas to spread.”

The old wise tale “you are known by the company you keep” summed it up a long time ago. Winners like to be around winners, athletic people tend to congregate with athletic people, positive happy people tend to socialize with positive happy people, in sports if the person you play with is getting better, you will tend to get better. Networking works because your goals are in sync.

Make friends with successful restaurateurs!

Customer Service:

Recall the worst customer service experience in your life. Is the image clear, is your pulse quickened, is your breathing becoming labored, is the anger welling up within you? Good, your goal as a restaurateur is never to have your guests feel that way. Pundits have pontificated, far better than I on the abysmal state of customer service. It is a pandemic in the service industry.

When you invite a guest into your restaurant, the guest should not have to hear about the waitress’s flat tire, the chef burning the special, the purveyor delivering the wrong product, the hostess’ romantic tiff with the doorman, the waiter needing next Wednesday off for a court date, or the fact that the carpet cleaners scratched the wall. The guest is not there to resolve your issues, you are there to solve theirs.

When you invite a guest into your restaurant, never, never, never lie to them. If the wait is going to be an hour, tell them it will be an hour. If you are out of something, tell them. A guest is placing an order at Joe’s Café and asked for a special sandwich, the counter person says, “we don’t do that here”, the guest responds “My friend got that special sandwich here yesterday straight away”, the counter person responds, “ok we can make it, however it will take longer because there is another special order ahead of you”. You have just lied to that guest. Why would anybody do that? You have just lost that guest forever. The guest will never forgive or forget being lied to.

Business Plan Basics:

Guy Kawasaki does a fantastic job of describing the formulation and use of a business plan.

The business plan is a very focusing tool, do not be afraid to use!

Creative Class:

Attracting the creative class, the dreamers, designers, artists, and artisans who shape our world should be one of your goals. This type of guest tends to be categorized as the pioneer, the early adapter, and the experimental. This group provides the best word of mouth advertising. Creative's create customer advocacy. Generalizing a bit, they tend to hang out in large metropolitan areas, as a group, are more open to new ideas. The dreamers push the envelope and require you to be innovative.

Discounts:

Gretchen Rubin writes an always thought provoking Happiness Project blog: Her July 20, 2007 blog posed the question about how to get kids to eat healthy. Quoting a story in The Week magazine got me to think about discounts and giveaways.

“In the descriptions of the various programs that appeared in The Week magazine's “Nutrition Classes Don’t Work” (7/20/07, not available online).

“But in practice, kids given free fruit and veggies, a federal study found, were even more likely to turn to junk a year later.” --People generally believe that they get what they pay for, and therefore don’t value free stuff very much. (Is this the ultimate Giffen good?) Giving healthy food away may have sent the signal that no one would ever pay to eat it. This is ironic because in fact, you have to pay more to eat healthy than to eat junk.

People do not value something you give them as much as something you charge for. Restaurateurs in an effort to generate awareness will initiate all manner of discount programs. Most fall into two categories. % off or value added (we will discuss frequent dining or loyalty programs in a future post)

Percentage off offers a specific discount off existing menu prices.

Grand Opening discounts, employee discounts, 10%, 15%, 25% discounts, $dollar value off, after lunch discounts, day old product discounts etc …

Some concepts, for instance Pizza, are very coupon driven. Customers will receive coupons in the mail for $2.00 off and immediately call for a pizza that evening. Hence, the reason for the preponderance of pizza mailers, relative to other concepts. If your concept is discount driven then you must provide discounts in order to compete, or provide an exceptional product. Restaurateurs are as a group very enamored with giving their product away. They generally lack the faith or the patience that their product will resonate with their customers. The strongest argument against discounts is that value added programs enhances your product while discounts tends to diminish the perception of quality.

Value added offers a specific additional product at no or reduced cost.

Ubiquitous value meals are actually a good example of this type of program. The customer purchases some item at full price and receives a discounted or a free second item ( i.e. buy a entrée and dessert is half price) (i.e. buy a sandwich, get a free cup of coffee). Value added promotion enables the perception that the product price is fair and a good value, and as a gesture of good will we provide additional products at a reduced price.

Outsmarted:

Entrepreneurs by nature tend to be people that can solve problems. Sometimes, however we are so concerned with the complexities of solving the problem that we neglect the simple solution.

Aditya Kothadiya recounts a story in his blog:

“A group of very intelligent business people were having lunch at a small restaurant. While eating, they discovered that their saltshaker contained pepper and peppershaker contained salt.

They started brainstorming that how could they swap the contents of the bottles without spilling and using only things available on the table. It was fun challenge for them. The group debated and presented ideas, and finally came up with a brilliant solution. The solution only involved a straw, a paper napkin and an empty saucer.

They called over the waitress to dazzle her with their solution.

“Ma’am,” they said, “we couldn’t help but notice that the peppershaker contains the salt and the saltshaker…”

“Oh,” the waitress interrupted. “Sorry about that.” She unscrewed the caps of both bottles and switched them.”

Price Points:

Pricing on a restaurant menu is always a source if consternation. Customers do not value free stuff very much. Arriving at price points for the menu, that is not questionably low or uncomfortably high, is much more art than science. You should err on the side of higher prices. I have witnessed many restaurateurs agonize over how much to charge, when to raise prices and how much. Will the change drive traffic or punish revenue? Pricing is a function of whether your product and service is a commodity. Your restaurant should never become a commodity because you have no pricing power. Differentiation provides pricing power and that is should be the focus of your efforts and pricing decisions.

The typical way to arrive at menu prices is to survey similar concepts in your area and set your prices. If the quality of your offerings or the atmosphere is differentiated in some fashion you can adjust your price up. If your products are comparable the price should match the prevailing in the area. In misguided efforts to drive traffic some establishments will set there price slightly lower. The most successful price strategy is to charge higher than the average and support it with overarching quality and service, in a design setting that is atheistically pleasing.

Design:

In the dark abyss, before the healing light of design, I was blinded by my financial background, so my bias was to view every decision through a financial lens. Time and again, when I was dining out with my wife, I would comment on how much the proprietor spent on the build-out. Design, I now know is the essence of life. Everything in your world is there because a designer conceived it, constructed it and found a way to market it. Design has the ability to make our lives glorious or intolerable. We are indebted to the dreamers, the designers who move us forward with style!

Entrepreneur: No Regrets

The most sited result of starting a business is “why did I wait so long”? Entrepreneurs whether the business succeeds or the result is not favorable, will always talk about the process and challenges they would have handled differently. Yet they never regret going into the business. Ultimately isn’t taking responsibility for your destiny a positive? Entrepreneurs may question several of the decisions they made in the business, but never the decision to start.

What are you waiting for?