He Said, She Said: Business Planning
ICE’s Culinary Management Instructors are seasoned industry professionals who are still active in the industry, working on their own projects while teaching classes at ICE. With such a wide range of experience between them, we decided to ask Julia Heyer and Vin McCann to take a closer look at the business of running a restaurant and sound off on some of the hottest topics in the restaurant world. Today, they tackle business planning.
Vin McCann: Having reviewed hundreds of restaurant business plans over the last 10 years, I remain flabbergasted, and somewhat saddened, by the number of them that underestimate the potency of existing competition and overestimate the contemplated business’s ability to generate sales. The discomfort the rose-colored outlook prompts is exacerbated by the recollection of my favorite marketers’, Al Ries and Jack Trout, warning that better product and better peopledo not qualify as positioning statements or unique selling propositions. Who goes into business promising the opposite? Guests, customers, whatever the conventional wisdom is tagging them with today, don’t drop out of the heavens every time a new restaurant opens its doors. They must be lured, seduced, yes even weaseled away from existing competitors.
The elemental math is that there are 310 million people living in the U.S. and over 650,000 restaurants. Eliminate 20% of the population for being too young, too old, or too infirm to be regular customers and you have approximately 248 million potential customers, or about 380 people per restaurant – not exactly the best foundation to build a business on. The nagging, inescapable, question every restaurant entrepreneur must answer is why your place? Opening with the idea of better food and service and no other marketing strategy is like hoping your distant object of desire, barely visible in a crowd in the lobby at Grand Central is going to pick you because you are there. What are the chances of that happening?
Julia Heyer: I agree 10000% – and will now clearly do something else than stand in the middle of Grand Central hoping for Prince Charming to trip over me. Seriously, I have nothing to argue and little to add. Besides this question: Given the numbers, why are there so many mediocre products and experiences out there? Is it the old knowledge gap by people that want to do better but don’t know how? Or the execution gap by those that would know how to take care of you properly, if they only cared enough to jump through all the hoops required making that happen? Have too many operators stopped caring?
Or can they simply not get their team to care about their business and guests? Likely, some of the more optimistic entrepreneurs, touting their USP as the “I’ll provide better service and food and drinks than the shmuck on the corner,” will turn into the burnt out, cynical operator that just doesn’t care enough to keep the fire and desire going every single day. Every. Single. Day. In our business you start over every morning. There is a reset button. How you did yesterday does not matter – only what you do for your guests today, how you make them feel on this visit. And that can be exhausting over time. So maybe it is not about doing better than the guy next door, but about more perseverance, more energy and quite frankly, more discipline than those who you think are not doing as well as you will?
Vin’s Response: Sounds like you’re advocating “testing” (psychological and physical) for potential restaurant entrepreneurs. While it would certainly carve into the stash of mediocre restaurants, there are undoubtedly more issues at play – some mythical, some inescapably real. Our cultural fixation with restaurants and the conventional wisdom that all you need is some old family recipes and a dream lure too many ill-equipped entrepreneurs. Poor planning with regard to financing, design, staff training, and marketing make too many operations forgettable experiences. Finally the restaurant business model, featuring high entry costs, low margins, and intense competition creates an environment that dictates we should all be delightfully surprised when we find ourselves in a restaurant experience that clicks on all cylinders – concept focus, product quality, service, environment, and value – regardless of the category or segment the restaurant does business in.
Julia’s Last Word: While implementing testing or good planning practices would be useful to future entrepreneurs, (not to say very German of me): Who am I to stop people from squandering their money? At least they are not asking me to subsidize their poor planning out of my pocket to then yell at me about it (and asking that people don’t spend more than their budget allows used to be called good business practice, instead of deriding it as “austerity”). Let’s just go and enjoy the places that plan, market and manage their business and guest experience well. I hear there is an excellent Greek place in Astoria.