My brother and a friend of mine bought a restaurant just under a year ago. While I don't have much of a stake in it, I'll occasionally talk to them about different ways to drive sales/cut costs.


A little background on the place-it's very much seasonal, doing more in sales in July than it did in January-March combined this year. From about labor day until memorial day, a lot of the towns residents move home. The people that stay in the town during the winter frequent the place often, but it's not enough to sustain even being breakeven in the winter.

There's a middle sized city about 20-30 minutes away, and we get a lot of traffic during the summer months, but that dies down in the winter. If there is going to be traffic driven to the restaurant, it will mostly need to be from that town.


In general, the place has excellent food/service, and its something we feel like if we get customers in the door once, we can convert them into regular customers.


The one idea that I've wanted to try from day 1 is the idea of free meals. My thought was that 1 day a month on either a Monday/Tuesday/Wednesday (extremely slow days), any customer who comes in during a certain 2 hour period would get their meal for free. The only thing we would ask is that they post about it on social media and tell their friends. This day would be random every month, and would not be announced beforehand. Sales on those days in the winter average about $300 on those nights, so it isn't exactly a huge amount

The thought process here is that people like free. People will tell everyone if they get a free meal. In theory, I would hope that people would realize they had a shot at free food and frequent the place more often. At that point, if we can continue to offer great service and quality food, I would hope that we could create more loyal customers.


I'm sure there's flaws in this plan, so flame away. Just wanted to see if there were other restaurant people out there who thought this could be an effective marketing strategy.

I work in customer service. The bargain hunters would bleed you dry. You'd have couponers showing up with all sorts of angles to get more food. BOGO would be a better option I think.

well I guess that's kind of the premise of the idea. The only way to can take advantage of the offer is if you are in the restaurant during a non publicly known 2 hours over the course of the month. I mean I guess everyone could tell there friends when they find out, or people pay attention to when it hasn't been given out yet, but mostly seems preventable just by not announcing the timing of the event.

I think a better and more creative way to do this would be to have a trivia day.

The people order their food and after they are ready for the check you give them a piece of paper with trivia questions. They have one minute to complete it.

If they get 4/4 questions right then those customers would get their food for free. If they got 3/4 they'd get 25% off.

People want transparency when it comes to discounts. They want to know the path needed to get it. Plus, they overrate their own abilities.

Even if they can narrow down each question to two options they are only 1/16 to get all of the questions correct which is only a 6.25% discount.

You are driving traffic to your restaurant but you also have the upside of collecting the full amount. People will brag to their friends when they actually get all the questions right.

If you are just giving food away for free it makes you look desperate.

Bad idea, like very bad


To put it simply, you are trying to attract customers that can afford to eat out, by running a program to attract customers who cant afford to eat out.


Also people who can afford to eat out avoid stuff like this because they know what it will attract (long waits, noise, dregs, chaos)


Just really bad idea


Would be better off targeting alcoholics

It’s just a roundabout way of lowering prices via a lottery style freebie. So many better ways to attract people. If you want to attract people who like trivia why not do themed trivia nights for small prizes?

how long was the restaurant open before your brother purchased it? what kind of restaurant? how many tables? average ticket amount? how many staff? what kind of sales in the summer months? need lots more details.

$300/night avg for sales is extremely poor, i'm sure you already know that. if this is a full service restaurant with lots of staff it's simply not going to do.

your idea for free meals and begging for social media reviews/tagging comes off as pathetic and will never work. there's a reason you have never seen this promotion in a restaurant before. even a 50% off coupon is a disaster. it's treading water, it's biding time until your demise. it's not fixing the actual problem which is the restaurant isn't good enough for enough people to be willing to pay a premium for it.

what's the population of the city 30 mins away and what is the population of your city?

if you've correctly assessed that you're already squeezing the locals and you need traffic from this city, you're going to need to advertise directly to that city.

you need to be 10x better than your competition in their city because 30 minutes is a big ask for dinner. but it is actually possible depending on where you live. but they need a reason to make that drive.

this is a very tough problem. it might have to turn into an actual seasonal business which is closed for winter, but then you run into major staffing problems.

at $300/night i'm not convinced you've squeezed the locals for all their worth. what's the population of your city?

Focus on the strength and boost your in season sales numbers with the $ you'd be losing from your marketing idea.

You could call it "Tramp Tuesday".

Was open for about 3 years. It's American food, a bit of a rotating menu with different dinner specials. There's seating for ~70 in the summer, and we lose ~ 20 of those in the winter when the deck closes. It's not a huge place. Average ticket is between $26-$27. Summer staff is ~25, winter staff is 4 full time and 3 more on the weekends.

approximate net sales

Jan-Apr- 20K; May-45K; June 60K; July 95K; August 75K; September-50K; October-Dec 30K



Probable fair. Monday-Wed are just awful; Traffic picks up steadily throughout the weekend-most Fridays/Saturdays sit around 2500-3K in the winter


~100K

Most of the advertising so far has been online and through different events offered in the city. A lot of last winter was going to different food competitions; I think we can do a lot better in this regard, just trying to figure out how at this point.

Bolded is the main concern. The full time staff is excellent and we are trying to do everything we can think of to keep the place open in the winter. They don't deserve to be seasonal staff, and we know we'll lose them if we try.


The one major thing we're doing this winter is pushing catering as much as possible. If we're able to properly execute, we feel like it will serve a dual purpose-we can come to the bigger city to deliver our product, while also showing off our product to future potential customers. That won't be enough, but it'd hopefully be a start.

The town we're located in has only about 300 people-probably about 200 in the winter. There are a lot of summer draws to the surrounding area, and we're the only place within about 10 minutes. There's a higher population in nearby areas, but most of the customers on those days are from the town itself.



We've toyed around with the trivia night idea, and it's something we'll implement at some point to see if it can draw traffic. Trivia nights are very overplayed in our area, with multiple ones each night.


Arguably the biggest hurdle in the winter is weather-we're in a snow belt, so getting customers to come 30 minutes in a snow storm is a challenge-we don't need to be 10x better, we need to be 50x better.

yikes, those numbers are grim. such a tough business. are you profitable in may and september? with a staff of 25, the summer numbers are kind of light too. you say "we get a lot of traffic in the summer months" but are you making any money in the summer months?

you've got to be losing thousands during the winter. why did they buy this place? went on vacation in july and got hoodwinked? please forgive me for being such a negative nancy.

Do you have data on your customers? What are your surrounding locations? Where are you located?

That's it's dead seasonally and only busy nights and weekends is standard for food service. The key is to minimize loss or turn a small profit if possible. If you're losing a lot, you're better off being closed during that time and you're going to have to figure out labor.

Some businesses make nothing 5 days a week and all the profit Fri n Sat. It just is what it is, but more detail is needed to assess your situation.

I think you might be better served to focus on cutting waste and labor cost while optimizing service and food quality/selection during the slower business hours, days, and months. It's possible even cutting advertising might actually be a correct decision, or limiting it. With a minimal customer base, you want maximum satisfaction. These loyals remember you on Monday and show up with friends on Friday, or during winter and show up with friends in the summer.

Your profit comes from night, weekend, and summer. Focus your advertising during those times. Data from customers would help and show you where to target. Are you near a highway? Airport? Colleges? Anything? Might be untapped sources you never thought of.

You aren't going to have a high ceiling on your slow business times even if sales go up. Just make sure you're not hemorrhaging money. Is this business turning over a profit? What are the margins?

Not enough detail to really give a better answer. It's possible the business should close immediately. It's possible it needs a serious injection of cash and can grow into acceptable profit. It's possible you guys are doing just fine and have pretty much done all you can do and there just isn't much more to be made. Tell us more.

by staff of 25, what I mean is there's about 4 front of house and 4 back of house on a busy shift, and typically 2 of each on off times, with a lot of people only working 1 or 2 days a week. Obviously by "lot of traffic", I mean in comparison to the winter-the place is at max capacity every Friday and Saturday from 5-11 during the summer, but the place isn't exactly huge.

Profitable may through September, or at least the operating costs are.


Yes, losing in the winter. Should they have bought it? probably not. But the business was at a perceived discount, and the building/land was at probably 75% of FMV. I don't know for sure, but if I had to guess, the plan would be to get the place making a bit of money and then sell in a couple of years.

From a profitability stand point, rent and utilities total about 10%, which seems light for what I've seen. Labor is about 31-32%, which seems about in line. COGS are hovering around 40%, which is way too high-they were about 45% the first couple of months, which was awful. Right now alchol COGS is hovering around 22% and food closer to 45%, but that number has come down as well. There were/are a lot of mistakes being made, but a lot of them are being corrected as they go along, and the cost % are dropping with them. The realistic goal is probably ~30% labor/36% COGS, and a profit can be turned at those numbers. I think those are still high compared to most places, but those are still profitable numbers at this place.

I hit on a few things on the above post, and Ill try to hit on a few more of your questions.

Bolded:

1) that's almost definitely the case here. Trying to skim by on times where we're slow, because we know we can crush during the busy seasons.


2) preaching to the choir. Costs were way too high the first couple of months the place was open. There are better practices now that are lowering a lot of these costs, and the one owner has (finally) started to actively pit vendors vs each other, and the costs have come down with it.


3) that's actually a lot of it. Regulars will bring in a lot of new customers when they have friends in from out of town, or when they make a day trip. The hope is that we did a good enough job in the summer, that some of that translates into higher winter sales-which is for sure possible, but we'd rather not wait and see and try to find other ways to drive traffic.


4) In a lot of ways, that's an issue. There's a lot of times we are at max capacity, and simply can't take more customers, so more advertising would be fruitless. We're working on different ways to add seating, but there aren't a ton of options due to land issues and town ordinances.


5) There's a couple of highways, but not much else around during the winter


6) Projected to be ~ BE operating costs the first year. probably within 2% one way or the other.

Is the place packed when it's busy? You said you have a deck. Can it be expanded? Do you serve alcohol? Provide entertainment? Is it low key? Upscale? Blue collar? White collar? What are you customer demographics?

There is competition? What are they doing for advertising? Pricing? Does your traffic pale in comparison to theirs?

It's not a challenge. It's impossible. Would you drive 30 mins on f'd up roads to eat your food? One of my favorite quotes, from Scrooge McDuck: "Work smarter, not harder!"

You said you have a deck. Would it be possible to keep the deck open, but heated and covered without killing the view if there is one?

We're looking at adding a patio that could increase summer capacity, but itd still be in a limited capacity. Currently there are smaller 1 or 2 people "bands" that play on Fridays that draw people, but the result is even more of a packed house with longer table turnover times. The hope would be the patio could draw people outside and off of our tables.


Interesting point for the deck. There's an absolutely gorgeous view off of it in the summer, so we don't want to block it. One option we may end up using is a "garage" type door that we can pull down and hopefully use to insulate the place in the winter. This could allow us to keep the extra seating for winter weekends/bad weather.


Yes, there's alcohol. Mostly a white collar type of town, pretty low key for the most part. Regular customers tend to be a bit older, with a lot more families in the summer/weekends.


love me some scrooge quotes

If you run at max capacity during peak business, you're bottle necking your own profit. Ugh. The good news is you have money to be made.

You've got to expand! One way or the other. Think of it like this: I now understand that your focus is driving up your non peak business hours, days, and months, but all your profit is going to come from the night, weekend, and better weather months. Should business boom for you somehow, it is essential you're prepared for it. You're already losing money by turning away customers and you expect to be and do better, wtf are you gonna do when business goes up by 20% unexpectedly?

Easier said than done obv. It sounds like you can't do any major renovation or it's simply not possible or sth. Know anybody good at Tetris?

Are you near an exit? A billboard with directions might be worth it. Or an extra tall structure with your business name on it, visible from the highway.

Disregard questions you already answered. Sorry

I used to be excellent at Tetris. Were actively working on ways to expand, but it's not the simplest thing obviously. I very much agree with you, but the way you put it makes it that much more imperative that we find a way. That's a line I'll use the next time I push the idea (which will be in about ten minutes)

I was actually looking into billboards when you posted that ha

Hi!

First why I dare to comment here
- I ran an industry business with up to 70 employees
- I organized a couple of techno festivals
- I run an apres ski bar in the winter

First of all - whats your general marketing
- Do you have nice lighted (winter!) billboards / signs at all crossroads to you and at towards you pointing exits of all surrounding cities
- Do you have a Google Map- and Facebook business page with good photos and many good reviews and weekly posts of specials, staff and history stories (how are strangers gonna find you and inform themselves about the quality in advance......)
- Do you have ads in local newspapers and tourist brochures

cheers

I used to do marketing consulting for a tourist attraction that went free 1 day a week - had huge traffic but all their paid day traffic decreased.

Also reminds me of the Groupon issue seen in a lot of small businesses - you get a lot of new customers but they only return if there's a similar discount.

If going the social media route, target local influencers (e.g., live in the nearby city and have 1000+ Instagram followers). Give them a meal in exchange for positive coverage.

Otherwise it seems like it makes more financial sense to be closed on slow days and then run events/themes on Thursday/Friday night to maximize traffic.

before trying to figure out how try and focus on the what (i.e. what is the number of patrons at an average order size that makes your goal beyond B/E for getting folks in the door on off days.) you may realize the simple fact is it is better to be closed on certain days and open on others if the threshold is too high. the other thing I would look at is other restaurants and establishments in the area and see what their traffic looks like on those low volume days of the week. the answer (as others have mentioned) may be a focus on maximizing your revenue on days where traffic is high and embracing that the business may just be seasonal or cyclical.

OP, you're trying to reinvent the wheel here when it's not needed.

Look at the big casual chains and how they put asses in the seats. They've been using these methods for decades because it works. Set up a direct mail campaign in your slow months, your first campaign should be a small test, 1000 to 2000 households. You offer a free appetizer with purchase of an entree, or bottomless lasagna, or whatever your thang is.

you think buffalo wild wings or olive garden was built by yelp reviews and facebook? wrong. They use consistent and repeatable marketing methods that are tried and true.

Step 2 - your upsell systems need to be rock solid, there's no point in getting someone in if you're not going to go for alcohol and desert upsells. Watch your servers like a hawk and make sure it's being done properly.

Step 3 - measure your roi from your campaign down to the dollar. if was profitable, simply scale up the volume. if a campaign was successful with 2000 households, it will be successful with 20,000. If it wasn't profitable, design a new offer and test that out.

here is the type of thing I'm talking about



This was probably a waste of time to type out since you have no equity and no authority to execute a plan, and even if you pitched it, your brother and friend are probably too stoopid to actually do it. I mean, 300 bucks in one night I would probably just jump off a bridge.