The Takeaway: The Myth Keeping Busy Restaurants Broke

0:02Welcome to Full Comp, a show offering insight into the hospitality industry, featuring restaurateurs, thought leaders, and innovators served up on the house.

0:16Welcome to The Takeaway. I'm Josh Kopel. The Takeaway is a tool, one idea, one tactic, one strategy you can implement in your restaurant this week. There's no guests, no interview, just actionable information that'll help you make money without costing you a penny, all in less than a time that it would take you to count out a cash drawer. Here is this week's takeaway. Let's kill a myth, shall we? We've all heard it a thousand times. If you put the guests first, the money will follow. But here's what actually follows. Burnout, debt, and us standing in a packed restaurant wondering why it still can't pay the bills.

0:55I've been there, and here's what I learned the hard way. If profit isn't baked into our business model, the business is already collapsing underneath us. We just haven't hit the floor yet. Hospitality is a luxury and it's no substitute for a business plan. I work with restaurant owners doing millions of dollars a year packed Friday through Sunday, and they're still broke on Monday. And how does that happen? Because so many of us were trained to prioritize vibes over viability. One of those owners and I did a full audit. Their menu was leaking a quarter million dollars a year. No pricing strategy, no margin analysis, just hope and hustle.

1:39So we fixed the pricing and we simplified the prep and we negotiated with the vendors and they went from 3 % profit to 16 % profit. And they didn't lose a thing on guest experience. It actually got better because now they can afford to invest in that experience. None of us can give great hospitality from a place of desperation. We give it from a place of stability. Which brings me to the menu. Our menus should be strategy documents. We've got to stop treating them like a passion project. Our guests look at the menu and they see dishes. But we need to look at that menu and see a profit and loss statement.

2:17When I work on a menu with a client, the goal is simple. Every guest spends a little more and enjoys it more. And we get there using three tools. Benchmarking, engineering, and design. Let's start with benchmarking. Benchmarking is a competitive analysis, like-for-like products in our market for our guests. But here's what most of us get wrong. We're only looking at direct competitors. If I run a burger joint, we look at other burger joints, right? The people who eat burgers also eat fried chicken, and they eat tacos. So I'm not gonna benchmark against those that look like us. I'm gonna benchmark against the use case overall.

2:54all. Where else would that guest go to have the same kind of night? And when I find my top five, I'm benchmarking against them aggressively. Where are we already at the top of market? And where are we leaving money on the table? I did this with an Italian restaurant in Los Angeles. We made small pricing adjustments while massively scaling perceived value. And we didn't even take them to top of market. We just took them to 90 % of it. And that alone picked up$175 ,000 a year in additional revenue on flat covers. Most of our guests don't come in often enough to notice a small price change. And so what I would explain to you is this, those pennies mean nothing to your guests, but they're gonna change everything for you and your business.

3:40Now we need to look at engineering. When I look at a menu with the sales data next to it, I'm looking at one thing, attachment rate. How do we get people to buy just a little bit more of what they already want? I work with a fast casual juice concept in Las Vegas that runs an 83 % attachment rate on upsells in fast casual. And it's simple. When you order a juice, they offer a wellness shot. When you order a wellness shot, they offer you a flight of wellness shots. When you order a smoothie, they ask if you want an extra scoop of protein. When you order one of their craft coffees, they ask if you want an extra shot of espresso.

4:17That's it. Just a little bit more of what you already came in for. And so when we engineer a menu, what we're minding are the gaps. We're guests naturally inclined to buy, but they're not because we're offering them the wrong thing. And I don't look at this as a greedy restaurant owner. I look at it from the perspective of a patron. The more our guests order, the more of an experience they get to have. And the more they experience, the more value they feel and the more likely they are to come back. It's not about greed. It's about making sure that they have the experience that we designed for them.

4:54And then let's talk about design. Mingyu design specifically. Here's the test. If a guest walks into your restaurant and says, so what's good here? We've already blown it. Because that is the Mingyu's job. Our Mingyu should be a roadmap, not a compass. A compass points people in a general direction. But a roadmap tells them exactly what to get and in what order they need to get it. We should make our menus so easy to navigate and so easy for them to make the right decision. I'll give you a great example. One of my clients, TJ, runs a gastropub in Chicago. And his burgers on the menu were sitting above the entrees in a section called handhelds.

5:34And when a burger comes first, that's what people order. But here's the problem with that. A burger is a commodity, right? It's a generic item. Everyone sells one and most of them are pretty good. So the minute a guest orders that burger, we're being compared with every other burger joint in town. And it's at a lower price point than the rest of his entrees. But the entrees are different. That's the food that no one's making. That's what turns TJ into a category of one. That is his moat. And when a guest falls in love with a dish that they can only get from him, they have a reason to come back.

6:08And that's what drives frequency. So we renamed the handheld section sandwiches and we pulled it to the bottom of entrees. And after that, the entrees outsold the burgers four to one. It's the same kitchen. It's the same guests. You just changed the routing. And now every one of those guests is going to leave with a reason to come back that they can't get anywhere else in town. And you put all three of those together. And that's how we're able to scale average spend. That's how we're able to make more money off the guests that are sitting in your restaurant today. Not by telling our teams, go sell 10 more dollars, but by building the perfect check.

6:45This one meal that every guest should get. Priced right, engineered to grow, and laid out so that the decision is obvious. And most of the time, it already exists in our restaurants. Look at the guests who are already spending what we want everyone to spend. Look at what they're ordering. Let that be your roadmap. It works on the cost side too. One client was able to cut their SKUs by 20%, their food costs dropped by 6%, and they never touched menu prices. It's not luck, it's design. And if our menus aren't driving profit, it's driving us out of business. So here's what I do this week. Three things.

7:24Number one, pull up your top 10 bestsellers and be real with yourself. Are they actually profitable? And are they actually driving traffic? And do they actually make you a category of one? Number two, set a profit per guest target so that we know what number we're shooting for. And step three, start tracking your average guest spend. Monthly reports are just too late. You want to look at these numbers in real time and you want to look at who's selling the numbers that you want to sell. We want to catch the leak while it's dripping, not after it floods. And we want to make sure that we're building momentum off the servers and the bartenders that are selling what we need sold.

8:03And so here's the takeaway. Profit has to come first. Not Sunday, not next quarter, today. And the best opportunity for you to do that is with the individuals sitting in your restaurant today. Because we can't serve great food, and we can't provide great service, and we can't build a great culture if we can't afford to keep the lights on. That's this week's takeaway. If it was useful, do this one thing before the day gets away from you. Go to restaurantbusinessschool.com to sign up for my free five-day restaurant marketing masterclass. It's a live workshop where in 40 minutes a day, I'll help you build out your AI marketing team to raise check averages, book more private events and corporate catering, and bring your best guests back more often without discounting and freebies.

8:51There are no ads, there's no additional expenses, and no additional work on your end. It's just my strategies and the robots will do the work for you. And if that sounds like something your restaurant needs, sign up today at restaurantbusinessschool.com.