Espresso: Behavioural Science Lessons From Managing Nightclubs - Pan Koutlakis

0:01What are some of the other lessons you took from just kind of observing behaviours when you were managing that nightclub at 19? Well, I think one of the biggest lessons, and it's less about behavior, but it really taught me that volume was everything. Right. And I think I learned that there is margin in food and drink. But if you're not doing enough volume for that margin to meet your costs and then become profitable, it doesn't matter what your prices are. It doesn't matter what your costs are. There's not enough people coming through the door and spending. And there's two pretty valuable lessons.

0:36One was this idea that you had to bring people in early and start the night. and that was really important. That's a really e-club focused piece. But another piece was when I started managing the club, I really found out that because it takes some time to get it at full capacity, it was never really big enough to be at full capacity for long enough to make enough money. And one of the big changes that I made, I was studying law at the time so, you know, I'd always put my little, I thought you pretty much think you're a lawyer while you're at law school. I haven't thought of myself as a lawyer since.

1:07Yeah, yeah, yeah. For sure. I went through a planning permission with the council and had to get someone to come and survey, check how many toilets there are, blah, blah, blah. I think I'm going back a while now, but we might have increased the top from 115 people capacity. So when you say the top, that's what you're going through. The top level, the capacity in that level. Oh, the amount of people. Yeah, the amount of people that were. I assume it's similar in the UK. Licensing for licensed venues, everyone can have so many people in that venue. mandated by whatever the licensing authority is.

1:41Yeah. Jesse, you've got a capacity if you're a 200-person nightclub, 500-person nightclub. I think we were about 115 initially. But at 115, they always felt like there was space there, went through this planning permission. I think we got it to 175 maybe. And the difference that makes if you're full is huge. The amount of extra people that you can have in there drinking, it just makes such a massive difference. And then it changes the whole way you think about the cost base. You're actually then, it flips from like, how do I save money here and there to make them profit? It's like, how do I now get more people in for more time?

2:17And we often see sometimes when you get too focused on the cost side, you sometimes stunt your business by trying to grow more profit, trying to build profit instead of growing your business by growing the revenue. And it's in like, I mean, in the startup space now, we're trying to build businesses and technology. I think the general consensus when you're building a technology business is you get the volume first and then you optimize for your margins later once you're really at capacity. I think if you try and optimize for your margins as you're moving to capacity, you really, you stunt yourself.

2:54You might make misses on service. You might make misses on the food. So specific on that. you might be you might be trying to optimize your you're doing your roster and you just often understaff because you're trying to cut costs as opposed to being prepared having a growth mindset where you're thinking I'm building the business I'm getting more people in every every week I want to make sure I've got enough people in here to deliver the right level of service because you want those people to have the experience where they tell other people about it and you grow your business that way it's there's a quote by again mentioned he's sort of mentor of mine rory sutherland one of his quotes i love is at school you can't rewrite the question in an exam but in business you can and it's a lot of his thing is just reframing the question so you ask a better question you suddenly have a whole new way of looking at a problem and then you solve that problem which with with you guys it's like i think so many restaurants think okay how do we keep costs down how do we protect margin and that's why you end up with things like you know those sort of um the what was it called they started in covid like the qr code table ordering yeah it's like yeah it's like that's great but fuck me it ruins the experience and then fuck me less people come through the door i think one of your superpowers mate is being able to reframe the question and then look at solve a problem in a completely new way totally and this is a really clear example and this is we talk about like the growth mindset as opposed to like the accounting mindset like if you go to your accountant at the end of the year to to look at how you performed And a lot of restaurants do go once a year and that's really when they interrogate the numbers.

4:27I think everyone needs to do it more often, but that's sometimes, you know, restaurants are super busy. You don't have time to be in those numbers every day. If you go to the accountant at the end of the year, you might end up with something like, oh, looking at your numbers, your Monday and Tuesday, you're actually losing money. And that could be the case on a variable basis. The costs of opening were more than the revenue they pulled in. and the accountant's suggestion will always be time to shut Monday and Tuesday. Right? That's always the suggestion. Every restaurant now, you can't. My mate's got a tapas bar in Clapham.

5:00Great. Like, I don't know, it's a good mate. We have lock-ins there, like, straight out of the thing. It's great fun, mate. But shut, shut Monday, Tuesday, Wednesday. Because you're still in the lock-in probably. Yeah, yeah, yeah, yeah. You guys got to leave first. To be honest, yeah, he doesn't need the e-club app. He just leaves us there every week. But, you know, he was saying it's because we can't afford to staff it. And I think it's, as you say, if they were to drop the price using Eat Club, people come through the door and that solves that problem. Well, there's two things. And we haven't even told people what Eat Club does yet, but there's two things that kind of give you some more basis for that as well.

5:35It's like you can't afford staff really depends on, like, this gets talked about in the coffee context in Australia a lot with the cost of coffee going up. And people are saying a barista costs so much money, it's going to increase the price of the coffee by$1 or$1.50. And I'm like, that's totally relative to how many coffees that barista is making an hour. Because there are cafes where the barista might make 10 coffees an hour. There are cafes where he's making 200 coffees an hour. The difference in his cost per coffee is wild, depending on how much volume he does. So it's not like there's some, it's the cost, all the input costs are relative to the volume because there is margin in every meal.

6:16And then what that leads me to is how come you've got some days where you're really busy and some days where you're not. I think this is natural in hospitality. You've got your week that builds to a Friday and Saturday night. And I think traditionally a lot of restaurants have been happy kind of breaking even or even maybe losing a little bit of money early week and then catching up at the end of the week. We just don't think that has to be the case. And what it suggests is that you've got a product that has perfect product market fit on a Friday and Saturday. And so on Friday and Saturday, you open the doors and people come in.

6:52People want to spend money. It's when people drink as well. So you're going to make more money per table, blah, blah, blah. But you're opening with the exact same product on a Tuesday, Wednesday, when people don't want to drink as much. They might not want to spend as much money. You don't have anything different for them. And there are lots of levers you can pull to differentiate your product to find product market fit. We offer one which is price. I mean, price is a – Just go through some of those because I think that's important for context, like lunch menus and shit like that. Yeah, lunch menus.

7:21I think understanding the mindset of the customer. During the week, people still often want to buy food, but they might just want to buy the meal and not drink. And you want to create an environment where sometimes you feel comfortable going into a nicer restaurant and having a meal and not drinking and not feeling pressured to drink, for example, that could be one. The lunch menus are a huge one. Having a particular, call the piano man in. These are all things that can find you product market fit. It's probably a mix of all of them to make something work. But that's, I think, the myth. I just don't think the modern restaurant can have product market fit on two days a week and ignore the rest and say, I just don't know why they're not coming on these other days.

8:13There are levers to pull, but you have to do something with that space. There's too much rent tied up. I love unintended consequences. So you may have product market fit Thursday, Friday, Saturday, Sunday, for example. But then to, as you say, gear yourself up for those four days, you actually reduce the quality of the Monday, Tuesday, Wednesday by having less staff. And then you actually lose customers because they'll be like, you know say i don't know i mean you know pans panoply of delicious bites whatever the fucking restaurant's called they go in and they're like oh my god that was amazing on the friday saturday go on the monday it's like there was no staff took ages the food was a bit dodgy that word of mouth the greatest form of marketing and then you without a doubt yeah so there's almost unintended consequences of of not sorting out the monday but there's also unintended consequences of closing as well i know this great restaurant let's go you walk down with your friend shit it's closed you go to another restaurant and you might discover another restaurant or you're just you know you've let someone down in that moment like it all it all adds up yeah you know what's absolutely mental mate London is literally the greatest foodie city in the world with so many absolutely banging delish restaurants opening on the reg I absolutely love it but look let's get real there's lots of times where tables are still sat empty when your favorite spot is silently struggling and look every single table counts everyone needs solutions and they need solutions very fast and that my friends is where eat club comes in eat club is a profitability tool created by hospitality insiders including the absolute don marco pierre white eat club gives top bars and restaurants control of a new stream of quality paying customers to fill those quiet times No faff, no upfront costs, only upside.

10:04Look, if you're in hospitality and you want bums on seats when you need them most, please drop the founder, Pan, or the VP of the UK, Liz, both absolute legends. Drop them an email, filmmytables at eatclub.co.uk. filmmytables at eatclub.co.uk. That will get you straight through to them and they can help. Please, let's turn those empty tables into profit. Thank you.