Archive for December, 2012

How to Lure Travelers to Your Restaurant, and Why You Want ‘Em

December 27, 2012

While growth in the domestic travel sector was slow but steady in 2012, international travel to the U.S.  flourished with international visitors spending around 100 billion dollars on tourism related goods and services, including restaurants.  According to the National Restaurant Association, international and domestic travelers account for as much as 40% of fine dining restaurant sales and 20% of casual dining sales, underscoring the need for proprietors in these sectors to make sure that their establishments are on the traveler’s radar.

Get in the Media to Grab Attention

Getting your business in media that travelers will see is an important way to bring them in to you restaurant. Obviously you can pay for advertisements to achieve this goal, but there are several free ways to generate publicity as well.

For instance, participating in major food festivals, competitions, and restaurant awards are all great ways to get free publicity and build your business’s reputation at the same time. Similarly, hosting charity events generates a lot of media attention and provides an opportunity for your establishment to demonstrate its good-will and commitment to serve the community.

Another great way to get in the news and attract visitors is to provide a novelty of some sort. This could be featuring local dishes, being the only restaurant to offer a particular kind of food, providing a unique atmosphere, or even taking a niche-market approach such as having only fresh or organic produce. The key is to make your establishment stand out somehow by featuring something that is newsworthy and novel enough to make travelers seek out the experience.

List Your Restaurant with Destination Management Companies, Travel Websites, and Visitors’ Bureaus

Getting your restaurant listed in as many places as possible is another important technique to bring in travelers. Many restaurants utilize what is known as destination management companies, or DCMs, to reach out to international visitors. Listing your business with travel websites, concierge services in your area, and local visitors’ bureaus are also effective approaches which can yield a large potential return for your efforts.

Networking with businesses that deal regularly with travelers is a great way to build relationships and a positive reputation as well. Not only do you have an excuse to periodically drop in and leave gift certificates or info, but the concierges and bureau workers you encounter will also be more likely to personally recommend your business if you take the time to build a relationship with them.

Optimize Your Social Media and Online Presence

Having a strong online presence is important in today’s era regardless of the customer demographic you’re targeting, but it is even more critical if you’re trying to attract travelers.  The odds are pretty good that those travelers will be searching online for places to eat in the area that they are staying and will be relying almost solely on online information and reviews to make a decision.

Thus, it is critical that your website is optimized so that it shows up in search results for its particular food and service category.  Similarly, it’s important that you have positive reviews for your restaurant available on major review sites. Your publicity and networking efforts will pay off here too as two of the factors determining search engine rank are the number of links and the amount of ‘buzz’ there is for your establishment from exterior sources.

Great dining experiences are one of the pleasures that most travelers seek out when they visit a new location. As such, it makes a lot of sense as a restaurant owner to target this lucrative group!

Leveraging Holidays and Special Occasions to Boost Sales

December 21, 2012

Holidays and special occasions such as graduation parties, birthdays, and weddings represent special opportunities for restaurants to significantly boost their sales. Whether you offer full-scale, private party catering or simply provide easily available digital gift cards, offering promotions that parallel with holidays and special occasions is a savvy marketing technique worthy of pursuit.

In-House Catering for Large Groups

One method many restaurants use to diversify their revenue streams and tap into the holiday cash flow is to cater to and host large groups of people in-house. This can be done either by sectioning off a portion of your establishment or by making it available off-hours for private rental.

While it’s true that space for meeting and eating is popular any time of year, it is especially sought after during the holidays. Businesses and individuals alike are looking for a place to host their holiday functions, and it would be folly not to market to those groups if it is within your capability to do so.

Cater for Private Parties, Offer Extended Holiday Delivery Hours

As more and more people entertain at home, restaurants have to shift the way that they offer service. In-home, private catering is in high demand, especially during holidays and special occasions. One method of increasing sales for private catering is to station a catering representative at the door of your establishment to greet guests, hand out menus and promotional materials, and gather business cards. Encourage guests to sign up for catering service early by offering discounts and incentives for doing so.

Extending your holiday delivery hours is another method of tapping into increased holiday sales.  Many people who may not be interested in full-scale catering might instead be interested in having food for their holiday feast delivered right to their door. Extending your delivery hours during the holidays can be a simple way to accommodate that desire.

Gift Cards Mean Business

Gift cards are an additional way to tap into holiday sales and are especially appealing to last-minute shoppers. It is estimated that approximately 5 billion dollars was loaded onto restaurant gift cards across all sectors in 2011. Since gift cards are one of the most requested holiday gifts, creating a holiday gift card incentive program is a smart way for restaurants to tap into that market.

Further illustrating the viability of using gift cards to leverage holiday sales is the fact that gift cards can now be offered digitally. This means that customers can instantly receive the gift through their mobile phones, email, or social media creating the perfect last minute gift. Digital gift cards are also nice because they can be promoted long after the window for booking holiday parties or buying the physical gift cards has closed.

All of these techniques can help diversify your income stream and leverage an increase in holiday sales. Offering carefully timed holiday promotions along with compelling incentives that encourage customers to buy or book in advance is a smart way to ensure that  your business receives a piece of the proverbial holiday pie.

Adjusting Your Menu Prices to Reflect Rising Costs: Is There a “Sweet Spot”?

December 17, 2012

According to the National Restaurant Association, menu prices are projected to inflate this year by 2.7% across the industry due to the increasing costs of wholesale foods. Since price is by far the most important factor determining a restaurant’s traffic, this creates a challenge for restaurateurs. They have to increase their prices to cover their costs, but to do so across the board would be suicide.

Instead, restaurant owners need to be selective about their price increases and take steps to identify where the ‘sweet spot’ lies in terms of a customer’s sense of value about buying a meal at their establishments.

 So What’s the Menu Price ‘Sweet Spot’?

In an effort to determine what price points would bring consumers back to restaurants, the NPD Group recently conducted a study examining the relationship between a customer’s level of satisfaction and the amount of money they spent on their check. The measures of satisfaction were affordability, good value for the money, and intent to return to the establishment again. The results of the study were revealing, showing that there are, in fact, some ‘sweet spots’ in the price points where customers feel the most satisfied.

For the fast casual dining sector, this sweet spot sits at about $9-11 for a dinner time meal. Surprisingly, the results for regular casual dining establishments were more mixed. The study showed that while over 35% of consumers were paying more than $17 per dinner, their results showed that they would be more ‘satisfied’ with the value of the meal if it were between $10-13.

This difference between where a customer would feel satisfied with the value of their meal versus what they are actually paying may be one of the factors contributing to the struggle for some restaurants in the casual dining sector to stay afloat.

Rising Costs and a Recession have Created a Different Type of Consumer

During the course of 2011, the national inflation rate was 3.2%, bringing costs up for everyone. Consumers were hit even harder by inflation of the cost of groceries which rose by 4.8% during that same period.  Ironically, the gap between the amount of inflation in menu prices versus that of groceries actually works somewhat in the favor of the restaurant industry.  After seeing the price of things in the grocery stores, customers aren’t quite as surprised or turned off by seeing an increase in menu prices.

What’s more, people remain willing to pay for the increased value of the restaurant experience over that of a grocery store; they’re just far more sensitive to the perceived value of the service they’re getting.

One-Size-Fits All Pricing Is No Longer Viable

The take-home point here is the importance of understanding where your consumers’ mindsets lie in regards to price vs. value and to provide opportunities for your customers to hit their pricing sweet spots.  Customers are still willing to pay more for a restaurant experience, but it is now more critical than ever that they feel that they have gotten a good value for their money.

The challenge is understanding which price points resonate with your consumer base and then featuring promotions and options within that range. Work over your menu list, discount items whose price may not have increased much, and provide options such as portion sizes to help your customers manage their checks.

Focusing on finding your customer’s ‘sweet spots’ makes them feel like they are receiving a valuable service for their money and goes a long way toward ensuring their loyalty toward your establishment.

Creative Strategies to Entice Diners and Build Loyalty during a Recession

December 14, 2012

The recession has changed the face of the restaurant industry, and those in the business are now looking for ways to retain and build their consumer base. Consumers are still eating out, but their needs and values have changed and it’s important as a restaurant owner to recognize that shift and adapt accordingly.

What’s important now is to provide a unique and exceptional service that customers value and to focus on strategies that build their loyalty toward your business.

Gimmicks to Bring People in and Give them a Rewarding Experience

As you know, customers love to feel that they are receiving great value by patronizing your business and there are several promotional gimmicks you can use to bring them in. One way to do this is to run differing discount promotions regularly throughout the week so that people have a reason to put you on their calendar.

For example, you might offer a “buy one-get one” deal on Wednesdays, a free scoop of ice cream to kids who come in with their families during lunch hour on Sundays, or perhaps a “date night” special on Friday’s where couples get half off a nice bottle of wine when they buy a meal.

Other promotional gimmicks that work well include loyalty reward programs, small contests that people can play while they eat, and a free dinner roll or chips to start the meal, to name a few. Your success with these types of promotions is limited only by your creativity and they can be a fun and rewarding tool to create a strong customer case.

Atmosphere and Experience is Everything

When people dine out, they’re doing so because they are seeking an experience. Creating an enticing atmosphere in an establishment entails more than simply having a little mood lighting, though, of course, that helps too.

It also includes factors such as the hospitality and warmth of your staff, the quality of your food, the timeliness with which it was delivered, how the layout of your establishment facilitates or discourages privacy and conversation, as well as whether or not you offer entertainment.

Fortunately, all of those points are easy to accommodate with relatively little cost. Investment in training and retaining quality staff and adapting your business to facilitate a pleasing dining experience goes a long way toward creating and retaining loyal customers.

Target Social Trends and Appeal to Customer’s Sense of Well-Being

One of the smartest ways to set your restaurant above the crowd is to demonstrate its commitment to the health and well-being of the community it serves. This can be done by offering health conscious or organic menu items, buying produce that is sustainably or locally produced, or even by giving a small percentage of a customer’s bill to a charitable cause.

Because today’s consumers dine out with more discrimination, appealing to their sense of health and well-being is a powerful way to reach out and claim their attention. Everyone loves to feel like they are supporting a good cause, and businesses that build their reputation around these types of ethical cornerstones stand out and make people take notice while creating a fiercely loyal customer base.

With the costs of operation rising and customer’s budgets tightening, survival of your restaurant depends on your ability to creatively adapt and respond to today’s situation. Focus on innovative ways to build customer loyalty by offering a valuable service experience is the key.

Healthcare Reforms are Coming – Here are the Action Steps Employers need to Take Now

December 10, 2012

The Patient Protection and Affordable Care Act (PPACA) stands to reform America’s healthcare system significantly, and business owners across the board are struggling to understand what the changes will mean for them. Some feel that the PPACA impacts the restaurant industry more than most due to high numbers of part-time and low-wage employees in the sector.

Although the PPACA does not fully take effect until 2014, reporting requirements begin coming in to play at the end of 2012. As an employer, it’s important that you take action now to ensure conformation to those requirements as well as to clearly understand how the PPACA will affect your business.

Required Healthcare Reporting for the 2012 Tax Season

The main thrust of the healthcare act is that employers with more than 50 full time employees will be required to offer them affordable health care insurance or pay a per employee penalty for avoidance. This insurance must also meet a ‘minimum value standard.’ How that minimum standard is determined and whether or not your business’ health care plan meets that standard is still in deliberation by the administration.

Starting at the time of filing for the 2012 tax year, employers who file more than 250 W-2 forms each year, and currently offer health care plans, must report the value of their employees’ health care benefits on their W-2 forms. Health care benefit reporting on W-2 forms is optional for smaller businesses until the 2013 tax year. The data gathered is for informational purposes only – employees will not be taxed on the value.

All Employers must Inform Employees of Their Exchange Options by March, 2013

The law mandates that all states open insurance exchanges wherein individuals and small groups can purchase ‘essential health benefits’ by 2014. The idea is to create a competitive marketplace where a variety of plans are offered by a variety of private insurance companies, allowing an individual to select the plan which suits them best.

As of March 1st , 2013, all employers are going to be required to inform their employees and new hires about the insurance exchange in their state, as well as provide them with the information they need to access it. The current proposal is that this notification would have to include information such as the employer identification number and the calculated employee contribution for the lowest-cost plan available. The government is ironing out the last details of this requirement and guidance will be issued to employers about how to conform.

Understand how the Healthcare Act will Affect Your Business Now and Save Headaches Later

The healthcare law has different impacts and requirements for different classes of business and it’s important to understand how your business is going to be affected so that you can prepare properly. The documents are complicated and there are going to be additional costs that will need to be managed. You need good legal advice, savvy insurance consultants, and long discussions with your tax adviser to help you navigate these new requirements most successfully.

Many restaurant companies are still unclear exactly how this health care law may impact them so getting this early analysis can be critical. Doing so not only ensures that you navigate the new requirements successfully, but also that you do right by your employees while still making sound business decisions.

Understanding the Details of How the Healthcare Act Is Going to Affect Your Business

December 3, 2012

While the Patient Protection and Affordable Care Act stands to vastly improve America’s healthcare system, it does have substantial impacts for employers. In a nutshell, it’s going to require anyone who employs more than 50 people full time to offer those employees health care insurance that meets a minimum standard of value.  How much these new requirements are going to cost will vary depending on your operation and how the regulatory process ends up defining ‘affordable minimum value’ – a discussion which is still in deliberation.

Some experts feel that serviced-based industries such as restaurants may feel the impacts of these new regulations more acutely than non-service sectors, and as such, it’s important to understand the details of the coming reforms.

How to Determine if Your Business Will be Subject to the Employer Mandate

If your business employs more than 50 people full time, in this instance defined as those who average at least 30 hours a week per month, you will be subject to the healthcare mandate. You will not be required to offer health care benefits to part-time employees; however, the number of part-time employees that you have does factor into the determination of whether or not you meet the 50 full-time employee threshold. The following formula determines whether or not you meet that threshold, and will be calculated on a monthly basis:

The number of full time employees you have + the total number of hours worked by part-time employees for that month, divided by 120 hours = the number of full time equivalents.

What if I Own More than one Restaurant Company? Are They Considered Separately?

If you own more than one restaurant, you need to get together with your tax advisor to determine whether or not you are considered a single employer as defined by the ‘common control’ clause in the tax code. If you are considered a single employer, all of your full time employees in all of your restaurants will be combined together to calculate whether or not you meet the 50 full-time equivalent threshold.

Do I Have a Choice in this Matter? How Much am I Going to have to Pay and what kind of Penalties are There?

Employers subject to the employer mandate can choose not to offer coverage to their full-time employees. However, if you go this route and even one of your employees uses a premium tax credit to access coverage on the insurance exchange, you will be subject to paying a penalty of $2000 per full-time employee annually.

You can also be penalized if the insurance plan that your company offers is not considered affordable. If the amount of your employee’s contribution is greater than 9.5 percent of their annual household income and they apply for coverage on the exchange using a premium tax credit, you can be subject to penalization in the amount of $3,000 per full-time employee. The IRS and the exchange for each state will verify the household income of your employee based on their tax filings.

If you do choose to offer health care coverage to your full-time employees, you can expect to provide affordable coverage of minimum value with at least 60 percent actuarial value in order to meet the requirements dictated by the reform. You will have 90 days from the time of hire to offer new full-time employees their health care coverage.

All in all there’s a lot to know about the changes coming, and although the law doesn’t go into effect until 2014, several of the reporting requirements are coming due by the end of 2012 and the beginning of 2013. See the following blog for more information about action steps you need to take now to ready your business for the reforms.