Caution = Successful Restaurants

In the last two months I feel as though I have moved from a gentle jog to a full-on race against time. Proposals are going out right and left. We are finally switching gears from slow to fast, and the problem is that everyone wants a deal. I think we are starting to arrive at the real new economy; one where clients want more, faster, and want to pay less on a longer payment plan. This is the new economy… one that focuses on the bottom line, not just the top line. Our growth business is site evaluations and planning as to how to engineer profits from unprofitable restaurants. The 20% drop in sales last year is being compounded by additional drops in sales this year, and fixed overhead is just that — fixed.

There is a new economy and we all must change gears and understand how we can take advantage of our new environment because if you listen to the pundits at ALIS or any other of the industry meetings, this environment is not going to change for a while. I recently read a clever article by Malcolm Gladwell in the New Yorker regarding entrepreneurs. His message was that at least in the few cases he cites, successful entrepreneurs today are really more cautious than risk takers. There is a lot to be said for timing, but I am not so sure that risk averse is the real core value of an entrepreneur. I think it is a great insight. Seeing what few others see and then having a) the opportunity and b) the courage of their convictions to move ahead with their insight. This brings me to my next point and how being a bit cautious can bring one success in the restaurant industry today.

I have an Italian restaurant in downtown San Francisco, which is a casual Italian restaurant that caters to tourists. Its sales are up 7% so far this year over last year, and the check average is still under US$30 with food and beverage. I see 3-star restaurants in and outside of hotels that are down as much as 40%. Our economy is speaking to us. You don’t have to be an insightful entrepreneur to realize that less expensive, less intimidating restaurants and bars seem to be busier than before and expensive restaurants putting on airs are not.

One thing in this recession that has not changed is that bars are doing well. It is still not a problem to spend US$12 to US$15 on a good glass of wine (provided it is more than a sip). Little luxuries have become more valuable because there are fewer of them. Just like clients — good ones are valuable and need to be cherished, but then I guess that is true of consultants, too.