In our interview with Brandon we get some expert insights on how to run a successful Restaurant. We cover everything from cost control to marketing and Gordon Ramsay’s Kitchen Nightmares.

Brandon O’Dell is a restaurant consultant based in Kansas City, Kansas.

He’s the guy restaurant operators call in when things aren’t running smoothly, profits
aren’t what they should be and the business future isn’t looking bright.

Brandon uses his years of experience in the restaurant/catering business and
no nonsense direct approach to help put struggling operators back on the right track.

Brandon can be contacted via email or telephone: 888-571-9068. His Blog is
blog.bodellconsulting.com and website
www.bodellconsulting.com.

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Thanks for being on TWISB. Was my introduction accurate and did I leave out any
important parts of what you do ?

Thank you for the opportunity, and thank you for the generous introduction.

If I had to add anything, it would be to let your readers know what I specialize in. O’Dell Restaurant Consulting offers operational, marketing and strategic consulting for restaurants, but there are two main things I am known for specifically.

The first is espousing and teaching the virtues of pricing menus by gross profit as opposed to pricing by budgeted cost percentages. Pricing by gross profit, paired with analyzing price points for the market, is the only method I know of that considers EVERY cost of doing business when calculating prices.

The second service I am known for is teaching owners how to use emotion-based marketing to brand their restaurant and build strong relationships that last with customers through an emotional connection.

Obviously running a restaurant involves managing in many different areas. Staff,
finances, food quality, maintenance, to just name a few. How do you classify the
different aspects of a restaurant business ?

I see a restaurant as a collection of several different types of business.

One reason many restaurants aren’t successful is that often times owners underestimate the complexity of running a restaurant. To run a successful restaurant, an owner must be skilled in many different industries.

A restaurant isn’t just about cooking and serving food.

A restaurant is a storage facility where the items being stored are perishable. It’s a manufacturer, whose product life is measured in minutes, not years. It is a logistics company that has to coordinate the delivery of a perishable product in a small time window, without mistake.

A restaurant owner is also managing maintenance, must be a master of marketing, and also motivate and supervise a sales force of servers and bartenders. Restaurants are really all these different industries rolled into one.

I don’t know any other type of business that demands all these different proficiencies to be successful. When I’m looking at ways to improve operations within a restaurant, I have to view it as many other businesses that may have to be evaluated separately.

It’s been said that under capitalization, not having enough money to establish a restaurant properly, is one of the most common causes of business failure. Do you agree ? What are the most common causes of restaurant failure in your experience ?

I think blaming “under capitalization” as a primary cause of failure is a cop out.

Technically speaking, every business that runs out of money to operate is under-capitalized. If they had enough money to pay the bills, they wouldn’t be closing.

To me, blaming under capitalization for a restaurant failing is crediting a symptom as a cause of death. It’s like saying a cancer patient died because they ran out of oxygen.

In my experience, the greatest cause of restaurant failure is the underestimating of the importance of marketing on the part of an owner or owners.

Too many people open up restaurants with the belief that their incredible food is the ticket to success. I try hard to impress on people that no matter how great your food or service is, people won’t walk through your door if they don’t know who you are.

You can’t market a startup through “word of mouth” because people have to know about you before they can tell other people. While word of mouth marketing is the best type of marketing you can get, trying to use word of mouth marketing for a startup or an existing restaurant that isn’t yet busy, is putting the cart before the horse. Let’s make sure people know about you before you expect them to recommend you.

Can you tell us a little about gross profit pricing and emotion marketing ?

Gross profit pricing is the act of combining all your costs of doing business for a particular period, adding how much profit you need to make in that given period, then dividing that number by the amount of people you can get to walk through your door during that period.

You then calculate an average gross profit over product cost you need to collect from every one of those customers to pay the costs you assumed and earn the profit you assumed.

Basing your prices on this principle is the only way I know of to guarantee that you collect every dollar you need to earn the profit you priced into your menu. The three considerations a restaurant needs to make to price by gross profit includes their;

1) Market price point – or what your market is willing to pay for the products you sell with the atmosphere and service you offer;

2) Accurate and up-to-date recipe costs for everything that you sell; and

3) The amount of gross profit you need to collect from every person who comes through your door to earn the profit you need.

These three considerations help you create prices that both appeal to your customers and offer them a good value, and guarantee that you will turn a profit IF you manage your expenses at least as well as you assumed, and you bring in at least as many customers as you assumed.

Emotion based marketing revolves around creating a unique selling point for a restaurant that is based on an emotion that you offer your customers as your primary product, more important than your food and more important than your service.

Long after customers forget who served them at a particular restaurant, or what they ate, they will remember how dining in that restaurant made them feel.

It is possible for restaurants to create a concept, menu, service and atmosphere that deliver a particular feeling to their customers which will stay with them long after they forget the rest, and help bring them back to the restaurant the next time they want to feel the way the restaurant made them feel.

Cultivating that feeling in your customers can build an emotional connection between your restaurant and your customer that puts you well ahead of your competition. Naturally, having food and service that meet or exceed the expectations of your customers is necessary, but it is only a starting point.

What are some of the big mistakes you see people making when they are trying to market their restaurant and get more people through the door ?

The biggest mistakes I see restaurant owners make when marketing is incorrectly using coupons and discounting their products to drive traffic.

They see pizza chains and other businesses successfully use coupons to drive traffic, and try to copy their efforts without knowing how to compensate for the discounts so they can still earn a profit.

Chain restaurants, like the major pizza chains, price coupons into their menu. They know the conversion rates on different offers they give, how it will affect their average ticket, and how to adjust their regular menu prices to compensate for the discounts.

Most independent restaurant owners don’t have the benefit of millions of dollars in marketing research and studies of customer psychology to guide them through the proper way to use coupons.

What ends up happening for them is that they discount their products or offer coupons that reduce the perceived value of their food and inadvertently train customers not to eat with them unless they have coupons.

I try to teach owners how to move away from discounting their goods, to offer deals that build their average tickets instead of decreasing them.

Rather than offering 20% off a ticket, and losing 20% of the gross profit from that ticket, I might show an owner how they can collect the full gross profit by offering something free that the customer may not have been likely to buy at all, such as a free appetizer, specialty beverage or dessert.

Rather than losing $5 on a $25 meal, the owner gives away $2 worth of product that has a retail value of $8 to the customer. In the end, the customer perceives a greater value, the owner receives a greater profit and also benefits from the customer being encouraged to add a course of appetizers, specialty beverages or desserts to their dining routine.

Do you have any examples you could give of small but important changes turning a restaurant business around from failure to success ?

One “easy” change I believe can be more impactful than most any other is shrinking the size of a menu.

The menu is part “marketing tool”. When a menu is large, it is harder to use that menu to convey the unique selling point of the restaurant because the message can’t be focused.

That large menu makes it hard for your customers to explain what you offer to their friends. Large menus require more hands and pans in the kitchen, longer prep and cleanup times, increased ticket times, and also take longer for a customer to look through and order from.

I think most owners will agree that 80% or more of their business is done during their peak periods.

The fastest way to add revenue is to increase the amount of people the restaurant can serve during those peak periods. The quickest way to do this is by decreasing the size of bloated menus.

With a smaller menu, your staff can come in later to do less prep, more items on tickets will be similar which means they can be cooked together, which decreases the amount of staff and equipment necessary to service the same amount of orders.

The ticket times are sped up through this increased efficiency which allows the kitchen to produce more food in a shorter period of time. Meanwhile, the customers have less items to consider and they order faster. All this means more business during your peak periods and a very quick increase in revenue.

On your blog you’ve described the process of calculating the ideal cost of food and liquor in order to measure waste and get costs under control. Why is cost control so difficult in the restaurant business ?

There are a lot of costs that have to be controlled in a restaurant.

Managers and owners wear many hats. Chefs may have to not only monitor purchasing, receiving and production of food, but they must also manage paper inventories, chemical inventories, smallwares, equipment and even linen inventories.

That is a lot of buying and managing going on. Without the proper amount of organization, the work necessary to manage all these different expenses can quickly become overwhelming, and once a chef or owner is behind on managing their cost control systems, it is very hard to catch up and they often need help to get caught up.

Using the right systems can have a great impact not only on the money part of cost control, but also the work load. Investing the time to find the right tools and implement them can be rewarded with extra free time in the end.

On a slightly lighter note. What do you think about Gordon Ramsay and his “Kitchen Nightmares” television show ? Is it frustrating for you to see your industry dumbed down or do you appreciate some of the difficulties of running a restaurant being highlighted ?

I love Kitchen Nightmares. While I know Gordon Ramsey has to edit his shows to create added drama, and probably exaggerates some of the issues within a particular business, he is always right on when it comes to solutions.

In any given situation, there are normally several of a set number of problems that can be identified in nearly all businesses. Many, many owners are all making the same mistakes. While some have certain skills that others don’t, you can bet that what IS going wrong is something Gordon and most owners in the restaurant business have already seen before somewhere else.

It just takes a fresh set of eyes to get in there and identify it. Just as in our personal lives, it’s easy for a business owner to be so close to their own problem that they can’t see it, even if it is a simple one.

If a struggling operator was to contact you for advice what information would
you need to know about their restaurant in order to understand what was going wrong ?

The first thing I do with any operator is to get to know them and let them get to know me so each of us can see if our teaming up can benefit the restaurant owner.

I like to know from owners what their vision for their business is at present, what problems they have already identified, what competitors they have, how many employees they have and what their “mood” is, what partnership situation they are in if any, how dire their current financial situation is, and most importantly what their professional background is and what skills they already have.

It’s also important to see the menu and to get a “sketch” or pictures of the layout of the restaurant.

What I am trying to do when talking to a restaurant is to identify their situation and compare it to one that I have already seen resolved or have resolved myself. When I can describe to an owner how someone else who was in their same situation dealt with it and came out of it, it builds a lot of confidence in the relationship.

Do you have any final thoughts for those about to jump into the restaurant business
or those struggling to make their restaurant work ?

I have a couple rules I live by when I am creating concepts or advising on existing ones that I believe would be helpful to would-be owners.

1. Keep it simple. We’ve all heard this before, but it is especially important in a business as complicated as a restaurant. Start small and simple, then build after you’ve mastered it. Better yet, don’t complicate things by trying to do more in one spot, keep it simple and duplicate to grow.

2. Be a student of marketing. Nothing you do in your business is more important than marketing. Without a steady stream of customers, any business will die. Remember, you must create your own word of mouth.

3. Do the basics well. Hot food should be hot. Cold beer should be cold.

4. Don’t underestimate the value of speedy service. Our lives get more complicated every day. We don’t have the leisure time for long meals that we used to. Recognize this is where the market is going and build your business to accommodate that market.

5. You don’t have to be the best to be successful. You do have to be better than you promised though.

6. Offer your customers what they want, not what you want to give them.

7. It’s more important for your concept to be understood than it is to be trendy or chic. If people can’t understand the message you are trying to convey, they won’t be able to communicate your message to their friends. If you can’t describe your restaurant in one short sentence, neither can your customers.

8. Clean and stock your bathrooms regularly.

Thanks for your time Brandon, I know our readers will find this interview useful.