Restaurants and Franchises

Posted by PITHOCRATES - August 5th, 2013

Economics 101

Changing a Restaurant Name can be Costly and hurt the Marketing of your Brand

What is the number one business most likely to fail?  Restaurants.  About half of all new restaurants fail within the first 5 years.  Why?  Because people who can cook typically open up restaurants.  And that’s all they know.  Cooking.  Sadly, cooking is the smallest part of owning a restaurant.  And it’s these other areas that people who can cook fail miserably.  Because when they open up a restaurant there’s no operating manual that comes with the building they buy or lease that clearly tells them everything they need to know or do.

Chefs in the finest restaurants are masters of their craft.  Because they study how to master the art of cooking.  They didn’t go to business school.  They went to culinary school.  But running a restaurant is more than cooking.  It’s a business.  A business that must produce revenue to cover all of its expenses.  Which is kind of hard to do when you don’t know how to market your restaurant to get people to walk through the doors.  Without which there is no revenue.  Or when you don’t know all of your expenses.  Which starts with the restaurant’s name.

A good name will not guarantee success.  But a bad name can hurt business.  It should not confuse people.  Such as ’57 Chevy, for example.  Which may be your favorite car.  But people will think cars instead of food when they hear it or see it.  And it shouldn’t discourage them from eating there.  Like Average Joe’s, for example.  Because people rarely go out to restaurants that have just received an average review.  So a name is important.  And if you start with a bad one it can be very costly to change.  There’s building signage.  There could be a pylon sign near the road.  Signage inside the restaurant.  Not to mention replacing all of your menus.  These things cost.  And cause confusion with the identity of the restaurant.  Which could hurt the marketing of your brand.

Getting Menu Prices just Right is often the Difference between Success and Bankruptcy

Choosing a good restaurant location is critical, too.  A nice building you may be able to easily afford will do you no good if it isn’t near people.  As people aren’t going to travel great distances to dine at an unknown restaurant.  Which means choosing a good location may require choosing a costly location.  The purchase price/lease price may be much higher than anticipated.  Property taxes may be higher.  Both real (the land) and personal (the equipment inside).  And may be a cost item that a person who can cook didn’t even know was required.  Like the additional expenses to get all the permits and licenses to open for business.

Once opened there’s payroll.  Which you have to pay even when you’re not doing much business.  And a sit-down restaurant requires a lot of people.  Kitchen help to cook, clean and prep food.  Someone to bus tables and wash dishes.  A hostess to seat customers.  And cash them out.  A wait staff to wait on customers.  A bartender (if you have a bar).  A restaurant needs a general manager, a front of house manager and a back of house manager.  And an executive chef.  If the owner is the executive chef he or she will have to hire others to manage those other areas.  Have a spouse split all management duties with the executive chef.  Stressing the marriage.  Or risk poor service that will prevent customers from returning.

Then there are the utility expenses.  Electric, gas, water and telephone.  A point-of-sale system to track sales and manage inventory.  Or longer hours to allow manual bookkeeping and inventory control.  Dishes, cutlery, napkins, toilet paper, light bulbs, dish soap, filters, grease disposal, etc.  And a pleasing interior design.  As people want to enjoy a good meal in a pleasant environment.  Things that cost.  And things revenue must pay.  Which brings us to the menu.  The thing that will make or break your restaurant.  If you have a 10-page menu to appeal to as many people as possible you will have too much of your money in your food inventory.  And you’ll end up throwing away a lot of slow moving product.  If it’s not unique enough people will have little reason to come into your restaurant.  As will menu prices that are too high will, too.  But if those prices are too low you won’t have enough money to pay for all of these expenses.  Getting these menu prices just right is often the difference between success and bankruptcy.

Buying a Franchise is like Buying a Restaurant that comes with a Complete and Detailed Operating Manual

A big reason why restaurants fail is because owners don’t understand their costs.  And because they don’t understand their costs they don’t know how to size their food portions.  Or how to price their menu items.  Portion sizes that are too large require a bigger inventory.  Which costs more.  Leads to more waste.  And that waste leads to more costs.  While prices too low won’t generate enough revenue to cover those portion sizes.  As well as labor and overhead costs.

In a restaurant the menu is everything.  A person highly skilled in cooking can populate a menu with some delicious dishes.  But a menu too large can confuse customers who don’t want to read a book before ordering.  It could expand the inventory to include a lot of frozen and canned items because they will last longer.  But are more costly than buying fresh.  Whereas a large inventory of fresh items will not last as long.  Leading to a lot of waste.  So a shorter menu allows a smaller inventory of fresh product.  Which increases the quality of the food served.  And keeps costs down.

The restaurant owner can get all of this right but if they can’t get people to walk through that door it’s all for naught.  And getting people to walk through your door can be the hardest part.  There are many options but they all require more time and more money.  And these are things a restaurant owner has little left to spare.  Which is why so few restaurants succeed.  But there is another way to own a restaurant.  One that has a much better chance of succeeding.  And you don’t even need culinary training to succeed.  You can do this by buying a restaurant franchise.

Buying a franchise is like buying a restaurant that comes with a complete and detailed operating manual.  That tells you everything you need to know and do.  It gives you your menu.  Your portion sizes.  Your menu pricing (or at least a starting point that can be adjusted for your geographic location).  And something even more valuable.  A built-in, extensive marketing program.  So that you can have a flow of people coming through your door the day you open for business.  Because people already know everything about your restaurant because it’s part of a great national (or international) chain.  And they may have just been waiting for one to open near them.  Something a chef opening his or own restaurant can only dream about.  But that franchisee can’t have the satisfaction of bringing their dream to life like that chef can.  As long as he or she is not in that half that fails in the first 5 years.

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Study shows that Women are Getting Fat because they’re Slacking Off on the Housework

Posted by PITHOCRATES - March 2nd, 2013

Week in Review

Talk about your war on women.  Here’s a salvo from the New York Times.  That reported on a study that said today’s women are fat because they don’t spend enough time cleaning, cooking, and doing laundry (see Does Less Housework Really Equal a Larger Waistline? by Lylah M. Alphonse posted 2/28/2013 on Yahoo! Shine).

A New York Times article about a study that links U.S. women’s expanding waistlines to the fact that they do less housework has sparked a wave of outrage online, where readers decried the piece for being sexist.

“Attn ladies, maybe if you put a little more time into housework you wouldn’t be so fat,” tweeted Taylor Lorenz as she shared the article, entitled “What Housework Has to Do With Waistlines.”

“Are you kidding? You just completely discredited yourselves as a newspaper,” commented Agnes Shugardt on the New York Times Facebook page. (Danielle Rhoads-Ha, director of communications for the New York Times, told Yahoo! Shine that since the outcry is over the study, and not the way the article was written or reported, the newspaper had no comment on it.)

It’s tempting to use a sexist expression here for comic relief.  But we shan’t.

Once upon a time women were angry that men didn’t appreciate how hard housework is.  Which it is.  And probably was the reason why women outlived men for so many years.  For as men got softer working office jobs women continued to work hard.  And remained strong.  So women were justifiably angry when men dismissed housework as simply resting on the couch eating bonbons while watching daytime television.  With a little dusting thrown in.  Now women are mad because their careers are not perceived as physically demanding as doing fulltime housework.  Which they aren’t.  For anyone given the choice would opt to work in the office during the day instead of doing housework.  For housework is backbreaking thankless work.  Few appreciate a clean toilet enough to keep it clean.  Unless you’re the one that cleans it.  But one thing certain about housework is that it burns the calories.  Better than any gym membership can.

Women, even ones who manage their homes instead of big businesses, are also less physically active now than they used to be. In 1965, women spent an average of 25.7 hours each week cleaning, cooking, and doing laundry. By 2010, women were spending an average of 13.3 hours each week on housework. Like their male counterparts, women who worked outside of the home are spending far more time sitting down in front a screen at the office these days, but Archer and his team were surprised to find that even women who stayed home were spending more time watching TV—16.5 hours per week in 2010, up from about eight hours a week in 1965…

Given the way technology has changed housework, it’s unlikely that more housework would make much a difference for either gender, though. Old-fashioned vacuum cleaners were clunky and hard to push, requiring a lot more physical energy to use than today’s lightweight models, and bending and stretching to hang laundry on a line in the 1960s burned more calories than transferring a load from the washer to the dryer.

Both men and women are getting softer these days.  Thanks to a higher standard of living.  And quality appliances at affordable prices.  Pity there’s a downside to all this convenience.  It’s putting us in an early grave.

Yes, women were healthier before they left the house to pursue a career.  And slimmer.  As were men.  If you want to see just how skinny we were watch an old movie.  Where all the leading men were skinny.  And borderline malnourished.  Or sit in an old theater.  The seating is pretty tight these days.  For we were a lot skinnier in the old days.  Not only gut-wise.  But shoulder-wise, too.  For if you sit in a theater that was built close to a hundred years ago you’ll be sitting with your shoulders pressing into the shoulders on either side of you.

We’re eating more and exercising less.  This is why our waistlines are expanding.  Especially for women.  For stay-at-home moms run a never ending marathon.  When they give that up to pursue a career they have to join a health club to make up for the exercise they once got for free.  Which they will eventually quit.  As most people do.  Because after a hard day at the office the last thing anyone wants to do is exercise.  They just want to go home and plop down in front of the television.  With a relaxing adult beverage.  Also not good for the waistline.

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