Ira Spilky & Associates

Success Ingredients of a Recession Proof Restaurant Concept

VOLUME 1 – ISSUE #2

 

by Ira Spilky
Published in On Premise West, Dec/Jan 2002

We have all seen a variety of restaurant concepts in all categories and segments of the industry come and go over the years. They have begun with hopes and dreams and a business plan in hand to meet the expectations of their investors/stockholders and more importantly to satisfy the ever-changing demographics, pocketbooks and tastes of their valued guests.

 

In light of this on-going foodservice and hospitality dynamic, both start up and multi-unit restaurateurs are eventually confronted with the reality of the marketplace, the competition, the economy, the political bureaucracy, the labor force, and the ever changing demands of the customer in meeting their “out of the home” foodservice appetite.

 

Since my establishing UCLA’s restaurant management extension school program in 1980, Having over 1400 students take my courses, incorporating Executive (CEO) roundtable sessions as part of my curriculum with a classic Carl Archer presentation in his “Back to Basics” approach to restaurant management, and finally, experiencing the success’s and mistakes of my multi-unit chain clients over the last 14 years, I have concluded, as my causal dining “recession proof clients” BJ’s Restaurant & Brewery/Brewhouse, Mel’s Drive-In, City Wok, and California Chicken Café have, that the following are the prime ingredients for sustained growth and prosperity in this dynamic guest driven industry:

 

OWNERSHIP’S PERSONAL PASSION FOR THE BUSINESS

This from within absolute has radiated time and time again. It is a must for the founders, principals and upper management to have and retain this from the get go and hand it down throughout their organizations. It is the driving force, the glue, and sometimes the band aide that holds everything together in both good times and difficult. I assure you it can be seen, felt and heard in every successful independent and chain organization – just get in touch with it and you will notice the difference that sets them apart from the rest of the pack!

 

STICK TO THE KNITTING

Staying on course to your Business and marketing plan is vital to the early stages of development combined with being flexible and adapting to the changing marketplace. It is important to listen to the needs and pulse of your customer, keep track of shifts in demographic trends and your competition’s performance. When operators go off course in any aspect of their planned development, it can bring down the entire organization and throw other units in economic jeopardy. On the other hand, revisions to a business plan that are well thought out, researched, and tested can prove to be a boom in all kinds of economic climates.

 

 

CONCEPT AND MENU DEVELOPMENT

The far majority of successful recession proof restaurant concepts have created and implemented concepts that focus and cater to the mainstream of America, are family oriented, are both day and night part profit oriented, have a multiple stream of profit centers, and fall into the casual dining niche. As to their menus, first and foremost, concepts are aligned with the menu – they match, fall into place, and balance one another out. There are built in quality control checks insuring the highest quality product is served and extremely important are check averages that are inviting whether it is business luncheon, a celebration, an evening out, or a weekend/night family event.

 

LOCATION LOCATION LOCATION

Restaurant concepts that can survive all types of economic fluctuations can control their FIXED COSTS i.e.: OVERHEAD. They have negotiated leases that are win-win for both landlord and tenant, have made absolutely sure their rent and other lease pass thru’s meet their five year pro-forma schedules, and of utmost importance their site selection criteria does not compromise with their location decisions. The reality of this is that there have been far too many bankruptcies filed over the last decade with leases that were far too rich in nature. Bottom line, you must treat every location decision as if it was your very first.

 

BRAND DEVELOPMENT

Sustained success poised for growth, expansion and prosperity as well as a downturn means projecting a statement, a signature, and a Brand that sets you are APART from your competition. This can only be achieved when the entire organization is on the same page, They market themselves from within and not just using outside sources such as advertising, media display, and public relations companies. Finally, ownership is open to re-inventing themselves and adapting to change with sacrificing the core meaning of the Brand.

 

CAPITALIZATION

Recession proof companies never establish themselves in a stressful pressurized UNDER-capitalized manner. They grow at the pace and level of comfort based upon either their internal cash flow or lines of financial resources from private investors or committed banking institutions. They also have a sizeable vested interest in their business and possibly have different incentive/bonus programs for their front line unit management. Finally, they project a healthy and vibrant image to the entire investment/banking community and are able to prove it!

 

In summary, in order to validate all of the above and perform a reality check on your own restaurant business, just take a look around you, read the trades and the media, are honest with yourself and see “WHAT CREAM HAS RISEN TO THE TOP & STAYED THERE!

 

 

Ira Spilky can be reached at 310-558-3241. Email address spilky@mindspring.com.

Ira Spilky & Associates   tel: 310-558-3241   fax: 888-588-5933
16130 Ventura Blvd. Suite 512, Los Angeles, CA 91436