The Restaurant Doctor - Electronic House Call

ELECTRONIC HOUSE CALL - October 1, 1999

MAXIMIZING PROFITABILITY
How do you maximize profitability? Stay in business a long, long time!

Planet Hollywood made some serious money for awhile, but now they are in bankruptcy and the concept is in shambles. Did they maximize profitability? What if they had been willing to move a little slower, think things out a little more and settle for a slightly lower percentage on the bottom line? Do you think they might have had several more years of successful operation to put dollars in the bank?

Profitability is an all-the-time thing, not just a monthly or yearly goal. It is when you take the long view that you truly maximize profitability.

Along this line, let me re-visit an editorial from my Home Remedies newsletter. This is one of the pieces included in the book, "Home Remedies: A House Call from The Restaurant Doctor™ (which will ship from the printer today!)

GREED
In the movie "Wall Street," Michael Douglas (as the character Gordon Gecko) rhapsodizes that "greed is good." His logic may have fit the film, but it's dangerous in our business. So what do I mean by greed?

Greed is a concerted effort to maximize revenue by trying to pry the most money you can from each guest that comes in. Greed is a one-way flow of cash -- to you -- with hardly a passing thought of sharing the wealth. Greed is all about what's in it for you. Greed comes from insecurity -- a belief that there is not enough to go around. It is interesting that what you obsess about often comes to pass.

When you are running scared, it reflects in the way you run your restaurant which impacts how your guests are treated which, in turn, determines whether they come back or not. Greed will kill your spirit and ultimately it will kill your business. To maximize income, relax, do a better job than you have to do and trust that if you consistently delight your guests, earn their trust and always work in their best interests, they will support you over competitors who are only out for themselves.

In short, leave some money on the table. Don't try to get every dollar you can tonight. Rather, show guests a great time at a fair price and leave them a little spare change to visit you again.

THE OTHER SIDE OF TIP POOLING
Wow, did I get an earful after my comments last week on tip pooling! (www.restaurantdoctor.com/ehc/ehc86.html). There were a lot of you who feel strongly that tip pooling is the way to go -- so many, in fact, that I had to put them all on a separate page to keep the size of this issue manageable. You can see what others had to say at www.restaurantdoctor.com/ehc/tippool.html . My thanks to everyone who took the time to share their ideas.

A note from the Doc:
I think the situation that the server in question found herself in illustrates once again that it is not what you do but how you do it. It appears that the owner made the decision to go to tip pooling without consulting the staff or discussing with them how the change would benefit them and the restaurant. Why do we continue to believe that we can make decisions that affect the lives of others without involving them in the discussion?

[ Home ] [ Top ] [ Email Restaurant Doctor ]