ELECTRONIC HOUSE CALL - November 30, 2001

I'm back at home after a short trip to Baltimore to introduce my staff selection system to the GM's of a 6-unit local chain. They want to take advantage of the current labor market to improve the quality of their new hires.

GOOD NEWS, BAD NEWS
Yesterday I had lunch with HR guru Tom Griffith. (This is good news, but not the good news referenced in the headline.) As usual, our conversation covered a wide range of issues in the industry. Out of all this came some insight that I want to share with you.

The good news is that we expect December to be a terrific month for restaurants and the retail sector. People are likely to immerse themselves in the familiar rituals of the holiday season as a way to forget the traumas of terrorism and recession. They will spend money more freely than they have in the past few months and you should see a surge in your sales volume, at least through the end of the month.

The bad news is that, once the flush of the holidays passes, people will again be reminded that unemployment is up, the world is still not safe and the economy is in the toilet. We expect them to retreat into their caves to ride it out, perhaps for several months. This is likely to mean that January and February, traditionally down months for most restaurateurs, will be even slower than usual, perhaps severely so.

So what to do? I have several suggestions

- Do everything you can to maximize your sales in December - you will need the money later. Look for revenue centers in addition to the traditional catering and gift certificates. Consider adding a mini gift shop for impulse purchases. You might want to modify your December menu slightly by adding some holiday specials to give people the option of spending up if they feel so inclined. (Mark them as such so folks will not think you too high-priced.) Avoid wholesale price increases that might scare guests off for future visits.

- While you have the traffic in December, be underway with marketing programs to lure guests back in January and February, perhaps with discounts, promotions, festivals or other special offers. You will have more people coming through the door -- consciously work to make them guests for life, because you are going to need them. Marketing January and February while you have the prospects sitting in your restaurant will be significantly cheaper than trying to reach them when they are holed up after the new year.

- Develop a contingency plan for reducing your expenses and covering your fixed costs after the first of the year in case my fears come to pass. If you haven't done it already, talk with your banker and put a Line of Credit in place to give you access to working capital if you need it. You want to be dealing with this when you still have cash flow. Don't wait until you are squeezed or you will be in a world of hurt.

- If your sales tank, you will need to control payroll carefully. Before you are faced with depressed sales, develop a plan for protecting your key staff while reducing labor hours. Will you lay off workers? Will you reduce hours across the board? Now is the time to start thinking about it because 1) you will have to deal with it and 2) you will need these folks when business improves, as it surely will.

- Re-visit the ideas we discussed in the "How to Prosper in Tough Times" tele-seminar. In case you missed it, info on how to get the tape is on the website.

AS A FINAL NOTE . . .
I suppose that issue #200 of the Electronic House Call has some degree of significance. I started EHC on July 31, 1997 as a way to share information and ideas with subscribers to my Home Remedies newsletter who had e-mail addresses. They amounted to only about 10% of the subscriber base back then and it didn't make sense to take up space in my regular newsletter with online-type information when there were so few to whom it might apply.

Now EHC goes to over 2100 people all over the world every week, by far my largest channel of communication and it is the Home Remedies newsletter that has taken a different direction as part of my new Coaching Program. EHC is still is a labor of love and a reflection on where my thinking happens to be on any given Thursday evening. In case you have trouble sleeping some night, every past issue of EHC is archived on the website.

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