ELECTRONIC HOUSE CALL - June 18, 2004

Last week I shared a report that suggested that diners would be willing to eat at off-peak times in exchange for discount incentives. I thought that a value-added offer was preferable to discounting because it maintained the integrity of your menu prices. In either case, moving prime time business to off-peak times is a great way to increase your occupancy.

Hotels know their occupancy every day, but it is not a number that many restaurants track. That being the case, let me introduce the concept and see if it turns on any lights for you. At the least, make the calculation at least once, if only out of curiosity. You may be shocked!

What's Your Occupancy?
That may be a strange question ... but it is an interesting way to think about your business potential. To illustrate, consider a 120-seat restaurant serving lunch and dinner from 11:00am until 10:00pm. On an average day, they do 200 lunches and 200 dinners. That sounds pretty good -- and it is certainly respectable -- but let's look at it again from the aspect of occupancy. What percentage of time is there a guest actually sitting in each chair in the dining room?

If the average lunch patron takes 45 minutes to eat, those 200 lunches represent 150 seat-hours (200 meals at ¾ hour each) ... and if the typical evening meal lasts 90 minutes, the 200 dinners equate to 300 seat-hours (200 meals at 1½ hours each) ... so the restaurant has a total of 500 seat-hours of demand.

The maximum available occupancy is 1320 seat-hours (120 seats x 11 hours a day of operation), so their occupancy is just under 38%. The restaurant, although comfortably busy, is only using a little better than a third of its possible capacity.

I do not mean to suggest that 400 meals a day is some sort of failure in a 120-seat restaurant, but I think many operators would look at that pace of lunch and dinner business and feel they are doing about as good as they can. I mean, nearly two turns at lunch is really quite decent! But by tracking occupancy, you will discover how much room there is for improvement ... and that knowledge should start your marketing wheels turning to find a way to fill those empty seats. In the weeks ahead, I will explore some different ideas on what you can do to increase your occupancy.

Reducing Overtime
Many operators unwittingly create overtime for themselves just by the way they structure their work weeks. In most restaurants, the pay week runs from Monday to Sunday. Friday and Saturday are the busiest nights.

If you are heavy on hours by the time you get to Friday you are dead. You cannot reduce labor on the weekend because you need everybody you can find to handle the crowd, so you are forced into scheduling overtime.

The solution is to change your pay week. If your pay week started on Thursday or Friday, you would get your busiest period out of the way in the early part of the week when you have plenty of slack on hours. If you were over on labor after the weekend, you could more easily trim hours on the slower midweek days without as much risk of reducing the level of service to the guests.

The Perpetual Question
What did you learn from your staff today?

[ Home ] [ Top ] [ Email Restaurant Doctor ]

© 2004 Restaurant Doctor