Laura AikenFeatures Business and Operations Finance
Things to consider if you’re thinking about expanding your operation to include sit-down service
When it comes to expanding your pizzeria, doing more can turn into making less.
When it comes to expanding your pizzeria, doing more can turn into making less. The trick is getting on the flip side of that equation. If you’re considering taking your operation from a take-out/delivery shop to a dine-in experience, read on for the road mapto success.
|What do you need to add to your menu to deliver dine-in?
Cory Medd is a two-time Canadian Pizza magazine Chef of the Year and owner of Two Guys and a Pizza Place in Lethbridge, Alta. He was doing a swinging take-out/delivery business when he decided to make the leap from renting to owning a building. The new digs were much larger than the restaurant’s former home, and in need of a renovation to carry out Medd’s vision. First, he crunched some cash flow statements to ensure the business could handle the move. In an e-mail to Canadian Pizza magazine, he shared that his forecasting came down to contemplating the pessimistic future (one of no increase in sales), the realistic picture (an estimate of how much business the dining room would do), and the optimistic view (a massive increase in business). Then, it was time to bring the new location to life.
“When I started designing the place, I started with the kitchen, knowing that 75 per cent of my business will be delivery and take-out, and I wanted to make sure we continue to push that part of our business. With deliveries, you throw it in a box, give it to a driver, and gone. No dishes, no server, no cups, no mess. The customer even pays the delivery fee. It’s beautiful! So, I was completely fine with a smaller dining room.”
In the end, Medd decided on 12 tables to seat 45 people and a bar area to seat 16. Most importantly, he said, the delivery and take-out sales haven’t decreased. Rather than convert the business, the dining room has added to it.
“With the smaller dining room, I believe it develops a bit of a demand. Even on a slow Monday with seven tables, it looks busy, and people are have a good time.”
Medd had more in his favour than just an existing popular brand. He says he was the first to introduce craft beer to the Lethbridge market and knew that would be a hook that worked. The beer has become very popular. The markup on beer and wine has also been good for his Cost of Goods Sold (COGS).
Unavoidably, labour costs do go up in a bigger building with expanded service and menu. One thing Medd has done to manage labour expenses is cross-train his servers to also answer phones, handle pick-up orders, fold boxes, etc. For Medd, the expansion has proven to be an exciting and profitable journey. His hunch about his market was right.
The many factors
If you’ve got the good gut instinct, then you’re ready for the myriad of new considerations that come with creating a great dining experience for your guests. To gather some more advice, Canadian Pizza magazine interviewed Bob Butterill, owner of Sage Advice restaurant consulting and an instructor at George Brown College’s Chef School in Toronto. Butterill spent 25 years in banking and commercial real estate before switching gears and heading enrolling at Niagara Culinary Institute. He has been with the George Brown culinary faculty for five years, sharing his wisdom in their business management courses.
One of the major costs, as Medd discovered, is your increase in labour. The number of servers you employ will depend on the standard of service you want to have, says Butterill. If you have a simple menu, one server may be able to take care of eight to 10 tables. However, author Lora Arduser writes in a Food Service Professional Guide series called Waiter & Waitress Training, that four or five tables is the maximum per server to provide excellent service. The number really comes down to your particular menu and circumstances. One way to figure out what’s right for you is to consider how many trips your server will likely make to the table depending on how complicated your menu is, says Butterill. Server experience also makes a difference. In addition, you will also need to decide on whether or not you would like a greeter.
If the kitchen is open and staff can see guests coming, then you may choose not to hire someone to do only that. The atmosphere of your operation is another factor: in a casual place you may not want a formal greeter, whereas in a more formal place you may want to have that as part of the experience.
“You need a pretty big restaurant to have somebody doing just that,” says Butterill. “A server can do that and you just need to decide how tables are allocated to servers and their sections.”
Fine details such as your billing policy can affect how many staff you need on shift to execute your desired level of service. For example, if you allow big parties to have separate bills, that will take more of your servers’ time, says Butterill. Also, when you have a larger menu you need to plan for more staff in the front and more experience in the back. How you decide to adjust your menu, if at all, will again all depend on your market.
Once you’ve got your menu established, and decided whether or not to offer alcohol (and it seems it is mostly to be expected for any dining experience, while not expected at eat-in places with counter service), you can capitalize on customer face time.
“It’s easier to upsell in person than on the Internet or phone,” says Butterill.
There is, of course, one relentless cost against the upsell opportunities and beverage markups: space. Butterill suggests developing a model for what you think the usage will be, as Medd did, and considering possibilities such as seasonality and what percentage of your customers may convert to dine-in, albeit with higher cheque averages. It’s not an easy task to take a hard look at the math.
“People are afraid to put the numbers down because they are afraid of what it will tell them,” says Butterill. He suggests incorporating the costs of furnishing the space, décor, extra storage space for more food and alcohol, possibly draught kegs and all other miscellaneous details into your overall plan. Then, of course, have a good idea of how to build awareness of your new location and/or services.
“People don’t like to sit in an empty restaurant. People lined up sends a message,” says Butterill.
Medd used a blog at http://www.twoguysandapizzaplace.blogspot.ca / to update customers on renovations, with pictures and notes on the progress, and maintained active Facebook and Twitter accounts to keep customers abreast well before the open date.
The opportunity for higher guest cheque averages and decent margins on beverages are tempting reasons to expand your brand with a dine-in location. There’s also the chance to spend more face time with customers. If you’re gut says your market is ripe for it, perhaps it’s time to let the adventure begin!
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