Raise prices during peak hours: restaurant expert

Toronto – Increasing prices during peak hours, holding regular meetings and rewarding staff for quality work are some of the things restaurant operators must do to be successful amid minimum-wage hikes, said a hospitality leadership coach at the recent Restaurants Canada Show in Toronto.

The aim of Matt Rolfe’s session on leadership, presented by his consulting company, Westshore Hospitality Group, was to help operators think differently about achieving their goals.

To survive and thrive amid the minimum wage increases happening across the country, restaurants need to get serious about increasing their food and drink prices, said Rolfe, who has worked with hundreds of restaurants, bars, nightclubs and hotel operations. Many operators respond to minimum-wage hikes by reducing staff rather than raising their food and drink prices, he said.

RAISE PRICES DURING PEAK HOURS

When operators decide not to increase prices, it is usually for emotional reasons. “They are frozen. They don’t take action. They are waiting to see what other places will do,” he said, noting that it’s important to understand who your competitors are and to stay up to date on what they are charging. Look not only at prices but also at serving size, he said. Sometimes it’s not comparing apples to apples because of, say, smaller glasses. He added that Westshore has a comparison sheet they send to restaurants to help them compare prices objectively.

Rolfe recommended figuring out how to increase gross, or top-line, sales. One strategy he urged restaurants to consider is raising prices during peak hours. Determine your busiest time of the week – choose a three-hour window – and increase prices during those times, for example, on Friday nights. An option is to target only certain items, he added.

HAVE A STRATEGY

Restaurants are a tough business, Rolfe acknowledged, noting that the average net profit for a restaurant in Canada is 3.5 per cent and in Ontario it is 2.5 per cent. “If people knew this, wouldn’t get into the restaurant business,” he said.

He recalled asking Al Jessa, president of JOEY restaurant group, how he managed to be successful. Jessa’s reply: “Don’t mistake busy for successful.”

Even if you are number 1, you have to have a strategy., Rolfe argued. To illustrate what happens when you don’t, he reviewed the story of the very successful Blockbuster Video, which made 40 per cent of its profits from late fees. The company, which enjoyed a huge market share, had an opportunity to buy Netflix and declined. Rolfe asked the audience, “Are you holding on to anything you shouldn’t?”

He stressed the need to innovate and to connect both staff and customers to what you do. “Show them why they should stay at your restaurant,” he said.

He challenged operators to make one goal a priority and to act on it, and to focus on their competitive advantage.

HOLD REGULAR MEETINGS

Hosting effective meetings is very important, he said. Many people stop having them because they aren’t fruitful. But “are you having the conversation that needs to happen before the business can grow?” he asked, paraphrasing the late Steve Jobs of Apple.

A recipe for success is one weekly meeting, one full or half day focusing on a particular issue in your business and four quarterly meetings to check on progress. “If you do this, you will see change for the better,” Rolfe said. “You have to get back to the good in your business.”

He gave the RC Show audience a reading list: Meetings Suck, by Cameron Herold, which takes an hour and a half to read, and Death by Meeting, by The Table Group.

RECOGNIZE QUALITY IN STAFF

Finally, Rolfe encouraged operators to make staff appreciation a priority. “Recognition needs to be a process or system in your business,” he said. Take 10 days and in that time try to recognize quality in an employee. The exercise will help you fine-tune your ability to notice the subtle signs of a good employee. “Celebrate someone once a week: it’s free and it has real emotional value.”

If you do this, you can expect to see engagement and recruitment go up, he said. “Workers are starved for recognition.”