Tuesday April 9, 2019
BUSINESS: No Sports? No Problem: How to Keep Business Booming on Off-Nights
Every sports bar experiences lulls, slow seasons, and dead nights. When your business model depends on basketball fans packing your bar, naturally your sales will be leaner on basketball-free nights.
DID YOU KNOWS…
The Unofficial Bar Snack of Every State
Each U.S. state is known for its signature bar food that’s popular among residents. In a completely unofficial ranking, Thrillist featured a complete list of every state’s official bar snack – and we are here for every minute of it. Do you agree with your state’s pick?
Apple vs. Spotify
Apple Music has officially passed Spotify in paid U.S. subscribers, up to roughly 28 million for Spotify’s 26 million, as stated by the WSJ. Keep in mind that these numbers do not include free trail listeners or the listeners from Spotify’s free ad-supported version so overall, Spotify still has more total users than Apple.
Chop Stick Controversy
A Burger King ad in New Zealand is drawing negative attention which initially intended to promote the chain’s “Vietnamese Sweet Chilli Tendercrisp” burger. In the Instagram sponsored ad, various people are awkwardly attempting to eat entire burgers with chopsticks; which sparked outrage that the ad is poking fun of ancient Asian culinary tradition.
IS ANYBODY LISTENING?
Why it matters to you: Will candidates for POTUS focus on our industry as they have farming during this election cycle?
The system that delivers our food is extremely complicated and intricate in ways we don’t normally consider. We look at prices in the abstract and don’t really think about how they are derived or who is benefiting from them. Well, in this election cycle at least two Democratic candidates for POTUS are discussing it at length. First, Senator Elizabeth Warren published a post on Medium discussing her intent to break up big Agra’s hold on the food supply. She threatens anti-trust action against giants like Bayer-Monsanto to ensure small family farms aren’t squeezed so tightly they can’t compete, or their profit is untenable. Bernie Sanders offered an editorial in the Des Moines Register offering similar support to family farmers.
For those of us in the industry, this issue can be pretty divisive. We all want the lowest commodity prices we can secure. We all know what happens when chicken wing prices rapidly rise; our profit drops. If Warren or Sanders get their way, there’s a chance those prices will rise; but, how should we respond to that? There is a clear analogy between family farmers and the independent restaurant operator. If outside factors are driving down your profit, wouldn’t you want the government to make sure that those factors were market-driven and not caused by corporate consolidation? That’s the issue that both candidates are highlighting. I sure wish they would see their way to doing the same for small restaurant operators, so our industry doesn’t fall prey to the same fate.
[Source: Mother Jones]
PROTECTING YOUR PROJECT
Why it matters to you: Only you can protect the slim margins that are produced by your restaurant.
When you hear a statistic like 60% of new restaurants don’t complete their first year in business, you can’t help but think our industry is just too hard for independent operators. In fact, that 60% number jumps to an 80% failure rate for restaurants within the first five years. When nearly ¾ of all new restaurant operators don’t survive, it’s easy to believe our industry is hopelessly difficult for new entrants. However, many of these failures occur because of errors balancing profit and rising expenses. We are clearly at an unprecedented time in the labor market. Wages are rising, and staff candidates now have far more leverage with employers. It sure feels like we are being squeezed on both sides with rising prices for food and other related expenses.
In the end, the balance an operator must strike between regulating prices and managing costs is precarious. The average margin for restaurants that spend about 67% of their income on food and labor is 6.2%. That is a sliver of the overall sales you do and means there is little room for error. This post suggests that constant vigilance is required for small chain or independent restaurant operators to succeed. Reviewing your approach to labor and challenging your food suppliers to be more competitive more often are only a couple of the ways you can protect your margin. The real lesson here is that you’ve chosen a uniquely tough business to realize financial success. It’s up to you, and you alone, to make sure every cost is controlled to protect these slimmest of margins.
[Source: FSR Magazine]