Success: What a Concept!

Pat Fernberg

Success: What a Concept!

If there were a kit for building a successful restaurant, it would have everything you’d need to survive and thrive in one place: top-quality components, complete instructions, ability to customize it to your requirements.

Well, that kit exists. It’s Restaurant Hospitality’s Concepts of Tomorrow (C.O.T.) Conference, and the 250 suppliers, owners and operators of promising independents, chain and franchise units, and multi-concept operations at the three-day event left Chicago with their brains, notebooks and business card cases crammed with ideas, encouragement and contacts.

In opening the conference, Jess Grossberg, publisher of Restaurant Hospitality, recognized two gifted New Jersey restaurateurs whose passion for the industry and pride of ownership reflects that of their fellow C.O.T. attendees. John Yurish of Brennan’s Deli and Gino Pesci of Attilio’s Pasta Kitchen have attended multiple Concepts of Tomorrow conferences, always scouting new ways to maximize their success.

Who better to demonstrate the principles of building successful concepts than keynoter George R. McKerrow, Jr., a pioneer in the casual dining sector who has also left his mark in independent fine dining, and Richard Melman, founder and chairman of the legendary Lettuce Entertain You Enterprises?

"Making a choice to go to a restaurant is about going to a place where you feel comfortable and can enjoy yourself and your family. Our research shows that we provide replacement meals for family dinners at home. This is where Americans eat today, and we owe them great food and great service," McKerrow said. "We’re the only industry I know of that orders, receives, manufactures, sells and collects for its product, all in one day — in our case, within 45 minutes," he added. "As I tell our people, we all look good together; we all look bad together. There is no ‘us’; there is no ‘them’. We are the cornerstone of the economy, 11.7 million employees strong. We can make a difference if we work at being unique, energetic, and enthusiastic in our restaurant development."

He told the capacity crowd that being an entrepreneur means "leadership, passion, and the willingness to accept responsibility, go forward, and make things happen."

McKerrow reflected on the success of Ted’s Montana Grill, which began in Columbus, Ohio in January 2001 and has grown to 11 units in 2003, with three completed units poised to open early in 2004; 20 to 24 more scheduled for 2004; 36 for 2005, and 50 per year every year after that. He described the concept as "a classic American restaurant that turns away from the themology and almost-as-good-as philosophy of contemporary restaurant chains and turns it back toward the values that were prevalent at the turn of the century in the United States."

"We need to get away from our industry’s tendency to deliver consistency with prepackaged, prefabricated food," he warned. "There’s nothing wrong with that, but we should deliver on our promise as restaurateurs to cook great food for people and give them an experience that they’ll really enjoy."

McKerrow emphasized the importance of employee training and development. "One of the most important things we did was to select great people early in the game and create a team environment that could be enthusiastic and gain momentum quickly." The chain has invested heavily in recruiting, hiring, and training qualified managers, and it recently opened a state-of-the-art training center, Ted’s Montana Grill University, that will train more than 225 managers annually.

Dean of concepts Richard Melman shagged questions from the audience and candidly offered insights on how taking risks—even unsuccessful ones—can pay off handsomely.

Describing himself as someone whose whole life is about looking for what he called "great stuff" (the unusual and interesting), Melman cheerfully paid tribute to his mistakes: "Mistakes are wonderful at keeping you humble so you don’t fall into a bigger mistake. I know what I know because I have probably made more mistakes than everyone in this room. That’s ok. Being a little dysfunctional is good: It sometimes produces interesting results." He illustrated his comments with the example of his mentor, restaurateur Arnie Morton.

Morton’s first three restaurant concepts tanked. Undeterred, he launched his fourth, the upscale steak houses that bear his name. "He was positive every time he got an idea. His resilience came from personal confidence," Melman explained. "It’s important to not take it personally. Step back, analyze, and change as needed.

"How do you change things that don’t work? The key is in how you approach things that don’t work," he said. "Think small to get big. Start small. Stay focused on what you want the concept to be and where you want to go with it. Don’t shy away from doing what’s necessary. I never think of the terms of single restaurants."

President Clarence Otis and vice president of development Chip Wade of the 2002 Richard Melman Concepts of Tomorrow Award-winner, Smokey Bones BBQ, echoed McKerrow in emphasizing a commitment to quality, service, research, responsiveness to customer preferences, and capitalizing on points of differentiation.

Wade told the crowd that opportunities are abundant for concepts that offer a "vibrant consumer proposition, are consistent with research, and offer meaningful points of differentiation." For example, Smokey Bones offers the appeal of barbecue’s smoked, slow-cooked flavor and its comfort-food stature.

The quality and style of its food, its friendly service and the cleanliness of its units make Smokey Bones a standout in the sports bar market, with a four to six percent growth rate expected annually over the next several years.

The chain strives to maintain its image as family-friendly and responsive to female guests. The restaurants have a kids’ menu and are as likely to televise videotaped local sporting events as national and international athletics, and Otis emphasized the chain’s commitment to community involvement, making it a welcome neighbor among sports bars.

Otis ticked off the qualities that have made the chain a "keeper" for parent company Darden:

• broad geographic and demographic appeal, permitting regional distinctions in proteins, sauces, and sides offered;

• the opportunity to evolve the concept over time;

• strong unit-level returns (annual unit sales are at least $2.5 to $3 million) with attractive pro forma earnings and returns;

• experienced leadership and a strong infrastructure; and

• it complements Darden’s existing concepts in terms of cuisine, guests, and experiences.

Friends of Distinction

Making your concept memorable and appealing to guests should be an exercise in fun, and Patrick Henry, president of Patrick Henry Creative Promotions, whipped out a bag of profit-pumping tricks that kept attendees hungry for more.

Henry suggested hiring a sales and promotion person who would be responsible for booking parties, attracting sponsors, building relationships with local distributors and media, overseeing promotional material design and production, and focusing on guest demographics in key dayparts.

Never underestimate the power of promotions, he told the crowd. Even the slimmest budget can achieve dramatic results with simple promotions.

Henry advised creating a promotional mailing list with e-mail and fax contacts, sending out press releases, starting a birthday program, and updating your image.

Promotion ideas are everywhere, he said. Flip through periodicals popular with your target demographic, check out reality TV shows and the Internet, explore underground newspapers, and get your hands on Chase’s Calendar of Events and similar event-related publications for the edgiest ideas. Borrow successful ideas and put your own stamp on them.

Build promotional opportunities around local and national events, holidays, or new menu items. Cross-market with local businesses. Update familiar promotions with new twists. Have fun with your promos: One establishment’s 10-cent martini lunch resulted in a 245% increase in lunch sales and 12,000 martinis being purchased. Change promotions often to keep them fresh, and bring back old favorites from time to time.

Whatever you do, Henry advised, "Do it now. Today will be yesterday tomorrow."

Vintage Strategies

If you thought you knew how to parlay wine sales into fat margins, wine expert and master sommelier Evan Goldstein wants you to think again. More wine choices, smaller markup opportunities, and more wine-savvy consumers are making wine margins tighter. Worse, the attention span of the guest decreases as his exposure to wine increases. "It’s all about discovery," Goldstein explained. "There is no brand loyalty in wine."

What’s your wine strategy? Start by defining your wine program focus (mission statement), constantly analyze your wine-to-spirits-to-total beverage-sales ratios, create a wine-focused culture (e.g., glasses on the table, wine-related displays), and build your program around your customers.

"What kills wine sales," Goldstein told the crowd, "is an untrained or overzealous, aggressive staff, a lack of focus in your wine program, and a lack of commitment to the program. If you aren’t demonstrating that wine is important, you can’t expect your staff to do better."

He offered tactics by the score:

• Your wine list should describe the wines and suggest food pairings.

• Offer a taste of unfamiliar wines.

• Use boxes, type font and size, and other formatting devices to feature wines and improve readability of your wine list.

• Offer wines not on the list — specials, odds and ends, and allocations — by word of mouth or as an option.

• Keep your list small and diverse.

• Offer short lists to boost interest.

• Keep your inventory lean.

• Offer value-priced wines.

• Use aggressive pricing to stimulate sales in slow windows, such as pre- and post-theatre specials or early-week lulls.

• Partner with suppliers and distributors to discover new regions and grapes, enhance training, and increase value to the customer.

"Your list is your commitment to quality," he explained.

It’s About the Product

California Pizza Kitchen whiz kids Larry Flax and Rick Rosenfield attested to the truth of speaker Daniel Walsh’s advice (see sidebar, page 40) at Tuesday’s keynote address. "We didn’t pick great real estate, and that was a mistake," Flax laughed. "Every concept has its real estate, so even though the concept of CPK was great in the eyes of the public, the real estate was so bad, we weren’t making any money."

"We thought this business was all about the concept," said Flax. "We were wrong. The restaurant business is not about the concept; it’s about the product, which is to say that it’s about the people who work in the restaurant, the ones who make people happy and make them want to come back. They’re the people who replicate the product consistently and keep the restaurants running." CPK thrives on what Rosenfield described as a ROCK culture: respect, opportunity, courtesy, and kindness, and credited that culture with being the key to the chain’s employee retention and its success.

The duo have rolled out a new concept, L.A. Food Show, and they’ve clearly learned lessons from the early days at CPK. "It’s all about real estate," Flax continued. "The drive times, pleasing the customer and getting him to your restaurant."

Who Loves Ya?

It’s no surprise that baby boomers drive the restaurant industry, reported industry analyst Robert Derrington of Morgan Keegan & Co. As the largest guest segment, boomers first fuelled the fast-food growth of the 1960s and 1970s, then the proliferation of casual dining concepts in the 1980s and 1990s. Now at their peak of affluence and influence, and blessed with more leisure and more options for discretionary income than previous generations, they rule.

But, says Derrington, keep an eye on the "echo-boomers", the 20-year-olds who came of age in an era when restaurant dining was more common than dining at home, whose palates and expectations are more sophisticated than their parents’ were, who are more racially and culturally diverse than any previous generation, and who are less predictable.

Major influences on restaurant industry sales include more women working outside the home, time-starved lifestyles, more single-par-ent homes, restaurant dining replacing home-cooking as the source of meals, restaurants’ image as a social destination and an escape, unemployment, gasoline prices, availability of disposable income, and consumer confidence.

Derrington’s advice for making a concept bulletproof: Keep it fresh, keep in touch with consumer tastes, and reinvest in your business.

One of those investments has to be in training, Mary Pat Knight, vice president of people development for the seven-unit Flat Top Grill, urged. "The issue is the same for all sizes of restaurants and budgets: You need to recruit and retain employees. We must train in order to improve this industry." Training is a benefit, a company’s investment in the future of its employees, Knight said, and it’s a critical component of growing concepts.

Of particular concern is the current generation of employees whose training needs are not being met by traditional methods, she pointed out. "People learn differently. We have to address issues of diversity and use technology to ramp up for the managers and employees who are coming up through the ranks."

Her model program combines specific training modules with self-teaching opportunities using different media, testing and validation of mastery, face-to-face learning opportunities, and Web-directed programs. Knight emphasized that training must be voluntary, requires full commitment of, and involvement by, management, and should be accessible to everyone.

To Market, To Market

Strike that line item for mass-market advertising off your budget. It’s great for building brand image, but it won’t cure the restaurant saturation problem and boost your business, Tim McCarthy of Sales Building Systems declared.

"The litmus test for advertising is: Is it a win-win situation?" he explained. "Find out what people want and give it to them at a profit to your restaurant. That’s what marketing is."

He scorns using discounts to build business. Discount only when and where it counts, and pair it with an opportunity to make a personal impression, but don’t do it too often. "Your best marketing tool is a really great restaurant," he said. "Find out what audience is coming into your restaurant and identify similar types of people. Send them — and only them — a trial offer to build loyalty. When they come in, treat them right."

For that reason, he eschews reference campaigns (i.e., getting customers to bring in a friend) and loyalty programs. "If you’re not bringing people back through your performance in the restaurant, a loyalty program isn’t going to do it," he said. "Why give money to people who are already there? Spend it to get new people, not regulars!" Birthday clubs and gift cards get a thumbs-up, however, and McCarthy’s also enthusiastic about encouraging guests to visit your website (but keep it current).

Once you’ve found that target audience, you won’t find a better model of marketing in action than at Gary Meszaros’ venture, Quaker Steak & Lube. From his born-to-be-wild entrance on a vintage Harley to his over-the-top promotional tools, Meszaros delivered a tutorial on building a theme concept and keeping it vital. Sharon, Pa.-based Quaker Steak & Lube seizes every opportunity to lure customers to its wings-and-roadhouse fare and to keep them, from holding bike and classic car nights to outdoor events, and he constantly tweaks and updates his menu, relying on employees and customers for ideas and reviews.

After 30 years in the business, Meszaros acknowledged that "our failures may be more important than our successes" as learning tools, and he attributed Quaker Steak’s success to five factors: outrageous décor that’s fun and unique ("It’s fun and interactive; definitely not a museum," he said); a broad menu of great choices that is constantly being refined and updated; a "relentless promotional mindset" of outrageous regular promotions that attract customers, create memories and build pride in employees and guests; incorporating little details that surprise and delight customers; and continual innovation that makes the most of existing locations and expands into new opportunities.

He admits to one major problem in basing his theme around a service station: "I can’t tell you the number of times people pull up to the pumps expecting a fill-up."

A variation on theme restaurants is the celebrity restaurant, and

Andre Suite, vice president of business affairs at rapper Shawn ("Puffy"/"Puff Daddy"/"P. Diddy") Combs’ restaurant, Justin’s, pronounced the cardinal rule of running a celebrity restaurant: "Define who you are, divorced from the celebrity connection. You cannot forget that food and service are what you have to sell."

Food and service are the core of Justin’s existence, and the upscale soul food restaurant has one goal, Suite declared: "We want you to feel like you are the celebrity when you are our guest."

Don’t forget that your celebrity restaurant is a business first and foremost, Suite warned. Clearly targeting your guest demographics, taking advantage of preexisting restaurant opportunities in desirable locations, tightly controlling costs, and clearly defining the celebrity’s role and your own role in the venture are critical. Suite advised:

• Educate the celebrity and yourself about the celebrity’s needs and personality. "Sometimes, it’s a battle of wills," Suite warned the group.

• Set realistic goals.

• Run the restaurant. Don’t try to be a celebrity yourself.

• Establish that the celebrity’s role is to drive business through his or her star power, period.

• Ensure that food and service are consistently excellent.

• Have a profit orientation, and make sure the celebrity understands it, too.

• Hire pressure-resistant management that knows how to handle media scrutiny.

"The celebrity alone cannot carry the business," Suite reminded the audience. "Focusing on the core business and understanding your profit-and-loss ratio are critical to your restaurant’s survival."

That’s advice every concept can bank on.