Revenue Growth Plan

Revenue Growth Plan

Step 1: Maximizing Sales Per Guest
     The first step in the Taffer Guaranteed Revenue Growth Plan is the easiest. It’s also the only marketing initiative you’ll ever make that has a guaranteed result. It will increase your sales every time. Its crazy that almost no one really does it. Instead, we often skip this critical step (with guaranteed results) and move right into expensive and risky external marketing programs, promotions or discounting to drive business. So, my goal here is to change the way you market forever by teaching you the value of marketing from within, first, and then marketing outside.
    A bar’s food program must be driven by a prevailing logic. Why does it exist? What should it be? What should it sell? The first step to maximizing food sales in a bar is to understand its purpose.
    In a bar or nightclub environment, a food program exists for one of the following four reasons.
    a. Convenience Dining: Provides quick, inexpensive food as a convenience to guests while they are drinking and partying. With this food program objective, your menu, products and pricing must fit into this logic.
    To be successful, the food program must be convenient, easy and inexpensive. Table or server service typically does not work for convenience dining. This is fast “grab and go” style merchandising.
    b. Cooperative Bar Dining: To provide food products that “co-operate” a bar or nightclub’s experience. This approach is most successful in lower energy bar and lounge environments. When this objective is identified, food products are sold in the bar for consumption in the bar. With this objective, food merchandising, menus and service occurs in the bar or nightclub environment.
    This approach is totally different from Convenience Dining in every way. This food program survives only when guests are compelled to choose to order food spontaneously. If the program is not set up to stimulate spontaneous buying, it will fail every time.
    c. Interactive Dining: This food program objective is very different from the above two. It must provide a separate environment and experience to capture couples or groups seeking a more intimate, less energetic “break” from the noise and energy of a higher energy bar or nightclub. In this case, the environment is the initial attraction.
    The environment, music, service, lighting and other aspects of the area and products must cause appeal through an intimate environment. A guest chooses to visit this area/operation to be in the environment. Then, frequency is driven by food/service quality.
    d. Signature Dining: This bar or nightclub dining objective has a total focus upon the culinary experience. It is very different from the three objectives identified above. Examples include a prime steakhouse, sushi operation, a raw bar and even amazing gourmet pizza. A guest’s buying decision to visit this operation is based upon a curiosity or desire to try the food offerings.
    Like Interactive Dining, a Signature Dining objective requires a separate dining room experience.

Menu Engineering
    Menu Engineering is the greatest single Four Walls Marketing opportunity for any restaurant. It’s also a huge opportunity for food operations in a bar or nightclub environment. But, few operators really do it.
    Rather than steer guests to buy more profitable items, most restaurants give the guest a “free for all, or, worse, unknowingly steer guest menu selections to their lower revenue, less profitable items. Consider this:
    1. Boxing an item on a menu will increase the sales of that item by 20 percent! After all, don’t we all want to order a restaurant’s best or most famous item? How do guests know which item that is? We box it.
    2. Shadowing an item on a menu will increase the sales of the item by 14 percent.
    3. Adding titles such as “Chef’s Special,” “House Specialty” can increase the sales of that item by 12 percent.
    4. The Listing Order of items also matters. Guests have a propensity to order the top one and bottom two on a list of items (entrees, appetizers, etc.).
    5. Price Points also provide opportunity. For example, a food item priced at $5.50 has the same value perception as an item at $5.95 does. So, you can pick up an extra $.45 cents every time the item is sold, with little or no negative guest reaction. This will add up to a lot of money. Conversely, increasing an item’s price from $5.95 to $6.00 will likely cause a significant change in perceived value — for only a nickel! Far more often than not, menus leave a lot of money on the table.
    6. Menu Options that Sell also make a huge impact upon your sales. Here are some quick ideas:
    a. Entrée Add-Ons: If you sell steaks, implement a “surf and turf” upgrade. You can use pre-skewered shrimps and other easy items. If you sell lots of fish, do the opposite.
    b. Two Sized Appetizers: We have had lots of success with two sized appetizers. For example, rather than just a 6-piece shrimp cocktail, why not offer the “king” cocktail” with eight pieces of shrimp too? About 30 percent of guests ordering the shrimp will order it, and now you’ve increased your check by $3-4 a couple of hundred times a week.
    c. The Big Beef Motivation: If you sell steak, feature a big one — a 24-ounce porterhouse or similar. About 30 percent of male guests ordering steaks will order it, raising your check by $8 or more. It works with burgers too.
    d. Smaller Desserts: We feature “The World’s Smallest Hot Fudge Sundae” and sell the heck out of it. Guests who normally do not order dessert get it because it’s only a few bites. And, we add $3 to lots of checks because of it.
    e. Special, Unique Items: If Outback Steakhouse’s “Blooming Onion” was simple onion rings, would they sell as many? Of course not. Yet, we take the simple approach all the time, especially in bar food programs.
Seek out new presentations for old things and fun names to create interest. Don’t accept mediocrity. Make your program and items stand out.
When TDI works with restaurant clients (national, regional or independent), we always begin with Menu Engineering. In short, here is the process we follow;
    1. Identify the highest profit contributors for each menu category (appetizers, entrée groups, desserts, etc.) in dollars, not percentages — in other words, the items that make the most money.
    2. Next, developing your menu using all the sales increasing ideas above and others to maximize your potential.
    3. Then, once you know how many items you will have, select the proper sized menu format (one panel, two panels or three panels). Make sure your font is not too small or your menu too large.
    4. With the knowledge of which of your menu items are the most profitable in dollars, design your menu using boxes, shadows and adjectives placed in just the right (visual) places.
    Remember, every menu format has a visual sweet spot — the spot that gets the most attention by the human eye. Those sweet spots are where you want your most profitable boxes.
    5. Using the above techniques will steer your guest selections to profitability.
    Using this TDI process, we typically increase client food revenue by 8 percent. And remember, because you are increasing the sales of your most profitable items, your food cost goes down too. Together, the combined impact is very significant.
    There is no more absolute way to increase your food revenue every time. And, it will work just as well with your beverage/cocktail menu.

Beverage and Cocktail Merchandising
    Like food sales, maximizing your beverage sales per guest also requires special techniques. With bars, nightclubs and entertainment venues, the programs identified below are very powerful. Often they can have a combined effect that increases beverage revenue per guest by over 11 percent. In a restaurant environment, increasing beverage sales always increases bottom line profits because beverages have a lower cost than food.
    1. Martini Board: Hang a 4-by-5-foot “Martini” or Special Beverages Board over your bar. Guests will respond to great names, interesting items and special beverages that are prominently displayed (not table tents!).
    2. Signature Drinks in Special Glassware: In nightclub environments Tooters work. So do shot glasses with “hooks” that hang on other glasses or beer bottles. But it should not stop there.
    Drinks that are made important become important. Name your house drinks well; get them noticed. Names can be risqué, downright vulgar, cute or elegant depending on your market.
    3. Special Garnishes: Great garnishes and toppings can go a long way.
    4. Up-Selling by Size and Price:
    a. Wine by the Glass: We often feature a 2-size wine by the glass program. With two sized wine glasses, you can feature a standard 6-ounce and a 9-ounce wine pour. TDI research shows that approximately 30 percent of all guests who order wine by the glass will order the large glass, significantly increasing wine by the glass sales results.
    b. Draft Beer: Like wine, if you are not offering and selling a large glass of beer, you are missing opportunity.
    c. Premium Soft Drinks: We hate iced tea. We hate refillable soda. We love premium soft drinks in bottles.
    In our Client restaurants, we often implement a display of popular bottled soft drinks including SoBe, Snapple, Jones, diet flavored colas and a few waters. These beverages add appeal, command a far higher price and do not get refills.

Language
    Effective language programs work. For example, what would happen if a restaurant answered the phone by saying, “Thanks for calling Jon’s restaurant, home of America’s best prime rib.” Then, the hostess mentioned that the prime rib was amazing. Then, the server mentioned it too. Would they sell more prime rib?
    A nightclub, bar, entertainment venue or hotel can implement similar language programs to steer knowledge and spending preferences.

Incentive
    Involve your staff. Involve your management. Want to sell lots of Jamaican rum? Send the sales winner to Jamaica. Want to sell lots of Cabo Wabo? Send your sales winner to Cabo.

Length of Stay
        The longer a guest stays, the more they spend. There are five elements that are critical to maximizing Length of Stay in nightclubs and bars. These are:
    1. Music and Entertainment Programming: The targeting, energy flow, music type use, presentation and selection of music is a huge contributor to Length of Stay. If your music is not perfectly flowing during the night, fixing it should be a major priority.     Even live entertainment can be boring.
We never allow more than 30 seconds between songs and make sure our live bands keep their energy properly positioned as the evening progresses.
    2. Sound System: A weak, poorly designed or improperly used sound system will greatly shorten your Length of Stay. Too much bass, improper equalization, too few speakers and other factors will cause strain on guest ear drums and cause premature guest fatigue. So, they leave sooner. Inexpensive sound systems are never a good idea.
    3. Room Lighting: Room lighting is also very important. Too bright will lower Length of Stay. Conversely, too dark will lower guest interaction and reduce your overall guest experience.
    4. Guest Flow and Comfort: Obviously temperature, room smoke, fresh air flow and seating/standing comfort all will impact your length of stay. Overcrowding will also have a negative impact upon Length of Stay.
    Overcrowding rarely increases revenue. Find your proper fill level to maximize your revenue. Typically holding back a bit will create a better sales per guest result.
    5. Room Dynamics: Room Dynamics can add greatly to Length of Stay.
Various types of dynamics exercises can be featured including slams of great music, special sets, special shot merchandising, staff activities and other efforts to add to the experience, excitement or appeal of the operation.

If you effectively implement the programs I identified above, I promise you a sales increase of 8 percent or more. And, we haven’t increased your guest traffic yet. Hurry up, go to work!

Courtesy of Night Club & Bar Magazine
Article by: Jon Taffer. Jon is chairman of Taffer Dynamics Inc., one of the hospitality industry’s most acclaimed restaurant and bar consulting and development companies.

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