maximizing profits | By Chris Thomas Promotions promotions article.pdfof brainstorming something fun...

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38 MAY 2007 | SANTÉ Promotions that Pay Off maximizing profits | By Chris Thomas His restaurant managers had to be convinced when Michael Dellar first proposed the idea four years ago: how about a promotion that would prompt guests to order wines they really wanted to try, rather than what they felt they could afford? “The managers thought their margins would really get beat up, because they’re compensated on their profitability in the restaurant,” recalls Dellar, cofounder of San Francisco’s Lark Creek Restaurant Group. “But bottom-line profit as a percentage of sales has actually risen because we do so much more business. The managers love it now, because the customer traffic during that period is exceptional. It’s become an event that people really wait for.” Now, July is “Half-Price Wine Month,” when corks pop in record numbers as the Lark Creek Inn, One Market Restaurant, and oth- ers in the Lark Creek Restaurant Group double their normal wine sales volume. “We don’t hold back on anything,” says Dellar. “The Bryant Family Cabernet that’s normally $600 is $300; the $180 Silver Oak is $90. You’re getting a bottle of wine for the price of two glasses.” Simplicity is critical to a successful promotion, says Michael Dellar, co founder of the Lark Creek Restaurant Group.

Transcript of maximizing profits | By Chris Thomas Promotions promotions article.pdfof brainstorming something fun...

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Promotions that Pay Off

maximizing profits | By Chris Thomas

His restaurant managers had to be convinced

when Michael Dellar first proposed

the idea four years ago:

how about a promotion that would

prompt guests to order wines they

really wanted to try, rather than

what they felt they could afford?

“The managers thought their margins would really get beat up,

because they’re compensated on their profitability in the restaurant,” recalls Dellar, cofounder of San Francisco’s Lark Creek Restaurant Group. “But bottom-line profit as a percentage of sales has actually risen because we do so much more business. The managers love it now, because the customer traffic during that period is exceptional. It’s become an event that people really wait for.”

Now, July is “Half-Price Wine Month,” when corks pop in record numbers as the Lark Creek Inn, One Market Restaurant, and oth-ers in the Lark Creek Restaurant Group double their normal wine sales volume.

“We don’t hold back on anything,” says Dellar. “The Bryant Family Cabernet that’s normally $600 is $300; the $180 Silver Oak is $90. You’re getting a bottle of wine for the price of two glasses.”

Simplicity is critical to a successful promotion, says Michael Dellar, co founder of the Lark Creek Restaurant Group.

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A tag team of two chefs and a sommelier walks 12 to 15 gentlemen through the fine points of shucking oysters, making tarts, garnishing plates, and selecting wines, and they have a blast doing it. The dishes include ingredients with either romantic history or symbolism: figs, avocados, oysters, caviar. The idea, says Guas, would adapt well for other special occasions, including birthdays and anniversaries. The cost per person is a reasonable $70 for a two-hour lesson.

“We have a minimum number of attendees in mind so that we’re not losing money,” Guas explains. “But by the time we pay the staff, buy the product, and give away a few things, we certainly don’t make money on it. We see it as public relations—100 percent—and tapping into a new client base is the top priority. Once we get ’em in here, it’s up to us to make sure we get ’em back, based on their experience.”

For the same reason, Guas also hosts children’s baking classes at Christmas. He admits the extra hours of preparation can be tedious, but he has devised a to-do list for the month leading up to each event that includes publicity. The waitstaff talks it up, and general managers notify their guest lists by e-mail, encouraging them to bring friends.

Promotions that Pay Off

The accounting, he adds, is as basic as the promotion itself: “We take the cost of this event, back it out of our wine costs, and put it into our marketing costs. We still account for all the costs, but they fall into different categories.”

To Dellar, simplicity is critical to a good promotion. “We’ve run some that have been so complicated,” he sighs, citing an annual April event known as “Dine Around the Bay.” The idea, he continues, “is for people to try each of our restaurants, and each time they go, at the subsequent restaurant their discount gets bigger. It has worked, but it’s a rather troublesome promotion and hard to communicate. For the most part, people today don’t have time to figure things out. They want to keep it simple.”

So how does a sales suggestion become a much-anticipated event, for both guests and staffers? Restaurants of all shapes, sizes, and price points wrestle with this question. The process of brainstorming something fun and creative can be, well, fun and creative—but then comes the extra work that’s inevitably involved in pulling it off. And who has time for extra work?

A New Take on the Cooking ClassThere are plenty of simple, easily adaptable ideas for effective sales boosters, and interestingly, a major bottom-line gain is not necessarily the reason to undertake them. For instance, would you fly in the face of logic and run a promotion that prompted potential diners to stay home on a major dine-out holiday, such as Valentine’s Day? Pastry Chef David Guas claims it’s not a concern at DC Coast Restaurant in Washington DC, which holds its “Sweetheart’s Special” cooking classes—for men only.

“They may stay home that one day, but they’re going to remember how gracious we were and how fun it was, and they’re going to come back,” says Guas. “This is about building relationships.”

“they’re going to remember how gracious we were and how fun it was, and they’re going to come back.” —David Guas

Creating good memories is ultimately a money maker for Pastry Chef David Guas.

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Beyond the Bottom Line Building loyalty is a unique challenge in mar-kets like Las Vegas, where the typical tourist stays three and a half days, according to the city’s Convention and Visitors’ Bureau. So, in addition to a full slate of tourist-driven advertis-ing, the Wolfgang Puck Fine Dining restaurants cater specifically to locals with an ongoing perk called “Compliments of the Chef.”

“It began in 2001 and was launched to serve the needs and time constraints of our locals,” explains Stephanie Davis, di-rector of brand communications. “The program of-fers priority reservations and preferred seating times for local customers, and a complimentary dessert per couple.”

Managers take guests’ word for it that they are, indeed, “locals.” Davis says the reservations and seating times are key, but it’s the free dessert that leaves that final, positive impression: “It’s a little something extra that shows people you care.”

Like any upscale eatery, Davis says Puck’s restaurants can’t afford to be kitschy in their promotions; offbeat can be off-putting. In her view, restaurateurs often come up with a promotion idea they think is fun and wade right into it, never asking the obvious follow-up question: fun for whom?

“I’ve seen so many ads and billboards with absolutely beautiful, creative artwork, and I think, ‘But how is that driving me to their restaurant?’” she observes. “It’s not enough to look great; you have to know who your customer is, and you also have to know what customers you’re not getting, and why, in order to reach out to them. I’m still a believer in direct-mail pieces, targeted to the right person.”

Redefining Loyalty The National Restaurant Association estimates about 40 percent of restaurants offer their customers a loyalty program, up 15 percent in the last couple of years. But these plans are anything but sure guar-antees of additional business, as Tavistock Restaurants learned when they inherited a traditional “frequent diner” program (customers earned points that were redeemed for gift checks) with their newly purchased properties four years ago.

“When we evaluated those guests’ purchasing profile and determined what a $25 redemption did to drive their decision making, we actually decided to fire all those customers!” says

Tavistock President Bryan Lockwood. “We risked at least $6 million worth of sales to make the decision that we needed better customers. We didn’t see that the guests were inviting friends or buying up on wine sales—they weren’t doing anything outside of their normal purchasing habits. And we had to say, ‘That’s just not going to get us where we want to be.’ It was a giant step.”

Today’s Tavistock promotion feels like anything but a discount, although a price break is the ultimate prize. From Thanksgiving through the end of December, guests at the group’s 20 branded properties (including Napa Valley Grille, Blackhawk Grille, and Cafe del Rey) receive a “Holiday Gifts” envelope with their check. They’re invited to return in January to open the “prize” envelope in front of a manager to see which of three special perks they’ve won: $20.07 (for this year) off the check total; one free meal; or the

Tavistock President Bryan Lockwood aims too “engage the guests” with in-house promotions.

“We risked at least $ 6 million worth of sales to make the decision that we needed better customers.” —Bryan Lockwood

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grand prize of dining free once a month for a full year at the restaurant.

“The holidays are so busy that it hampers our ability to connect with guests as much as we’d like to,” Lockwood observes. “So they’re presented with this gift while they’re out buying their own gifts for other people—to let them know we’re thinking about them. Then when things slow down in January they come back, and with each and every one, there’s a hand-in-hand connection between the management staff and the guest, a chance to get to know them better. It’s fun for the managers and gives them a platform to chat with the guests. Sometimes the chefs get involved in the redemptions, too. It’s like a thread that [stitches] together the emotional connections we try so hard to work on.”

The theme allows for some personal recognition of each guest, and the certificate includes an opportunity for guests to sign up for e-mailed newsletters. “Holiday Gift” redemption is an impressive 37 percent. Lockwood explains it’s a matter of increasing repeat business without decreasing perceived value. It pays off in other ways as well, as guests opt into the newsletter program and refer friends. Or to summarize Lockwood’s theory of good promotions in his own words: “The win continues down the road, if you engage the guests.”

Chris Thomas is a food, restaurant, and business writer based in Boise, Idaho, and Seattle, Washington.

The Collegial, the Charitable, and the Decadent: More Business Boosters

• In Denver, Mondays are “Service Industry Nights” (SIN)

at Nine75, the Sullivan Restaurant Group’s hip, casual

comfort-food eatery. Anyone who shows proof of

restaurant or bar employment receives a 20 percent

discount, on both food and beverage.

• In Chicago, the Signature Room (on the 95th floor of

the John Hancock Building) has raised $500,000 for

160 different nonprofit organizations with its “Charity of

the Month” program. Charitable organizations apply for

consideration; each year kicks off with a January event to

honor all 12 groups selected for the year. Ten percent of

the profit from a four-course “Signature Selection” meal is

donated to the charity for each month, prompting a new

roster of first-time guests every 30 days or so.

• In Cupertino, California, Alexander’s Steakhouse has

created perhaps the ultimate promotion to boost a single

check average: the “Evening of Extreme Luxury” sports a

$10,000 price tag that includes a roundtrip limo ride from

the couple’s home, fresh flowers, and a decadent, multi-

course menu paired to premium wines that ends with

“Jewels and Dessert,” a course that garnishes dessert

with diamond jewelry.

From Thanksgiving through the end of December, guests at Tavistock’s 20 branded properties receive a sealed “Holiday Gifts” envelope with their check. They’re invited to return in January to open the “prize” envelope in front of a manager and see which of three special prizes they’ve won.