Day ONE

Since agriculture ETFs are doing so well, I hopefully will buy some more. Today was not a very productive work day. So I left little early.
Things to do today by 11pm are to do research on my application and then at least email HR tomorrow for my letter and order transcripts.
Tailor my resume by finding aspirational jobs and check UK visa timelines.......
And if I get a time after all this, work on office presentation tomorrow morning before office.

More updates later on what all I did and my views on jogging.....

New hygiene standards can help NYC restaurants

As per latest news the new hygiene standards set forth by city heath officials will grade every single New York City restaurant A, B or C.

Although the actual impact on restaurant sales might be understood a few months down the line I see an opportunity for small scale restaurants to enhance their PR. These grades will be displayed on the restaurant entrance and city website and can, therefore, have an impact on customer’s perception of quality of food in the restaurant.

Yes, you are right if you are one of the 24000 NYC restaurants facing tough completion from restaurants in your area this is an opportunity to improve your operations and get some competitive advantage.

If you are able to convey to the customer that you follow higher hygiene standards than your competition you can impress many clients and sell more food.

J, Business consultant, TOFFA

Perception v/s Reality

TOFFA’s first ever survey on restaurants brought to the forefront again the widening gap between what restaurateurs think customers want and what customers actually want in these tough times .

On one hand, the fast food and quick service restaurants have been able to bridge the perception-reality gap by offering discount coupons and mailing fliers to increase traffic to their restaurants. Not only this, most quick service restaurants also have a clear strategy for the next few months with their focus on more value menu items with more drink options, a signature drink not available elsewhere, providing discount coupons and promoting free refills.

On the other hand, the full service restaurant operators consider improving their service standards, explaining the menu items, including a signature drink as the primary focus for next few months .A survey undertaken by Nation’s Restaurant News suggests that consumers want a daily drink special and discount coupons to be included by restaurants.

We also found from our surveys that restaurateurs are fighting reduced revenues by cutting operating costs and food costs which is fine but they should also focus on adding unique menu and beverage items. They can even seek help of their distributors and suppliers to work together and generate new ideas to boost revenues.

In restaurant business, it is very critical to know what consumers want and fulfilling this need of customers can surely help in increasing revenues and satisfying your customers.

Jaskaran Kalra, Business Consultant at TOFFA

Psychology of Pricing-protecting your restaurant’s bottomline

The economic uncertainity has severly effected consumer restaurant spending decisions and even if consumer do visit restaurants, they are opting for value meals.

Restaurants have responded by competing with each other to offer the most attention grabbing deals and discounts. Restaurants are luring consumers with high-low pricing strategies, quality premium products, combo meals and attractive price points. I had a chance to interview few restauranteurs last week and their response on this situation was “Since everybody is doing it, we have to do it and there is no other alternative”. This has squeezed bottom lines further resulting in cutting food input costs and operational efficiencies. And then there are those restaurants who have not joined this discount bandwagon but have also suffered with squeezed bottom lines.

It is critical to understand when, how and how much to raise prices and this requires detailed understanding of your consumers, competitors and most importantly your restaurant’s point of differentiation.

A recent research shows that consumers don’t blame restaurant for increasing menu prices.

How to further stimulate consumer spending?

The research further affirms that consumers do exhibit tolerance for price increases depending on the type of the restaurant and the daytime. Consumers are willing to spend only about $5-8 in a casual dining restaurant ,$8-12 for a lunch in a family dinning place and in a casual dining place some consumers are willing to pay as much as $15.In case of dinners, price ranges from $8-11 in a casual family place to $12-15 in a casual dining place.

In each of these cases, certain “extras” tempt customers to spend more. These include cleanliness, great ambience and friendly staff. Unique and differentiated menus are also very important. Consumers mentioned that premium meats would also persuade them to spend more.

Tolerance for price increase

Research shows that most consumers are willing to pay 13%-20% more than what they consider the ideal price. At a full-service restaurant that’s already more expensive, they’re a little more resistant, willing to pay 12%-16% more.

Consumers will be more willing to accept price increases for “must have” items that they cannot easily duplicate or switch out with a substitute. Most consumers are more flexible about price hikes for items they can’t prepare at home, and less flexible when it comes to breakfast, snacks, or meal “add-ons” such as appetizers or desserts. A small price increase will have less impact than a large one. A large enough hike will convince almost everyone to opt out of the item—or even go to another restaurant.

Research also shows that consumers are more tolerant of smaller, more frequent menu price increases—even as often as twice a year. They’re more resistant to large, infrequent boosts that could provide a rude surprise when they check the menu or menu board.

Gathering Intelligence

To understand whether your consumers will be convinced to spend more for a menu item, you first have to know yourself and I again repeat know your customers—that is, understand your customers’ motivations for visiting your particular restaurant instead of another, and for choosing a particular item rather than an alternative. And of course, you have to know the competition.

When weighing potential menu pricing changes, consider asking customers directly: Interview or survey them to learn what they think of your menu and what they’d be willing to pay. You should also evaluate your POS data to understand your customers’ spending habits and spending threshold.

Once the price of a menu item has been raised, review the impact on purchase patterns.

What Makes a Menu Item Worth More?

Consumer research points the way to a number of elements that can add value to a particular menu item or your whole menu. These include:

• Premium ingredients
• Appropriate portion sizes or a variety of sizes
• Perceived freshness
• Included extras at no charge
• Uniqueness
• Craveability
• Select use of “natural” and “organic” labels
• Non-menu-related elements of the value equation—service, ambiance, alignment with customers’ needs.

It is understandable that in this tough economic environment,increasing menu prices is big NO but if done in an appropriate way it will only contribute to your revenues.Think and protect your restaurant business by considering these ideas.

Jaskaran Kalra, Business Consultant, Toffa

What do I mean by Two-Prong Strategy in Restaurant business

I interviewed a lot of restaurant owners last week and all of them acknowledged that recession has hit the industry hard. Most of them (rather all of them) are still concentrating on improving the margins; not by focusing on revenue generation but by concentrating on cost reduction methodologies. I personally feel that during such uncertain times, working only on one of the dynamics would be unfair (or foolish!!). Agreed to the fact that saving costs by reducing number of employee hours or redesigning the operations might help, but lets face it..how much 10% 15%..ok lets say optimistically 20%. While lot of energy and resources are utilized to reduce the expenses, the revenue still stands same (though in most cases the % drop is way more as compared to cost saved). A comprehensive strategy would be work with both the wheels at the same time. And with this thought in mind, I will be recommending various suggestions from time to time that if followed should make the balance sheet, income statement and cash flow statement much glamorous!!

Since most of the owners (or managers) are receptive about cost methodologies, I would list down 5 steps that should reduce the energy and water expenditure. You might ask why I chose energy/water, because almost 20% of the cost falls in this domain. So here it goes

1. Install CFL's : These are little expensive, readily available, has longer life and less energy consumption

2. Use high-efficiency pre-rinse spray valve for dish-washing

3. Regularly inspect and replace worn out cooking ranges, refrigerators, coolers, freezers, door gaskets, condenser coils etc. YES!! Don't wait for the things to go really bad. Buy and invest in Energy star qualified models

4. Fix water (esp.hot water) and ventilation leakages immediately. Wasted water, water heating and sewage costs can add upto thousands easily

5. Last but not the least, Set an Energy Management plan for your restaurant. This is something that needs to be discussed in detail and hence I am still researching on it and would post my findings shortly.

Just an Eye opener: Average energy consumption in a full service restaurant is Food preperation (35%), HVAC (28%), Lighting (13%), Sanitation (18%), and Refrigeration (6%) [Ref: Conserve.restaurant.org]

Till then, Happy saving..

Gaurav Toor

Business Consultant, Toffa

Capitalize from CHAI

While I was waiting in queue for lunch to be served, I overheard a discussion that suddenly rung a bell- White collar Torontonian executives discussing about Chai. One of the quotes that I can recall "After a loooong day, I usually have a cup of chai (sometimes two) to relax myself". Here is another one "Why don't we have chai places in downtown like we have Starbucks and Timmy's?"

Chai-a traditional indian drink- has been consumed for centuries in the east but more recently in the west when CJay Corp. first introduced the tea varieties in North America in 1997. A freshly made chai is hot, creamy and fragrant with tea leaves, cardamom, ginger, sugar/honey and ofcourse milk. The popularity of chai has grown so much that some of the industry analysts predict that one type chai (my bet on masala tea) will eventually become so popular that it might even cafe latte. With such strong predictions about the beverage, it becomes a necessity-or should I say obligation- to serve chai at restaurants. A better idea would be to invest in small corners stands(like we have for hotdogs) to offer made-to-serve varieties of tea. And why not; the making time is less, the raw materials are cheap and readily available, the profit margins are impressive and above all, people LIKE it. Furthermore, the exclusivity will spread the name and add value to your restaurant's brand thereby giving you a direct competitive advantage over your competition.

Chai is here to stay- Capitalize from it!!

Gaurav Toor, Business Consultant
Toffa

Happy staff can lead to increased sales, enhanced customer satisfaction

Even though the economic recession has taken its toll on restaurant business, restaurateurs must still keep their workforce engaged and motivated. This can be done in simple ways as in-house competitions or barbeque gatherings.Afterall, if you love your employees; they’re going to love your guests.
Mark Simpson of Legendary People says they put a lot of time, energy and money on employee engagement. Another research by Hay Group suggests that such a strategy not only impacts the company’s bottom line but also prepares the restaurant to face economic storm gracefully. The survey result shows that companies that scored high on engagement scores also showed the highest revenue growth, customer satisfaction and employee retention rates.
Some of the best practices for employee retention include but not limited to:
• Maintaining open and honest communication with employees.
• Providing capable leadership as employees need to believe they are working for winners.
• Maintaining quality in customer focus.
• Creating development opportunities.
• Compensation and benefits.

Restaurants that are attentive to engagement issues set themselves up well to hang on to their best people. Little forward thinking can help in growth of your restaurant and employee engagement is certainly one of the best ways to enhance revenues and customer satisfaction.

Jaskaran Kalra, Business Consultant at TOFFA