Smart operators overcome challenges of fewer customers, revenue swings
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When sales first dropped 20 percent when the recession hit in 2008, Moscrip began “tightening up our whole operation” and saving about $1 million a year in labor and food costs. Annual sales of $14 million have stayed flat each subsequent year but have not dropped further, he says. Two-thirds of the savings resulted from eliminating an assistant manager position in each of his six restaurants.
Kyle Nicholson, innkeeper and chef of The Bluff at Friday Harbor House on San Juan Island, located about 2-1/2 hours from Seattle via driving and car ferry, faces the additional challenges of his destination location in the winter. He offers off-season packages to the island’s 6,000–7,000 locals, as well as weekend visitors, such as winemaker dinners, cooking classes, and movie nights.
He also cuts back hours, closing on Tuesdays and Wednesdays and suspending lunch services. His Sunday and Monday dinner business benefits from other island restaurants being closed on those nights.
The winter menu includes preserves his staff makes from local produce during peak harvest season, saving on food costs. Some of his staff members work seasonally, swapping San Juan Island for ski resorts during the winter months.
Nicholson said he hasn’t measured any effects of the recession on business because he hasn’t been at The Bluff a full year. He does note that a lot of property on the island is for sale.
In New Orleans, Steve Pettus, a managing partner for Dickie Brennan & Co.’s three restaurants, says his and many other local restaurants have been insulated from the national economic woes because so much money has been “poured into our economy since Katrina. There is a lot of construction going on now. The core business area is doing better than ever,” he says, and 2010 and 2011 were record years for his group.
Still, Pettus and his partners carefully watch their expenses, because the costs of goods sold are higher than ever. Making a large shrimp buy at the right time, for instance, recently saved the company a great deal.
When tourism to New Orleans slows during the summer, Pettus, like his peers in other tourism-dependent places, ramps up attention to the locals. He participates in the Louisiana Restaurant Association’s “We Live to Eat” promotion, which touts its abundant summer seafood and produce resources. He estimates that New Orleans has 50 percent more restaurants per capita than other cities and that locals eat out an average of 3.2 times a week year-round.
Pettus stresses the importance of closely monitoring costs all the time, but especially during the slowest seasons, when he sometimes monitors them hourly. “If you track the leading indicators, it works,” he says.