What a deal: Christmas with the family in snowy
Northern Vermont, then New Year's Eve for two
overlooking Biscayne Bay in Miami. My wife,
Annie, and I went from the sublime to the sublime
and said goodbye to 2007 from a prime table at
Prime Blue
Grille.
The new restaurant was everything that my client, Jim
Dunn, had envisioned during his years with House of
Blues and Smith & Wollinsky — high end, but
not out of sight; well-appointed; exceptional food and
service; a great view; and high energy. We had
wrapped up the first six months of operation with a
physical inventory that morning, and the
preliminary results three days later showed us very
close to our targeted bottom line.
The vision took hold in Miami and, according to the
plan for 2008, it should work in the Natick Collection
(Massachusetts' newest upscale mall), as well as in
Boca Raton, Las Vegas, and elsewhere. Despite the
fact that unanticipated (and uncontrollable) problems
in construction delayed the opening for three months,
the build-out costs were on target, and operating
revenues and expenses tracked the detailed
projections completed a year ago.
A couple of days later, we had dinner a bit down the
scale, at a little mom-and-pop pub on the West Coast
of Florida near where we were staying. Over the
course of a couple of visits, we chatted with "pop,"
a/k/a Skip, and were impressed by his
ability to turn out delicious meals for a modest price.
That we got to know him was a function of our being
his only patrons for the hour that we were there on
our first visit — a phenomenon attributable
to the fact that Lee County was to experience
freezing temperatures that night for only the 45th time
since 1931.
But weather was the least of Skip's problems. After 39
years on the site, and 23 years of Skip's ownership,
the restaurant was losing its lease in favor of
a hotel/condo to be built on the property as soon as
the real estate market turns.
"Are you month-to-month on the lease?" I asked.
"Have been for two years now," he said. "I figure I
might have another two years before they get rolling.
Meantime, I've done o.k. with the business from the
adjacent construction work, especially at lunch, but
that's pretty much dried up now, too."
"So," said I, trying not to sound like a consultant,
"what are you going to do?"
"I dunno. Just play it as it comes, I guess."
Skip and his restaurant may not be there the next
time that I get to Fort Myers, which would be too bad.
He's got a great product ("The best burger
ever," according to my other half, who knows a thing
or two about the culinary arts) and service, and
he's a local institution.
On the other hand, now that I've acquired expertise in
the restaurant industry, courtesy of Jim Dunn and
Prime Blue Grille, here's the way that a "visioning"
process might start out with Skip:
- Q — What are the key elements to
making money at this level of the business?
Anticipated answer: controlling costs, and working
your tail off.
- Q — What's your economic
model? Anticipated answer: By working long
hours, my partner and I keep our food and labor costs
at 60%, and at our level it's mostly a cash business,
which helps. It's a living.
- Q — What if you raised your
prices 25% (e.g. from the $7.95 currently
charged for great spaghetti and meatballs with
homemade sauce, salad, and rolls)? AA —
We've never tried, even though the neighborhood
has changed with the upscale condos nearby.
- Q — What if you doubled your
marketing budget? AA — We typically
advertise only when the Red Sox are here for spring
training. We fill the place during that month. But then
everyone goes north in April…
- Q — What if you bought the
vacant storefront down the street and relocated?
AA — I'd have to figure out how to raise the
money, and determine the carrying costs of
ownership versus renting…
- Q — What if you added a cook
to free up some of your time? AA — It
would increase costs, but maybe I could follow
through on some of my promotional ideas to bring in
more business and offset the added expense…
- Q — What if you invested in
some new equipment? AA — We could
be much more productive, maybe even save on
utilities and labor costs. Do you suppose I could get a
loan?
At this point, I would be pushing my pencil all over
the white paper placemat that Skip spread over the
table before taking my order. "What if…?"
leads to "Well, then…" and "That would mean
we could…" and before you know it the basic
elements of a strategic plan begin to fall in place.
And every one of these elements has a financial
component: dollars in, dollars out (return on
investment).
From the back of the envelope, it's only a small leap
to a spreadsheet and from there to a business plan
for 2008. For organizations more sophisticated than
Skip's restaurant, there are intermediate stops at
departmental budgets and the internal push and pull
that comes with company politics and priorities. But
the process always starts with someone pushing
back from fighting the daily fires and saying "What
if…?"
Now, what if I were to send Skip a copy of this
issue of Howe's Bayou???
