When and if to Change

Junior Burger
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2007/01/18 09:08:12 (permalink)

When and if to Change

Hello, I recently had an idea to open a specialty food restaurant in Arizona, but after realizing that it would be longer and more expensive to open I went a different direction. I purchased a restaurant that was already open and producing a nice profit. This did two things for me 1. gave me a kitchen where I could perfect my specialty food and 2. Gave me a paycheck which gave me time. My qestion is how long should I wait before I start implementing some changes to the restaurant, that will help raise profit. Should I even change anything? Any feedback or advice would be greatly appreciated, thanks.

6 Replies Related Threads

    Double Cheeseburger
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    RE: When and if to Change 2007/01/18 09:21:12 (permalink)
    sounds risky to me. if you are adding to an existing menu, well thats one thing. but to change completely, a working profiting business, that sounds like disaster. if it aint broke, dont fix it! as for your specialty idea.......do share...... perhaps we can be more helpful with more info.
    Double Chili Cheeseburger
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    RE: When and if to Change 2007/01/18 20:27:25 (permalink)
    I agree totally with Bass. Add your new items to the menu gradually and see how they go over. If it works, remove a slow mover from the menu and add another new dish
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    RE: When and if to Change 2007/01/19 09:10:16 (permalink)
    Do not change a thing if u'r showing a profit!!
    Wait until U are well established as the new owner, then and only then try u'r new items as SPECIALS and see how they go!
    The single biggest mistake people make going into the restaurant business is CHANGE!!
    We have one nearby which was doing a million a yr. New owners bought it for cash, closed it down for 3 months to "upgrade" opened with completely new menu and interior..Both very nice but not what people were used to at that location, ran it for 90 days went belly up, now building and property are for SALE, restaurant closed..GOT THE MESSAGE???
    Junior Burger
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    RE: When and if to Change 2007/01/23 08:37:51 (permalink)
    Thank you very much for your feedback. To answer your question about what the specialty item is, it's cajun food, i.e. deboned chicken stuffed with shrimp etoueffe etc. Any suggestions on that subject are also welcome.
    Double Chili Cheeseburger
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    RE: When and if to Change 2007/01/23 10:45:02 (permalink)
    How do you stuff something w/ a sauce that means to smother?
    Sonny Funzio
    Double Cheeseburger
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    RE: When and if to Change 2007/01/23 14:22:28 (permalink)
    Prior to ANY change, FIRST you have to do the numbers, so you need a stable period of operations to gather your data.
    This means do NOT change your menu at all ... not in the menu mix nor in specific items.

    Briefly, some of the figures you need before any changes are as follows ...
    Establish your numbers for Breakeven - you will need to know how to do this properly ... the important thing about going thru the analysis process and being able to do these calculations right is by doing them, you uncover the specific issues about your operations which can be individually corrected/changed. These are things such as the appropriateness of your Food and Beverage Costs, your Fixed Expenses (including any salaries paid), your menu pricing, your menu mix, whether your employee scheduling is tight and accurate (variable labor cost), all your controls having to do with everything about your food and supplies, whether the number of seats in your dining room will support the number of covers and covers per hour needed to support your costs, whether you are having volume problems related to menu choices and customer handling, and an absolute bucket load of other metrics. All this stuff is interrelated ... and all of it stems from what are known as Cost/Volume/Profit calculations (CVP) which are part of determining your breakeven numbers.

    The reasoning is a little bit algebraic and involves specific formulas but really is *not* too difficult once you understand the process.
    You will have to understand the use of factors such as fixed costs (including Contribution Rate) and variable costs (Variable Rate), Contribution Margin etc ... the giant benefit to doing it right is that it leads you to be able to "plug" in a level of profit that you desire (profit scenarios), and specifically work backwards thru your analysis to determine *exactly* what actually can be done (in all those areas stated above) to achieve it!!! ... and importantly, whether for all the dynamics (as shown by your calculations) that are going on ... breakeven and/or profit is even possible ... and as well ... just how profitable your operation can be *now* with certain corrections, and how breakeven and profit would look in the future with the "specialty food restaurant" changes you are hoping to make.

    Short of taking restaurant accounting courses at a local college that has a culinary arts program, go to a college bookstore or large commercial bookstore and purchase a couple good references on doing Cost/Volume/Profit calculations and breakevens and throw yourself at the material. (btw: look for books specifically dealing with restaurant "cost controls" for food, beverage and labor)

    AFTER you go thru this process *then* you will be able to look at implementing the changes you desire while understanding how they affect your food, beverage and labor costs, pricing, volume and turnover, profitability etc.

    Not doing the analysis and instead flying by the seat of your pants is the equivalent of wandering out into a snowstorm without knowing where you’re going.

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