Stayin' alive: business lives off repeat patrons - Column

A question: How many restaurant companies increased earnings every year during the "booming" '80s? It's actually a very short list of those that performed well every year during the last 10 years.

Does consistent, long-term success elude many restaurant companies because they make the wrong decisions based on the right information? Or is it because they're not getting the right information to begin with? Who knows--there are probably case studies for both and a combination of both in most cases. But managers will probably not get the information they need to deliver long-term results even if they do ask the right questions.

One company spent six figures every year on marketing research and went out of business. They probably knew, in general, why they closed. What they didn't know was what they could specifically do to keep customers or bring them back more often. Operations management assumed it was doing a good job until they turned out the lights. Another successful young company spends very little on customer information and is expanding its menu with the wrong products. Will they make the very short list of restaurant companies that are successful long term?

An average restaurant could increase profits by 30 percent if they could bring back customers one more time in a year. You don't need new products, hot new marketing strategies or a "back-to-basics" philosophy to make that happen.

Unit sales and profit gains result from improving operations delivery at each unit. The fact is, you may be enjoying sales gains now at a particular location and doing a poor job with customers. The information available to most managers is of little value to knowing where a restaurant's sales should be or where they are headed.

Think about the whole decision-making process on its head. For comparison, imagine unit managers trying to achieve a food cost objective using the company income statement rather than their own inventories and specific product mix information. Managers might miraculously end up at their food cost goal. But they would breath a sigh of relief, not bask in a sense of satisfaction for a job well done. Just as unit managers receive a monthly income report which requires action, management must provide them with tools to improve customer satisfaction and increase lighter user visits--and keep heavy users coming back.

Why are companies willing to assume a unit's operation meets customer expectations while they leave no stone unturned in detailing every monthly expense -- no matter how small? If companies had information that showed why many customer visits were below expectations, they would probably try to correct those problems. More importantly, every unit management team would take that same information and address customer priorities for their location. They won't all be the same.

In fact, one visit out of six is not a good one at most restaurants. Managers are usually surprised to learn how much difference there is between their own locations on customer satisfaction--even between visits to the same restaurant. Their first priority is not to launch a new menu effort or start a new promotion to build sales when they do. Why do you think a famous company started "guaranteeing" customers a good visit?

Improving unit performance is ultimately a communication issue -- not a measurement problem. The Total Quality Management gurus will tell anyone who wants to know that it wasn't speeches by CEOs that made the difference in turning the manufacturing companies around. Giving line managers the information they needed to improve performance in their operation started the quality revolution for product companies. Getting that information requires the active, ongoing involvement of operations management -- starting at the top -- but mostly it means getting the right information into the hands of unit managers in a way that allows them to really do something with it.

An answer: That's the way you can really move managers to improve performance with customers and increase sales every year. And one of the best ways to grow profits every year--like those few companies that grew profits every year for the past decade. And even better, be one of the even fewer who will do it in the demanding '90s.

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