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truth or lie

Big Fat Lie #3 – Bad Economy Or Simply Bad Operators

The discussion once again revolves around our bad economy and what operators can do to weather the storm. This is the essence of the points that need to be made.

I’m a trained economist by education and I really don’t even know what the ‘natural life cycle of economies’ is nor does anyone else. It is also irrelevant. What we have is just that – what we have. When have prices never risen? When has some economic factor never been at work in our markets? The bottom line is that most operators have no formal strategy to begin with on how to build better businesses – let alone weather negatively perceived economic factors that have little or no bearing on their markets.

Discount and coupons don’t work in good economic times let alone bad ones. What sense does it make to offer economic incentives to buyers to make purchases that they wouldn’t normally make anyway (do to a perceived period of spending constraints on their part) simply because we are experiencing lower returns? Conversely, what sense does it make to leave money on the table when we are experiencing renewed purchasing by the consumer during much improved economic times? The answer is none and none.

As for the bad economy, high-end cars, jewelry, and attire are going strong. Airlines are packed to the gills with paying customers. Pet foods and accessories are never going to abate, nor is the health industry, nor the alcohol industry. What’s known as hospitality is doing just fine – try to get a good hotel room in New York , Chicago, San Francisco or any of the larger secondary markets, or a table at an outstanding restaurant on a weekend. The ferries to Nantucket are already packed with reservations for next summer.

Oh, and hey, there are a couple of high tech firms that seem to be quite strong, some non-profits having great years and some universities with record endowments. Then there are athletic teams, the travel industry, etc…

One of my clients in southeastern Michigan of all places – GM, Ford and Chrysler country, rust belt, etc… is experiencing 23% + increases and has been for the last 3 years, with no signs of it letting up! My God, Burger King, of all people, is having a good year.

Does that mean we don’t have economic problems? Not at all. When has any economy ever not had problems? But it doesn’t mean we have to heed the rantings of all the “chicken littles” about how the sky is falling either! Especially when there are clear signs to everyone with the proper eyesight, that with the right strategy and resources in place, you don’t have to be held hostage to those problems in the first place!

The bottom line is that operating a restaurant business in today’s economy requires you to be smarter than you were 24 hours ago – let alone a year ago.. We can no longer subsidize poorly organized or badly run operators and we shouldn’t. The world really doesn’t need any more restaurants (we’re rapidly passing 1,000,000+ in the U.S.alone!), so why do you think you, Mr. My-Friends-All-Tell-Me-I’m-A-Great-Cook or you, Mr. Retired-Engineer-Restaurateur-Wannabee, will be more successful than industry professionals when they themselves, are having a hard time figuring it out?

Sometimes people have more money than common $en$e.

The success of a restaurant is determined way before the key is put in the newly hung door. It starts with a formal strategy for success. Anything less and it’s only a matter of time.

And cost control has to take place at every juncture imaginable by being built into the businesses operating systems as well as the culture of the business and alone cannot overcome any negative circumstances. No one ever shrank their way to greatness. The only way out is to grow your way out of whatever circumstances you find yourself in – period.

As the founder, owner and President of a Restaurant & Hospitality Coaching and consulting firm with clients in 36 states and 14 countries, coupled with my own 31+ years of very successful operating experience in this industry, the last thing I need, or want, is to continue to have to face the “politics of fear” that some use in our industry to drive their own professional goals and ambitions, putting them ahead of the truth and their clients simply because they don’t understand that to do so is a reactionary stance against circumstances they need not face in the first place.

Good operators don’t need to be smacked upside the head with a skillet to know that they need to position their businesses to grow in good times and in bad. With bad operators, it’s usually too little too late anyway.

This is the conversation that desperately needs to take place in our industry, especially given the urgency of the circumstances with which most operators find themselves in.

Time To Take Action

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  1. Grow your business.
  2. Make excuses.

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Jeffrey Summers - Founder/Principal, Summers Hospitality Group Jeffrey has spent over 30 years in various Marketing, Operations and Business Development roles in corporate and franchise chains as well as independent concepts including: fast food, QSR's, casual full-service, fine-dining, private clubs and banquet facilities, corporate dining and catering businesses. He is widely recognized by his peers as one of the world's leading voices in the Restaurant & Hotel industries, as an expert in restaurant & hotel businesses, Jeffrey now devotes most of his time to helping owners/operators and their organizations both identify and achieve their business objectives using all of the tools at their disposal. More info about Jeffrey.  How Can We Help You Build A Better Business?

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