Tips From FreePOS Restaurant Owners

1. Simplify your menu... not the number of choices.   For example, you can offer a ham and potato soup, a ham and cheese sandwich, a ham sub, a ham and egg special, a ham biscuit.   All these items require ham... this strategy increases volume on one main product and therefore gives you better price points when purchasing.
2. If you are in a mall, have inactive servers 'pulling'.    Why not have someone who is 'waiting' for their next table hand out $1 coupons to the mall traffic?
3. Managers should be paid a low salary and a HIGH bonus for profits.   Let them share 5% of the profits each month... and only hire people who are willing to break their backs for you.   The uneducated (but hard working) person is who you should hire... not the guy who has a BS degree and 'upper crust' experience.   Opportunity makes great employees.
4. Consider disposable plates, forks, knives, spoons etc if possible.   The dishwashing center is always a big hassle.
5. Pay servers a commission based upon 'add on' items (i.e. desserts, appetizers, drinks).   If they can make money selling it, they'll push it for you.
6. In table service environments, be sure to 'capture' orders using a computer system or a defined procedure so that food is never prepared without a verified order.   Free food to friends of your employees is VERY expensive.  
7. People love a freebie... every 16th customer should get a free desert or appetizer if possible.
8. Get food out to your customers as fast as possible... this means you get rid of any employee who doesn't hussle and get the job done.   "Fast or you won't last"    Turn tables fast.
9. Rest rooms should sparkle.   Don't be cheap... a restaurant must be clean.
10. Gift certificates should be offered at the end of all meals served for a 10% discount.   (Since you dined with us today, you can purchase a $10 gift certificate for just $9)
11. Bottled water should be served... not tap.   This enables you to charge for a drink every time and it adds to the quality of your product.
12. For $200 you can make your entire restaurant a 'wireless internet cafe'.   If you offer internet and email access for your customers, you will attract professionals, business meetings and a higher quality of clientel.   Get a Linksys wireless access point at Best Buy and plug it into your cable modem.   Include the phrase "Wireless internet access at every table" on your menus and printed ad materials.
13. Servers should be instructed on how to give change.   If a customer has a $22 check and pays using a $50 bill, the change should come back with a lot of $1 bills.   This encourages the customer to leave a higher tip.   A $19 check paid with a $50 should be changed out with 1 $20, 1 $5, and 6 $1...  make sure the customer has enough $1's to leave a good tip.
14. Thank each customer as they leave.
15. Ask each customer how their meal is/was.
16. Establish credit terms with each vendor... get ahead of the cash flow cycle!  If you pay COD, get a 2% discount.
17. When starting a business, work to get VOLUME not profits.   With volume, you can negotiate better prices, hire better people and get tons of credit from banks.   Profit should be kept at a minimum if raising profits will reduce volume.
18. Never warn an employee... if they need a warning, fire them.
19. Portion controls should be a primary concern.   Use metered foods as much as possible.   Use pre-sized scoops for portion control.   This helps with food cost.
20. Popcorn is a smell that increases appetite.    Your store should have a popcorn scent in areas that are suitable.    A bar should always smell like popcorn.    Salt is a bartender's best friend.
21. All bar snacks should have a large salt content to encourage drink orders.  Croutons with Tabasco are great too... hot is like salt in that it makes you drink a lot.
22. Punch cards for business lunch -- come in 10 times, get an 11th meal free.   This encourages repeat business.    Punch cards are not voluntary... they are given to each person at every table NO MATTER WHAT.     Come in 5 times, get a free appetizer.
23. Sell gift-cards on ebay.com or use restaurant.com
24. Wait staff should be given random perks... a free beverage, a thank you or an extra 15 minute break.   This makes them smile more.

Watch Out For BURN OUT

Let's face it... running a business can be a hassle.   Despite popular belief from employees, there is no room in the back of the building where an infinite supply of cash grows on pooplenuckle trees.   Every dollar that ends up in the profit margin is hard earned.    As business owners we deal with customer problems, employee problems, vendor problems, our own problems and ofcourse property-management issues.

First of all, pat yourself on the back just for being a business owner.   It takes a strong person to stick it out.   Second, let me tell you a few things I learned about running a business.    No, my business wasn't POS related... I ran a computer consulting firm for 12 years.    But it is amazing how many common attributes all businesses share.

Let's begin with the formation of a business.    I don't care if you are selling your time or a product or a service... you must set up a corporation.   This sheilds your personal assets from those of the business (the best General Liability insurance plan you can get).    Plus, with a corporation you are entitled to a much wider array of deductions which means lower taxes.    ALWAYS make sure the IRS gets paid on time.   One of the ways 'audits' are picked is from a pool of flagged corporations.   These corporations are flagged when they are: 

• Late sending in sales / meals tax payments
• Late depositing federal withholdings
• Late filing quarterly forms
• Late filing corp. minutes
• Late filing their personal returns and corp year end returns

I've heard a lot of accountants say 'Oh, audits are chosen by random'.   THIS IS NOT TRUE.   If you have ever been audited and had to pay money, you will be audited again.    I spoke with an actual IRS agent and she told me EXACTLY how the selection criteria works.   If you want to avoid an audit, PAY ON TIME!

Next, you'll need to choose a chapter for your corporation.   The selections are C and S.    Basically, if you are a restaurant you'll want to go with S.    If you are a chain of restaurants, you'll want each location to have its own S-corp.    If you manufacture something (i.e.  your own brand of salsa) and you are getting into grocery-chains and brand-names, you'll want an array of C corporations to hold your S-corps.    What is the point of all this?   Very simple:   If you are sued, you want the defendant to be your corporation (or just 1 of your corporations)... not 'you personally' or 'the entire chain' of locations.

Now that your business is licensed, incorporated and hopefully insured... you'll need to spend HUGE numbers of hours making sure that the business actually earns a profit.    Here are the ways to insure you make money:

• NEVER be the minority stock holder in any corporation (less than 51% is BAD)
• TRY NOT TO fire an employee... assign them jobs/shifts that they hate and let them quit
• NEVER settle a frivilous Personal Injury case... always fight it (you can get a reputation among the local attorneys as being a push over... and your G/L insurance rates will go way up if you have a settlement history... and it sets the ground work for future claims by establishing a pattern of negligence - If I am an attorney and I can get you to say in court that you have settled other claims in the past, my obvious next question will be "If you haven't been negligent in the past, why did you settle?" and "If you were negligent in the past, what specifically have you changed since then?" )
• ALWAYS make sure employees who have been 'injured' on the job are given access to the hospital.   EVEN IF YOU KNOW THEY ARE FULL OF BS... they should be allowed to go to the hospital.
• The corporation that runs your 'business' should be a different corporation than the one that owns your business's property.   Your business should 'rent' the property from the corporation that 'owns' the physical building/lot.    This reduces liability.
• DO NOT borrow more than 25% of the gross yearly profits.   The flexible nature of corporate interest rates is a trap bankers love to catch you in.   Cash on the barrel is best... but if not possible, you should be VERY VERY lean on borrowed money.
• ALWAYS carry health insurance... you can get sick (I did to the tune of 100K+)
• ALWAYS carry life insurance... don't stick your wife/kids with a business that has no value.
• ALWAYS pay vendors NET-45 days.   Even if you have the money early, pay them 45 days.  If you pay net-10 sometimes and net-60 other times, you will be 'unstable' to your creditors.   Pick a set of payment terms and NEVER be late or early.

After about 3-5 years of working like a dog, you will experience what is known as 'burn out'.   Life's less black-and-white questions will begin to flow through your cluttered mind:

• What happened to 'my time'?
• Why am I living my life for everyone else?
• Why am I not happy like I used to be?
• Where does all the money go?
• etc etc etc

The good news is that these questions are NORMAL.   The bad news is that you are getting BURNED OUT.   After the initial challenge of starting a business is over, the day-to-day operations of a business can get quite repetitive.   The highs become 'not so high' and the lows become 'just another day'.   In summary:  you num up to the peaks and valleys.

So how do you get out of the BURN OUT cycle?    Here are my solutions:

• Take a day off (yes, your business will suffer... who cares?) and do something just for you.  Not for your family, not for your brother, not for your kids,  DO SOMETHING FOR YOU.
• Don't try to BUY HAPPINESS... a new car is exciting for a day,  the payments are for 60 months.    A vacation is $10K... the same amount of money could have given you 2 weeks off at home and with family.
• Don't waste your time arguing... if you disagree with someone, you should try to avoid them.   If a train is coming down the tracks, DON'T STAND IN ITS PATH.    Step aside and let it go by.
• Be LOYAL to your spouse/significant other.  Tell him/her everything.   Tell him/her what you are thinking about.   Be honest.    With everyone else, Be BRUTAL BUT FAIR.

Employees are every business's biggest windfall or downfall.   For me, employees just about ruined my life.   I was in a technical business in a coal-mining town... I should have paid a premium for just a few of the very best people.   Instead, I hired a large number of lower calliber people.    Not that everyone that ever worked for me was lower cal, but many were.    The short and sweet of it is:  you're better off with 1 person you can count on, than 5 people that show-up for work on alternate Tuesdays based on the phase of the moon.

Employees should always be hired based on their need.    If they NEED a job, then they will work hard (i.e.  a father with two kids).    If they DON'T NEED a job, they will be lesser employees (i.e.  a college kid whose Mom and Dad are paying the bills).      Your job should always represent a STEP UP for the newly hired person.    NEVER hire a previous manager for an assistant manager position.   That is a step down and the employee will leave quickly.

No employee will be profitable in less than 6 months.   THEREFORE, if you can't cover their salary as a loss for 6 months, you can't afford the employee.   Waiters and waitresses are not an exception to this rule.

Everyone in your company should be paid a LOW salary and a HIGH 'output based' incentive.   Waiters/waitresses should be paid based on the average ticket value.   Managers should be paid based on weekly profit statements.   Just as you would not hire a vendor if they didn't save you money, an employee should have a 'quota' or base-line for expected performance. 

You are better off having 3 waiter/waitresses that make $14/hour than 6 making $7/hour.   A $14/hour job is HARD TO FIND... a $7/hour job is EASILY REPLACED.    Be the highest paying employer in your industry, but don't hire a lot of people:    hire the best.

SWEAT EQUITY... if you want to save a bundle on your business's next location, buy an old warehouse with lots of sqft and low $$$.   Rent out the back as office/warehouse space.   Use the front as a retail area.   Use the middle/sides/corners as your HQ.   Never buy a BRAND NEW CONSTRUCTION or owner-built out facility.