Stop Losing Money: The Profit Leak Fix
What would you do if you could take over your restaurant today and make immediate changes to improve performance?
In Part 3 of the popular If I Owned Your Restaurant series, Roger shares the practical strategies, systems, and profit-driving tactics he would implement immediately to improve restaurant profitability. Drawing from decades of restaurant ownership and consulting experience, Roger dives into the operational details that often separate thriving restaurants from those that constantly struggle with shrinking margins.
This episode covers everything from labor management and inventory control to menu profitability, marketing, recruiting, guest retention, and financial accountability. Roger explains how small operational improvements can create significant gains in restaurant profit over time and why every operator should know their numbers, track key performance indicators, and build systems that support long-term success.
One of the biggest themes throughout this episode is identifying and eliminating profit leaks.
Whether it’s inefficient scheduling, poor inventory practices, unprofitable menu items, ineffective marketing, or missed opportunities to increase guest frequency, Roger shares real-world examples of how operators can improve profitability without sacrificing guest experience.
You’ll also learn why regular inventory counts are critical, how to evaluate labor efficiency, why menu engineering remains one of the most powerful profit-building tools available, and how understanding product mix can reveal hidden opportunities worth hundreds of thousands of dollars annually.
Beyond operations and finances, Roger discusses proven marketing strategies that actually generate measurable returns.
From creating strategic alliances with local businesses and leveraging loyal staff as brand ambassadors to developing catering programs, loyalty initiatives, mug clubs, and special events, this episode provides practical ideas to help restaurants attract new guests and increase repeat business.
If you’re looking for ways to increase restaurant profit, improve accountability, reduce waste, strengthen your team culture, and build a more profitable operation, this episode is packed with actionable insights you can put to work immediately.
In This Episode You’ll Learn:
How lease negotiations can improve restaurant profitability
Why separating operating and real estate entities may help protect assets
Ways to improve curb appeal and visibility with minimal investment
How to track labor costs against your restaurant’s sales sweet spot
Recruiting strategies that outperform traditional hiring methods
Why labor accountability starts with scheduling and time clock management
How inventory systems help control food costs and reduce waste
The importance of weekly inventory tracking and establishing performance benchmarks
How menu engineering impacts restaurant profit
Why product mix analysis is one of the most powerful profit tools available
What makes a menu item a “cash cow”
How to calculate and use your daily break-even point
Why guest counts and table turns should be monitored consistently
Marketing strategies that deliver measurable ROI
How staff can become powerful brand ambassadors
The role of social media, events, and promotions in driving traffic
How catering programs can create additional revenue streams
Why mug clubs and loyalty programs increase guest frequency
Creative ways to build strategic partnerships that generate new business
Whether you’re an independent operator, multi-unit owner, or aspiring restaurateur, these proven strategies can help you improve restaurant profitability and create a stronger, more sustainable business.
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Hey there, and welcome back to the podcast. You know, my first two episodes on what I would do if I owned your restaurant were so popular, they were off the charts. So this is actually part three. You know that labor is a challenge. You know that margins are shrinking. Competition is stiff. Value to guests is important.
This is what I would do. It's a deeper dive if I owned your restaurant. Let's start with housekeeping. Let's talk about your lease, okay? Ninety percent of all restaurants out there have a lease, but did you know that there's a very good chance you can renegotiate your lease terms and even get concessions?
I know this because I have a podcast, episode number four forty-nine, with the lease coach. You should go back and listen to it. If you've been a great tenant, if your landlord wants to keep you, think about this. It's worth it to you to renegotiate your lease Think of the cost savings there and think of what you might get.
I learned a long time ago, as you know, you don't ask, you don't get. All right? Let's talk about that. If you own your property, and if you've got real estate as part of your portfolio, maybe the building that your restaurant is in, think about the importance of keeping a separate operating company from your real estate company.
Now, my attorney, so many years ago, decades ago, recommended this for a very good reason, if there's a lawsuit because of something that happens in your restaurant, they can take everything in the bank account. They can take your equipment. They can attach things. But if your restaurant operating company is separate from your real estate company, the operating company can pay large rents to the, huh, to the real estate company, and the real estate company owns all the assets.
It owns the property. It owns the furniture and fixtures, the equipment. You see where I'm going with this. So once you pay yourself and you've got payroll and cost of goods and all the operating expenses, if everything else gets paid in rent to the real estate company and you get sued, they can't sue the owner of the real estate unless somehow they prove that the owner of the real estate was negligent, okay?
So that is very, very important. I did that with all of my restaurants where I owned the property, and that was several. That was really vital. Let's talk about a fresh coat of paint, okay? How many places, any business, it could be a restaurant that you've been to, it could be any business at all, where you just notice that the place isn't dialed.
It needs a fresh coat of paint. Maybe it does need to be painted. Maybe there's trash in the parking lot. Maybe there's, you know, fingerprints on the windows. Maybe there's burned-out lights in the parking lot or in the entryway. These are all the important details that determines whether your place has curb appeal or not, or if somebody moves on to the competition.
I recommend take a walk outside your front door, put your guest hat on, and look at everything, all those little details that a guest sees that matters that you don't want them to see, you need to fix. Next, high visibility. Okay, you can drive around your town, and you can see those businesses that really stand out either through their lighting or their signage or the attractiveness of their space, whatever it is.
That is a competitive advantage. So take a fresh look at your place. Go outside and look and think, "What could I do different? What could I do for little money that'll improve this, increase the visibility?" Anything like that is really, really important. I think you've heard me tell this story of I had a steakhouse once.
It was called The Great Grizzly Bar and Steakhouse, and I owned the property, and I had 1,200 feet of road frontage. I had an artist take a giant 13-foot-tall tree trunk, and with a chainsaw, he carved a giant grizzly bear with this giant chalice in the air because it was a bar and a steakhouse.
So imagine this 13-foot-tall thing mounted on the front lawn that you could see up and down the street. But then I thought, "Well, you know, I want people to see it at night, too, because I'm open for dinner I attached a propane tank to the bottom of this bear, and we put a, a flamethrowing burner on top that threw this, yeah, this flame, like two or three feet off the top of the bear, and you could see that for half a mile down the street from either direction.
Not only was it powerful as a hook, but then people started using it as a photo op, and day and night, people were stopping and literally taking pictures in front of the bear, many of which came into the restaurant. So that was a hook. That's visibility, okay? That's curb appeal. That's a fresh coat of paint on your place.
Let's move on to finances and KPIs, you know, key performance indicators. Track your labor weekly against your sales sweet spot. This is something I did every single day. You might have heard in the other episodes, I tracked my labor two different ways. My overall payroll is what I paid myself, what I paid my team leaders, all my hourly wage employees, my payroll taxes and fees, and the payroll...
You know, that's, that's the big check that you write every single week or bi-weekly, okay? But then kitchen labor is most important to track on its own because kitchen labor is the highest it's ever been. Now, I owned steakhouses a long time ago. I sold my last steakhouse in twenty fourteen. I paid my main grill cook, and he was a rock star.
I paid him fifteen bucks an hour. He got a raise every year, but when I sold that place in twenty fourteen, I was paying him fifteen dollars, and this guy was a rock star. Now, to replace a person like that, it's probably twenty-five dollars an hour, okay? Labor has gone up huge, and we know that there's a labor staffing issue, okay?
So track your labor weekly against your sales sweet spot. So what does that mean? If you've got a consistent business week to week, okay, and let's just say, let's just say you do twenty-five thousand dollars a week in sales or thirty thousand dollars. That's-- Let's just say that's a consistent amount, and you wanna make sure that the labor, okay, efficient labor is what I'm talking about.
That means you schedule efficiently, you cut people when you don't need them, you stagger your shifts. Let's just say you're optimizing your labor efficiently against that amount of sales, and then you do the math and you divide. Obviously, you do the simple math, and if your kitchen labor is a certain amount, you divide that by your kitchen sales only, your food sales only.
What's that percentage? You wanna make sure that that percentage is the same that you hit every single week. Maybe your kitchen labor is twenty-eight percent. You wanna hit it twenty-eight percent, twenty-eight and a half, twenty-eight percent. You get the idea. Okay, it's very important to track payroll both ways.
Overall payroll percentage Do the math. Kitchen labor percentage, do the math. I did that every single week, and I stayed in my sweet spot. If ever there was a variance or a spike, I knew exactly what to do to dive in and figure out where it was. Was it in the kitchen? Was it here? Was it there? I dove in and figured out why did my labor spike against similar sales.
If you can do it one week and hit your sweet spot, you should be able to do it every single week. But you gotta focus on it, okay? That's very important. Need staff? I talked about the labor shortage. So many operators tell me, "Oh my God, what do I do? I'm short-staffed this week. It's like I hire somebody and they show up for a week and then they quit, or they don't show up at all after that."
It's like everybody is struggling. And you know It's all about accountability. It's all about setting clear expectations and holding people accountable and having an amazing company culture where you recognize and reward people and you incentivize them for helping you run your business. That's ideal.
But I digress. Let's go back to the labor shortage piece. Are you hiring people? Are you putting signs in the window? Are you actively recruiting people? What does that mean, recruiting people? There's a place, you've heard me talk about this in other podcasts. There's a restaurant chain in Southern California, 28 locations, open breakfast, lunch, and dinner.
They had a huge labor challenge right after the pandemic when so many people left our industry. They came up with the idea of gift cards to their guests, their loyal customers. They gave $250 gift cards to anyone who referred an employee, a new person, a new hire, a new recruit I call them, who lasted 60 days.
And it wasn't, again, it was not $250 cost. It was their food cost, pennies on the dollar. That was a genius idea. When I had this challenge decades ago, I incentivized my best people, my A and B players, and said, "Who else do you know who might not be happy in their current job, who really wants a place that cares for them, that has this amazing teamwork and respect culture?
We incentivize, we recognize and reward our people. You bring me people like that, I'm gonna give you 100 bucks." And then I gave that person a couple hundred dollars if they lasted 60 days. And I knew if I had them for 60 days, our training, our recognition rewards programs, the fun, the team spirit, all that was gonna retain those people.
And yes, it turned out to be true. 96% retention rate in my restaurants, even though some of them were seasonal. They were open only months a year, and those people had to go get new jobs when we closed, and they all came back year after year. That was really powerful. My biggest restaurant of all, I hired people.
I sold it in 2014, one of the steakhouses I was telling you about. I go back there as a customer now, and it's amazing that people I hired 28 years ago still work there, and they're part of the family, and it's the culture, and that's a powerful thing, okay? So if you need staff, stop trying to hire people.
Stop putting signs in the window and on, you know, on the road. Recruit people. That's the way to go. Okay. Make sure that your people are punching in and they're productive, accurate to the schedule. All right? I saw so many people. I had 60 people in this flagship restaurant, a long time ago, granted, but, but the point I'm making is still relevant today.
Out of 60 people, I noticed that 25 or 30 people were clocking in early, anywhere from five minutes to 10 minutes to 12 minutes, right? And I watched them, and I tried to figure out why are they clocking in early? The schedule says they're supposed to be here at two o'clock. This person's clocking in at 10 minutes to 2:00, and they're chit-chatting with their friends, and they're grabbing a free soda, and you get the whole idea, right?
And I said, "You know what? We're really good to these people, and we have these incentives and recognition rewards, and we take great care of them, but it's costing us a lot of money to have so many people clocking in early." So I made it very clear to my team. I had a couple of meetings and I said, "Listen, if the schedule says you're supposed to be here at two o'clock, that's when you punch in."
And I do the payroll. I compared the schedule back then to the time these people clocked in and I said, "Okay, if there's a legitimate reason you're being called in early- I'll pay you for that time, but you need to put your name on this template I created, and you need it signed off by the manager.
And if I don't see your name on this, then I can go into my point-of-sale system, and I can edit your time to the time the schedule says you're supposed to be there. And that saved me hundreds of dollars with 30 out of 60 that were clocking in early. That was huge, okay? So make sure your people are punching in and they're productive and accurate to the schedule.
Make sure your team clock out when they're supposed to clock out. I talk about this all the time. It's like you can lose so much money if people forget to clock out because your point-of-sale system is gonna pay them all those extra hours until it transfers over to the next day unless you catch it.
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You need to put an efficient inventory system in place. You must take inventory. And again, that is not placing orders next week. That is calculating the value of your goods on hand at a given point of time. I've said forever that not taking inventory regularly is like leaving hundreds of dollar bills all over your restaurant for anyone to take.
You wouldn't do that, so why aren't you taking inventory if this is you, okay? An efficient inventory system is so important. I always recommend you do this four weeks in a row because, again, there's that sweet spot thing again. You wanna make sure that if your sweet spot is a 28 or even a 30% food cost, if that's your sweet spot and that's what's making you money, you wanna make sure that every week you take inventory, you're hitting 30% food cost, 30% food cost, 30 and a half okay, 30% food cost.
But if one week you're at a 30 and the next week you're at a 32 and the next week after that you're at a 33 and a half, it's like you don't know what your food cost is. It's all over the place, all right? So make sure you take it four weeks in a row until you hit those four weeks of your sweet spot and then, and only then, go to a 30-day inventory.
And then you don't have to worry about it again, unless 30 days later you hit a 36, and then you dive deep and you figure out where the spike happened. But you wanna stay in that sweet spot, okay? Once I went to a 30-day inventory, I never had a problem again. It's like my people knew. It's like it was all about efficient processes, okay?
And everybody was accountable to make the place work. You know, I even had this very basic idea of open book management. So I recommend you do this too, because There are so many people in your restaurant that think that you're making all the money and they're doing all the work. That happened to me so long ago because they don't know how to run a business.
They've never run a business before. They don't necessarily think that every time I sell this entree for so many dollars that it costs me so much for the food cost and so much for the labor cost and the linen on the table and the dumpster in the parking lot and the silverware and the plates and every...
They don't think about that. So every time a plate breaks, how much did that just cost you? Seven or eight bucks. And that profit just came off the next dish that you sell, the next entree that that plate is served on. Man, how much silverware have you seen end up in the trash that costs you dollars and dollars for every piece of silver?
All this costs you money. Unfortunately, even if it's honest, there's a theft issue in our business. I don't need to tell you that. There are people that have apartments and they need toilet paper and ketchup and silverware and napkins and all this stuff has an easy way of just finding its way out of your restaurant.
But if you went to visit some of your team members, I've seen it happen, you might just find a lot of your stuff in their apartment, okay? It happened to me. It's happening to other restaurants out there too, okay? So that's important. So this open book thing, let me go back to that. What did I do? I took a flip chart and I put, this was a while ago, I had a $25 steak, okay?
And people thought, oh, Roger's putting 25 bucks in his pocket every time he sells a steak. Wrong. Okay, $25. Here's a couple bucks for the food cost on that. Here's several dollars for the labor cost on that. Here's all the dollars for all the laundry items of every expense I had in my restaurant. And here's what I'm actually making.
Here's the profit on every dish, every item I sell. Oh, and that couple of pieces of silverware disappeared, that broken plate, after that, everyone got more careful. It's like they're incentivized to care. We recognize rewarded performance for being careful, for being great team members.
And that led to a high retention rate, that 96% I'm talking about. Cost your menu items to the penny. This is the biggest needle mover. I talk about it all the time. I consult with restaurants. If this interests you, I can work for you and do this in your restaurant. But imagine every menu item in every category has an ingredient cost to it.
Forget the labor. We're not talking labor. We're just talking about the cost of ingredients. So I have a template, and it lists every single menu item. And on an individual level, let's just say this is the chicken Parmesan. One template for every menu item in every category, appetizers, soup, salads, entrees, sandwiches, pizzas, desserts, all these are items.
You need a template for every one of those things, and there's a bit of homework here. But nothing, nothing, nothing is more important than making sure you know how much it costs you in ingredients to sell this menu item to that customer based on what you charge on the menu for it. it How many ounces of this goes on the plate?
If it's a takeout container, since the pandemic, right? Online ordering and so much has become delivery now and third-party apps and all this, you must include the takeout container, even the doggy bags they used to call them, or the box that someone didn't finish their meal. That should be costed out as well.
So now you got a list of ingredients, okay? There's a couple other things that this template shows you. It shows the menu price or what you charge the guest for that item. And then if you do the simple math, it'll show you the profit of that item, okay? You simply subtract the ingredient cost from the price you charge on the menu, and that's your profit on this item.
But then there's the food cost piece too, okay? Because you divide the ingredient cost by the menu price on the menu, and that gives you the food cost of that item. That is such vital information. So imagine now that you have a list of every single category, and now I rank these from the most profitable item to the least profitable item in each category.
And then I go to a product mix report on my POS system over a long period of time, and I see the volume of sales of all these items I've sold. And what do I find? I find that the profit difference in each category among items is many, many dollars. And when I see a restaurant selling thousands and thousands of something that's losing them three dollars, five dollars, seven dollars on appetizers, ten dollars, twelve dollars, thirteen dollars on entrees, and they're more popular sellers.
They're filling their seats, wondering, "Why is my bank account not growing?" Because the menu isn't profitable and these, these low-profit items are stealing sales from what they want to sell, what they could be selling. Case in point, individual independent operator restaurants, busy lunch and dinner places, two clients were in excess of three hundred and fifty thousand dollars in lost profit against sales of almost two million dollars.
Okay, I worked with two different pizza chains, both five locations. One was a franchise of thirty units. They had me analyze five of their stores. I found six hundred and twenty-five thousand dollars in lost potential profit. The other one was a single independent five-store location, only pizzeria, eight hundred and eighty-five thousand dollars in lost profit over a year's time because in every single category, wrap sandwiches, salads, soups, entrees, desserts, pizzas, all that stuff, they're losing dollars every time the low-profit items are stealing sales from the high profit.
I can't emphasize that enough. That is the biggest needle mover. If you need help with this, reach out to me, roger@restaurantrockstars.com. You gotta cost your menu items to the penny. Analyze your product mix for volume against sales once you know this information. I mentioned it, but I can't emphasize it enough because that's what tells you the volume of sales against the profits and where you're losing money every single day.
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Cash cows. I love cash cows. A cash cow, you've heard me talk about this. It's an item that has extremely high perceived value by the guest. They think it's amazing for what you charge for it, and they have no idea that there's virtually no cost to the item because it looks amazing by virtue of what it is and how you present it, the plate it's on, the, you know, the dish it's in, whatever it is.
It looks amazing. It smells amazing. It tastes amazing, and hopefully it's a signature item because it's almost pure profit, okay? I could give you many examples of cash cows that I found or created for my restaurants. What do they do? They lower your food costs. They increase your profit. I even found a way to give these things away that drove lots of business in the door because I could afford to give them away.
They cost me virtually nothing and the average check coming in the door, and I mean the average check, okay? Sure, it could have been a four top, it could have been a two top or even more because I gave this item away if people came in and had a drink, had dinner, whatever, and the average check was $85.
And granted, this was years ago and checks have risen since then, so y- your results could be even greater than this. Sure, some of the checks were 150 bucks. The average check was 85 bucks. What was the cost? Less than a dollar for these cash cows. So again, it lowers your food cost, it increases your profit, and in some cases it can be a hook to drive new business.
That's huge. Know your daily breakeven. This is a basic accounting lesson, okay? Your daily breakeven It's where you're not making any money, but you're not losing any either. So the amount of sales that come in in a given day, you're not making a profit, you're not losing any money. And why do you need to know this?
Because not every day in your restaurant is busy, okay? Maybe Monday is your slow day. Maybe Sunday is your slow day. Imagine your sales on a Monday are $1,000, okay? And unless you're hitting $1,000 with consistency every single Monday, if your break even is 1,500 bucks, you're losing $500 every time you open on a Monday.
All right? So the point is, once you know what it costs you, your break even is what it costs you to put the key in the door and open the door and turn the lights on and have food in the walk-in and having staff to serve the guests, okay? All the costs, the dumpster in the parking lot, it's a list of your fixed and variable costs.
I'm not gonna give you an accounting lesson now. If you need help with this, I can certainly tell you how to do it or coach you through it, but it's so important to figure this out. All right? So that's your daily break even. If you're not hitting that daily break even every single week or exceeding it, it makes sense to close your business because you're gonna lose less money by being closed that day than open if you're losing money consistently every Sunday or Monday.
However, there's a caveat to that. I always recommend you come up with a special promotion, something catchy, something with a hook. There's lots of different ideas. You put a catchy name behind it and you offer value to your guests. Maybe it's a loss leader on your menu. It could be anything. I could give you examples of things I did that made one of my slowest nights one of my busiest nights.
But try to come up with a special promotion. Maybe it's karaoke night. Maybe it's trivia. I'm gonna talk about that in a minute when we talk about marketing. But whatever you can do to drive new business, obviously it makes sense. If you can't do that, if you've tried to do that and it's failed, close and give your team the day off, all right?
Because you're gonna lose less money closed than you will by staying open. And don't worry about consistency. Just communicate to your guests that I'm gonna be closed from now on every Monday so you don't upset any people. Don't stay open just because five people might walk in or regulars might be upset.
Communication is the key. Track your guest counts daily. You need to know what your daily covers are. How do you do this? Every time you know, a front of house person opens a new check, whether that's a bartender or a server, okay? they punch in into the POS system. There's a place for how many guests you're serving.
Make them accurately type in four top, six top, 10 top, two top, whatever it is. And then at the end of the night, you're gonna know, again, how many guests did you serve? And then you can figure out how many table turns you have. Did I turn my tables over once? Did I turn it over twice? Did I turn it over three times?
And obviously, the more the better, okay? So guest counts are super important also. All right, let's move on to marketing. Marketing is so important. Now, there's so many different strategies that restaurants have tried, but, you know, in my experience, there's so many experiments that people try, okay?
I'll try this, I'll try that. I've never done a radio commercial. I've never been on television. I've never done direct mail. This, that, the next thing. And most of those are expensive experiments. If you've never tried them, you know, I've said this before, your phone rings off the hook all day. People show up at the back door all the time trying to sell you things.
And most of the time you're like, "Hmm-" You know, here's the hand. I'm not interested. But sometimes you're in a moment of weakness or something they say catches your attention. Radio, huh? Yeah, you know, we'll custom craft this radio spot for you, blah, blah, blah, and we'll put you on the radio and everyone driving to work will hear you, blah, blah, blah, and all this kind of stuff.
Well, unless you can track it some way, you'll absolutely have no idea if there's a return on investment to it. And that's the important thing. How much did it cost you? And where was the business coming from? And two, what's the return on investment? Is it double what it cost me? Is it 3X, 5X, 10X? You got to know if there's a return.
Otherwise, it's an expensive experiment. Your biggest, biggest, biggest marketing needle mover is your team, your staff. They're brand ambassadors for your business. If they love your place, then they should be recommending your place to all their friends and family. They should be, you know, spreading your praises on social media, all this stuff.
My team did that. My team loved our places so much they used to hang out together. It's like they worked together and they went out together when they weren't working. They hung out. It became this team spirit thing, but they loved our place. And they used to randomly just film videos inside and share it to their social media posts.
And they promoted our place because they believed in it and they wanted it to succeed. All right? So don't underestimate the power of your team being raving fans for your business and spreading the love. That's a big deal. Let them be brand champions, but coach them on this. Say, you know, if you really love our place, I'd really appreciate it if you did some posts.
Now, here's the kicker. Social media is a big deal in marketing. It's cost effective, right? Anybody can post on social media, but not everyone is an expert to know when to post, how often to post, what platforms are the best, this, that, and the next thing. But just know you've got a team member on staff, if not more, that are on social media all the time.
Make one of those people your social media guru and incentivize them to do so. You decide how you incentivize them, but just know that they know how to do it maybe better than you. I know I had a person that I entrusted and I empowered to do it because I was no social media guru and they did a fantastic job.
know that also you have people that are incredible artists perhaps, okay? I always had these giant chalkboards in my restaurants and we talked about hooks and cash cows and the things we wanted to sell, but we also had illustrations on these chalkboards in colored chalk that drew attention to these things.
I had a really talented artist that created these really cool chalkboard things and they changed them every single week and that person was empowered to do that and that boosted sales of things that were really profitable for us. That was awesome, okay? So don't underestimate the fact that you've got a social media guru in your place and you probably have some kind of artistic person that can do amazing things and that's marketing and that's really cost-effective marketing.
That's powerful. Train your entire guest-facing staff to serve and sell. Sales are the lifeblood of your business. I created this training system, it's in my Restaurant Academy, and it's called Sales Stars and it's all about what guests are looking for. They wanna be recognized, they wanna be acknowledged, and they wanna be served.
But in order to do that, your people need to be trained. We used to train them daily, and it was about entertainment, information, education, okay? We wanted to entertain our guests, we wanted to inform and educate them, and leave lots of suggestions, recommendations on what we knew they would enjoy and appreciate.
That's salesmanship. That's not breaking their arm for an extra dollar. That's telling them about what they may not know that's great about your place that increases the check average. Sales stars doubled and tripled my sales in my restaurants year on year. It was so powerful. So I totally recommend, that is another big needle mover.
Train your staff to serve and sell. Have a daily pre-shift, and it's not about the chef special this night and here, taste this food. It's a strategy session. It's about how do you read a table? How do you determine if these people are in a hurry and they need to catch a movie, or it's an anniversary, a special occasion, and you take care of each individual table, but again, based on all the opportunities.
Every table, every person at every table is a series of opportunities that are either captured at that precise moment of truth or they're lost forever, okay? So you need to train your people, read the tables, tell them what you know they'll enjoy and appreciate, and you'll watch your check averages increase.
And what's more important, your guests will have a better time, all right? And you'll give them a real dining experience versus just, oh, food and drink. Take the order, you know, deliver the food, and bring the check. That's an average experience, okay? If your people are trained in product knowledge and in restaurant knowledge, set them on fire, turn them loose, and see how your checks will rise and your guest satisfaction will increase.
That's huge. No order takers allowed. That was a pet peeve of mine Catering. Start catering even on a small scale. Do private parties even on a small scale. There are down times in your restaurant. There are early times where you can give people a deal to bring in a bunch of people at like 4:00, 4:30, and if you don't get busy till like 6:00 or 6:30.
We did this all the time, okay? And pretty soon we had a private party business where then we had repeat business, where the same people would have a holiday party. They'd have a birthday party for the owner of the company. It's like we fostered this business. The catering thing, it's like it all started with, you know, a doctor's office or just some, larger business in your community where you bring a taste sample of maybe one of your signature items.
Maybe it's a cash cow or a hook or just something, and you, you bring some bites into the office and you say, "Here, I hope you enjoy this. If you're interested, we do private parties, or we'll bring you lunch every single week, and you don't have to worry about lunch." And if it's a big enough company, they might love your food and say, "Oh, we'd love that if you brought us X every single week."
And then you give them choices, okay? That's how you start a simple catering program, or you turn people on to your restaurant. And then what else happens? They like your place so much that they start coming in for dinner sometimes or special occasions, okay? That's just simple marketing, okay?
If you have a bar Even if it's a lounge, you know, a couple of draft beer handles or whatever, have some kind of an event. I talked about those slow times, right? It could be karaoke. It could be, trivia night. Trivia is huge. You know, my wife and I occasionally go to a bunch of different places in our local area with friends, right?
And we, we show up sometimes with six people, eight people, and we go to this trivia, and they pay this trivia person, and they give them a free meal, and think of the business it drives on a slow night, okay? So do that. But it doesn't have to be a slow night. It's a draw any night of the week. An acoustic musician, that's cost-effective too.
You can pay somebody two hundred bucks for two hours, and they'll come in, and they're good on the guitar, and they got a nice voice, and they keep people drinking and eating, and it's just entertainment that draws people in. It can be really cost-effective to do any of those things. If you serve draft beer, start a mug club, right?
Mug clubs are huge. I've talked about this before. The academy has a complete course on starting a mug club. Not only can you get big money for memberships, depending on how many mugs you sell, but the biggest kick is people suddenly think of your place as their clubhouse, and now they come in multiple times a week.
So they pay you a membership to belong to the club. You give them some incentives. Maybe it's a discount on the draft beer. You give them a ceramic mug, these really beautiful mugs that hold twenty ounces of beer versus the standard sixteen-ounce pint. Maybe you charge the exact same as a pint. Maybe you discount it a quarter.
Doesn't matter. They're getting the value in the extra beer. You give them a T-shirt, a custom T-shirt with your logo on it. Yes, these things cost money, but I got this program sponsored every single year I had mug clubs in my restaurants. A radio station, a draft beer company, your food supplier.
They want exposure to your customers. They will pay for your T-shirts. They'll pay for the mugs. It's amazing, the power, if you've got a big draw in, okay? Mug clubs, I can't speak enough about it. You've heard me tell this story. When I sold my restaurant, there were 1,200 mug club members paying about $55 a year, and that was like $70,000 plus in cash flow, free and clear cash flow, because the sponsor paid for it.
There was no cost to it. All we had to do was give great service. But again, the biggest kicker wasn't the 70 grand. That was nice to have, but it was really all about how often people came in. People that used to come in twice a month maybe came in three times a week now. And then we got our suppliers to give us fantastic prizes, and we had a contest every year, a photo contest where we said, "Okay, take an interesting picture somewhere interesting in the world wearing one of our logo merchandise items," okay?
Because retail merchandise for us was huge. Okay, people pay you to wear your items around town, and people see your logo on the T-shirts. You could charge 20 or 25 bucks for a T-shirt, 30 bucks for a trucker hat with your logo on it. I said, "Take a picture somewhere interesting." And I asked for 8 by 10 photos because we framed these things, and we filled the bar with all of these framed pictures, and we had a contest every year, and everybody wanted to win.
One year it was a gas grill and, like, 50 pounds of Black Angus steaks, right? Who wouldn't wanna win that? And people are buying the merchandise just so they can go, "They're going on vacation next week. We gotta buy a T-shirt. We gotta enter the contest. We're gonna find something interesting." It was crazy the things that people did.
You know, I had a customer who actually was from out of state, and they had a friend who was a state police person in that state, and they had a staged arrest on the side of the highway where here's this customer of mine thrown up against the car, handcuffed, wearing my T-shirt, and the lights are flashing on the police cruiser.
I'm like, "That's a winner." Like, that's hard to top, right? Somebody went to India, okay, and they were wearing my T-shirt, and they actually stuck their head in an elephant's mouth, and they took a picture, and that was a winner one year. I could tell you crazy stories about some of these photos, but this is, this is guerrilla marketing.
This is simple and easy that costs you nothing because your suppliers come up with a great prize. All you have to do is have a merchandise program and sell this retail stuff that's impulse items anyway. Okay? People, again, are advertising your business and paying you for the privilege, so that's huge. If you're a family casual place, you've got to have one of those crane games because kids will stuff five-dollar bills in it all day long.
All right, you've seen these crane games with the stuffed animals. It takes very little real estate to put one of these cranes in your business, and then parents are just so happy to have a, you know, a relaxing night out where they can eat their dinner in peace. You feed the kids first and then, you know, here's five bucks.
Go try to win a stuffed animal or even the candy cranes or whatever it is. And depending on how much space you have, you can have a whole video arcade in your place. I did. I had pinball machines and pool tables and crane games and all this kind of stuff because it paid its freight. Okay? It paid its way.
It didn't cost me anything either because just know that there is a gaming company in your state that will give you all the games. You don't own them. They own them. They will deliver all these games if you give them the real estate. They will come in once a week, and they will cash them out, and they will give you 50% of the take of whatever these games and machines take in.
They will maintain the machines. If anything breaks, they'll come in and fix it, and they give you a change machine so people can stick their five and ten-dollar bills in and get the coins, and here you go. That was huge for me, too. I talked about the cash cows. The biggest thing I did whenever I opened a new restaurant was I created what I called strategic alliances.
You might have heard me talk about this in the other episodes, but again, I got to say it again because it was so powerful. It's old school I identified high traffic businesses in my community. I sat in parking lots and I watched customers walk in and walk out, and if a business had steady traffic all day, I'm like, "That's a winner."
I approached the owner or the general manager. I said, "Hey, I'm Roger and I'm opening a new restaurant and I'd love to give your customers something absolutely free just to try my restaurant." I had all these four-color business card type coupons printed with a photo of what the cash cow was and what the value was.
My biggest cash cow was $10 on the menu. I sold it for 10 bucks and it cost me about 30 cents. Okay? And I could tell you how to do this, and it's in my academy. But anyway, imagine selling something for $10 that costs you 30 cents, and it was my most popular appetizer. We sold thousands of these things. I could afford to give them away.
I took a professional quality photograph of the cash cow, put it on the front of the coupon, $10 value, $10 value, and then crazy copy, absolutely free, fantastic, stupendous, amazing, this item for free Come on in and order a drink and have dinner, and I'll give you this $10 item for free. And the average check was 85 bucks because the coupon started coming in and we tracked it.
You know, my team, my front of house team would literally staple these coupons to the guest check. My office manager would track the spend, and the average was 85 bucks. Some of it was 150, some was 200, but over time it was 85 bucks for the cost of 30 cents, right? It was genius I did this. You can do it too.
The kicker for the business, what was in it for them? I said, "Stamp the back of this coupon so I know where they're coming from." I gave them a stack of them. When they ran out, they asked for more and I gave them more. So yeah, there was a little bit of printing cost involved, but for the return on investment, it cost me nothing.
They stamped the back and we tracked, and I said, "Listen, for every dollar that you drive in the door, I'm gonna give you 10% back in trade at the restaurant before tax." Some of these restaurants were racking up hundreds of dollars in free money that I loaded on a gift card. They sent me 15, 10, 15, $12,000 in a month or two in new business that I wouldn't have, and they got trade for that.
And I says, "No strings attached. Bring your partner, your wife, your spouse in for dinner. Just sign the check. Give it to an employee. Have an employee party with it. I don't care." It's like, here's the value on the gift card. Keep sending me the business until I don't need the business anymore and then I stopped.
I opened a new restaurant. I did it again. Okay? That's what I call a strategic alliance using cash cows. And don't forget, this is all about trackable marketing only. If you want me to help you work with your restaurant, I do coach restaurants. I love working and talking shop with operators. I specialize in analyzing your P&Ls, analyzing your menu profit.
That's the biggest needle mover. Again, the marketing, the staff training, the leadership, the accountability. I do all those things. But we also have the Turnkey Restaurant Academy at restaurantrockstars.com. Thanks again for listening. Can't wait to see you in the next episode. Stay well, stay tuned, and I'll see you then.
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