Tuesday, 1 September 2015

Business Lessons Learnt from Saturday’s Dinner

Some businesses can’t help themselves and don’t seem to want to succeed. The following story and subsequent business lessons come from a recent dining experience.

Saturday evening last week, I decided to go out for dinner. Being in Perth and being 4,500 km away from home on a project, I quite frankly didn’t feel like cooking, so out I went dining on my own—something I get quite used to. I had seen a TV segment on a new part of town that had recently been redeveloped, so I decided to go and have a look.

The segment had obviously done its job, as this section of the city was substantially busier than other parts of the city. While walking through the arcade, I found a restaurant that caught my eye. It was busy but not full, having quite a few tables available, and without Reserved signs on them. I approached the concierge, and she said she needed to check with her manager to see if they would take a table for one. She came back and politely told me there weren’t any tables available. I pointed to the 10 or so tables I saw with no one sitting at them and asked, “But what about those?” and she responded with, “I’m sorry, sir—we have no tables available.”

I went on to another restaurant, had my dinner and then went for a walk around the city that took me past the first restaurant. Lo and behold, as I walked past, there were the tables—still empty. How would you be feeling about now?

It made me wonder, What was that manager thinking, and what was he trying to achieve? While not having spoken to him to get the exact specifics, I can’t help thinking he was trying to maximize the use of the tables. He had tables for two and four available, but by putting one person on a table for two, that table was only yielding him 50% of its potential.

Compare this to a successful restaurant near my unit where I often visit and where the owner has a completely different mind-set on how to manage this situation.

His restaurant is substantially busier than the one I visited on Saturday, yet he manages to fit me in without any difficulty at all. Before you ask, there is no substantial difference in the number of tables at either restaurant. His approach is to take me in and make sure I receive quick service. The waiters are quick to give me the menu, ask for my drink order and get my dinner order. The meal is delivered quickly, as is the bill, which is delivered soon after I have finished eating and have indicated that I don’t want dessert. His mind-set is about table churn. I have often seen the table reset and a couple sitting at it by the time I have paid my bill at the counter.

His restaurant’s reputation and business are enhanced because of his actions:
·      He takes me in while being busy even though I am a table for one.
·      He ensures that I get quick service.
·      He resells the table shortly afterward.

One manager was focusing on maximizing the numbers at the tables at any particular point in time, while the other owner was focusing on maximizing the number of people throughout the evening. Quite a different target and quite a different result. It goes to show that you need to be careful where you focus.

Another lesson I see in this is that the owner of the first business seems isolated from what is happening on the front line. This separation between the manager and the daily activities of the business is the main thrust of the TV reality series called “Undercover Boss.” (You may wish to review my article on this show and the lessons to be learnt from it.)

These lessons become even more important when you consider the current economic climate in Perth at the moment. Just walking around, it is easy to see that Perth’s economy is not in good shape. Every day a new shop empties out and a For Lease sign is posted. Office space is available everywhere as companies either close up or close their Perth office.

Perth has had it good in the recent past. Recent prosperity is one of the reasons why everything here is so expensive and why the quality of service is, to be frank, quite bad. Businesses here have not had to work hard to get patronage. Particularly in the hospitality trades, pubs and restaurants provide very low levels of service and charge expensive prices for substandard meals.

The rotating nature of the mining boom means that new people are rolling through the city every few months, so businesses haven’t needed to work on the basics of building a loyal following amongst their customers. When one rotation finishes, the next group of people comes through; many of them are new, and so the cycle continues. This cycle means that business will come through the door whether organisations do a good job or not.

The lower commodity prices will change this, and when it does (as it seems to be doing at the moment), these operators will struggle. My local Italian restaurant will continue to thrive while those new ones, yet to learn these lessons, will soon be moaning about how the bad economy is the cause of their struggles.

Lessons to be learnt
Successful business people focus on maintaining the basics and executing them flawlessly. They get what they focus on.
What are you focusing on at the moment? Could a mind-set rearrangement help you and your business? Here are some things you can do tomorrow:
·      Take a look at how your mind-set is impacting your business.
·      Shop your business and find out what is really happening.
·      Ensure your focus is on improvement activities like these:

o   What is my customer’s experience like?
o   What is my return on capital?
o   Can I increase my inventory turns?
o   Do I have customer payments that are outstanding for longer than 60 days?

If you want assistance in any of these areas, contact me:
David Ogilvie
Phone: +61 (0)438 787 759
© David Ogilvie 2015 All rights reserved

David Ogilvie is a global expert in profit improvement and maximising ERP investments.

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