What to Do While You’re Waiting on the Recession

The daily headlines in our industry are enough to scare the bejeepers out of any foodservice operator. The short-and-long-term effects of sub prime mortgage lending, hundred-dollar barrels of oil………

What to Do While You’re Waiting on the Recession

By Jim Sullivan Copyright Sullivision.com

The daily headlines in our industry are enough to scare the bejeepers out of any foodservice operator. The short-and-long-term effects of sub prime mortgage lending, hundred-dollar barrels of oil, slumping customer counts, slouching same store sales, election year jitters, and rising grain, protein, dairy and commodity prices sap at our reasoning, perspective, and leadership skills daily.Nervous yet?

According to Inc magazine, the last two recessions in the U.S. (2001 and 1991) lasted approximately 8 months each. And it should be noted that recovery did not mean that everyone who declared bankruptcy became solvent again or that factory workers who were laid off during the downturn got their jobs back when the economy improved. Manufacturers typically use downturns identifying ways to eliminate payrolls through mechanization, “right-sizing” or outsourcing.Nervous now?

While previous recessions had an upside of increasing our available labor pool, this one may not. Unemployment is low across all age groups. There are more young people than ever in the 16-19 year-old demographic available to join the workforce today, but most of them are choosing not too. By encouraging their children to choose more extracurricular school activities instead of work experience, parents are complicit enablers in this sobering statistic. Apparently the belief is that Harvard values a resume chockablock full of team sports and chess club experience over part-time work in the real world.Trembling yet?

The Fed Chief recently told us that we’re not in a recession (defined as two consecutive quarters or more of declining gross domestic product adjusted for inflation) but the truth is because of the lag time between reporting and results, he and we won’t really know until we’re at least halfway through it. On the positive side, it should be noted that a major difference between 2008, 2001 and 1991 is that today—more than ever—Americans have incorporated dining out into their lifestyles. According to industry research, Americans now eat an average of 4.2 meals per week outside the home. Plus some studies indicate that a family of four spends less than $7 to eat at a restaurant than they would buying and preparing a similar meal at home. I’m not trying to put a happy face sticker on a serious concern, but perspective is always critical.

So yes, things look uncertain, and yes, things may even look grim, depending on your segment and sentiment. But this is the time to keep a steady hand on both the tiller—and the till. Experience shows that it’s more productive to your long-term success to invest time focusing on the things you can control instead of endless worrying about the things you can’t. So while you’re waiting on the real, or imagined, Recession to hit, here are some smart things that smart operators start concentrating on. What counts is what stays. Your first responsibility in tough times (or any times) is to retain—at all costs–your current customers. Give them more of what they come in for. In QSR, increase the speed, improve the accuracy, enhance the service. In full-service, pile on the hospitality with 100% table visits by managers, and a stellar waitstaff who know how to take care of guests.Service is free. Pile it on.

Be smart about where you cut costs

Be careful what you cut out if you’re shaving costs. Make certain it’s not something the guest values more highly than you know, like amenities, portions and a well-trained team. Also, market harder and smarter in tough times. Now more than ever, ratchet up your local store marketing and better connect to the business and residential communities within a 1-5 mile radius of your restaurant. “Segment leaders market their way through a recession,” said Mike Ganey, senior VP of PR firm Howard, Merrell in a recent issue of Fast Company. “All other companies try to save their way through a recession.” P.S. don’t rely solely on media advertising or LSM to produce more traffic. That may produce “trial.” But smart hiring, training and service creates something just as valuable: frequency.

Sharpen the saw

If other operators in your trading area are losing focus by worrying about the stock market instead of their customers, make them pay by adding value and stealing their customers the smart way: hire better people and invest in stronger training. (Ironically, the economy gets better when you get better.)

To see forward, look back

When charting your course through murky waters, don’t just consider future possibilities without similar due diligence on what you learned from the last downturn. Look twice as far into the past as you do into the future for the best perspective of what actions may be necessary now. My first Area Manager was fond of saying “I believe there’s an old answer for every new problem.” Henry Ford more famously opined: “Those who ignore history are doomed to repeat it.”

Don’t be the last to know

Be self-competitive and pro-active; have your Area Managers and Unit Managers pro-actively ask questions like: What do competitors claim is our restaurant’s major weakness? What do customers like best about our restaurant? When we criticize our products or concept, what problems do we cite? What are we doing to improve? What critical areas-–quality, service, reliability, speed, brand promise, takeout, drive-through, follow-up–are our toughest sell? What are our customers’ top five complaints? What are their top five expectations? Even Bill Gates admitted: “Your unhappy customers are your greatest source of learning.”

In good times, volume can hide a multitude of sins

The bright side of a recession is that it can force us to get leaner, think better, act faster, be stronger. As you assess these suggestions (not surprisingly weighted toward the “soft” skills), be certain to solicit the input and ideas of all your managers and key team members too.

After all, there are no hard times for good ideas.