Don't let numbers control your business - restaurant management

Don't let numbers control your business

Patrick Morris, marketing executive vice president at Perkins, recently told me something that really made me do some serious thinking.

What he said was this: "The problem we're facing in the industry is that everyone is managing by the numbers, which is a lot like painting by the numbers."

That is, the numbers control you. You act only in reaction to them. We should instead try to control the factors that create the numbers--the people, the products, the concept.

A pure demonstration of the pitfalls of this painting by the numbers mind set is surfacing in the area of new proucts. New products must be a core strategy of any successful concept. I've helped develop, then witnessed, great sales and concept successes that were the result of well-disciplined new-product development.

What's wrong with new products, however, starts with the lack of discipline and vision in new-product managers. But the shotgun, anything-goes approach emerging in our business probably goes a lot deeper. As competition, mergers and buyouts increase, senior management tends to look only for the quick fix.

And it is no less narcotic than coupons.

Recently, Advertising Age published a list of 18 new products noted in the Quick Service Restaurant segment. Given trade secrecy, the list can be only a tip of the new-product iceberg in this segment. Why does this new-product boom bother me?

There are three reasons.

(1) Few of these products will replace tired old ones. They'll instead simply be added.

Overcrowded menu boards hinder good operating disciplines.

There are probably five losers in every 50-item Quick Serve Restaurant menu board I've seen recently. A loser is a product that produces less than 1 percent of the restaurant's volume.

The problem may start with the product-development people, but they're only part of it. Anybody can roll out a lot of new ideas. Where are the guys with the guts to rid the board of the old, tired ideas?

The result of no discipline is what I call "menus in motion." And if you don't think they can cause havoc, just stop in any major hamburger fast feeder this summer and ask for a large fry.

Operators, already pressed to the maximum with labor pool shortages and training and execution pressures are getting killed by these glutted menu boards. Their stores are affected in every sense. And while execution suffers, the worst effect is on the bottom line, the store level operating profits.

(2) New products, just like price-offs and coupons, are being used as a corporate crutch.

Where did this shotgun approach to new products come from? From the same sources that gave us coupon hysteria:

* Lazy marketers.

* Corporate politicians.

* Bean counters.

All are acting as apologists for the real culprit: corporate leaders with short-term cash flow as their only concept. They are becoming what I call the "vision-impaired" of the restaurant industry.

Here is what goes on in a corporate conference room, Anychain, USA:

Bean Counter: "Our new pricing is killing our volume, and the banks are really mad now. What can we do?"

Lazy Marketer: "Roll the pizza product that seems to be doing well in Topeka. May be initial triers only, but it will get us bodies fast."

Operator: "But that will make 66 items on our core menu. We've run out of slats. Can't we drop the guacamole cheese puff pita skins we sold 510 of last year?"

Coporate Politician: "We could if 400 of those weren't sold by Joe Blow, who's on the board."

OK, maybe I am getting silly. But tell me: Is there anyone put there who doubts that some version of my little satire is going on in chains all over the country today?

(3) Good concepts are being bled by indiscriminate discounting and new product proliferation.

Keep an eye on this over the next 24 months, and you'll see what I'm talking about. for an example of early symptoms, you might go check out the items and prices on Pizza Hut's non-promotional menu.

I'll tell you what I found: pan, deep dish, meat lovers, cheese lovers, pepperoni lovers, salad bar, dine-in, take-out, delivery, and a guest check for my little family of five that brought tears to my eyes.

Or perhaps you want to play the "What is Game." This is how it goes:

What is Wendy's? (choose one)

* Hamburgers

* Super Bar

* Potatoes

* Express Paks

* Hot Dogs

* Chicken sandwiches

What's the solution?

Take a hard look at your sales and operating plan. Is it just aggressive, or is it a good balance between operating and consumer realities?

Are you sharing goals with your marketing people so that they can then help you control the factors of people, products and concept?

Or are the numbers controlling you?

Tim McCarthy, former marketing vice president of Ponderosa, is president of Contract Marketing, a marketing-service company based in Willoughy, Ohio, near Cleveland.

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