Before he became host of SPIKE TV’s popular “Bar Rescue,” Jon Taffer spent three decades running or improving bars, restaurants and nightclubs. The author of “Raise the Bar: An Action-Based Method for Maximum Customer Reactions,” he serves as president of Nightclub & Bar Media Group (Nightclub & Bar Convention and Trade Show, Nightclub & Bar magazine). Additionally, he is chairman of Taffer Dynamics and consults with hospitality operators around the world. His latest venture is “Taffer Time,” an on-demand digital video series where he provides business lessons for hospitality professionals.
BurgerBusiness.com spoke with Jon Taffer about how burger bars can improve their bottom lines. He is a strong advocate of expanding the bar but he also provides valuable menu and marketing counsel for burger-joint operators of all kinds. You don’t serve burgers; you create reactions. Learn what he means by that.
When you evaluate a restaurant, what’s the first thing you look at?
The first thing I look at is the food/beverage sales mix. Traditionally in a TGI Fridays or Applebee’s environment, just to pick two that people know, it would be 18%-20% beverage sales. When an operation is doing 40% or 50% beverage sales it functions more like a bar than a restaurant. At what point is it a bar that serves food or a restaurant that serves liquor?
One of the biggest problems in casual dining is that they don’t understand that distinction. People typically don’t go to bars to eat and they don’t go to restaurants to drink. They eat at restaurants. They drink at bars.
Why is the distinction important?
Because if people walk into a “bar” your food has less credibility. In order for your food to have culinary credibility in a bar environment you have to have menus that look that part, table tents that look that part. It’s much harder to establish culinary credibility in a bar environment. Where bar-oriented restaurants blow it is that their food seems unimportant.
The same is true for a burger bar doing 85% food sales and 15% beverage sales. If you look at beer, draft beer typically runs at 22% cost; bottled beer runs at 25% cost; a drink with spirits runs a 14% to 17% cost on a much higher menu-price item than the two beers would be.
Burger bars need to understand they will make more money per revenue dollar on spirits and spirits-based cocktails than on anything else in that building. End of story.
The only way they’re going to sell [spirit-based drinks] is to make them seem important. Table tents. Servers who actually use the language. “What are you folks having to drink tonight? Our special is…” You have to create the credibility through which you sell beverages.
I believe the perfect business runs about 70:30 food to beverage. What that does is that for every point that you move from food sales to beverage sales you’re increasing your profit percentage substantially.
Remember you’re into half the cost structure with spirits with generally less labor impact.
Why do many operators miss on that?
Because they’re oriented toward the kitchen and the burgers and so on. But don’t get me wrong: The most important thing any restaurant can have is a hamburger. I’ll tell you why. The hamburger defines a place. Is it on a regular bun or a custom bun? Is it a frozen patty or a fresh patty? Is the meat a blend? What’s the shape of the patty? How is it presented?
A burger defines a restaurant. It’s basic or above basic or gourmet or it’s special. And if that burger comes out special, you’re thinking everything else coming out is special, too.
Burgers are critical and not just because they’re popular. Just changing a bun to a local custom bun or changing the patty to a custom blend or changing the seasoning or buttering the bun or toasting the bun all create a huge difference in how people perceive not just your burger but your entire operation.
My point is that a guy who serves a great burger is typically not waking up in the morning thinking about spirits. He’s thinking about meat blends and burgers. That’s his passion. But he’s got to think about to think about the bar side of the business.
Where does he start?
Here’s my suggestion: I think you work in your business 80% of the time; you work on your business 20% of the time. This is where many small independent restaurant owners blow it. They get involved in day-to-day operations all day: receiving, chopping, storing, baking, grilling, serving, etc.
They never step back and ask, “How do I grow it?” “How do I make it better?” “How do I improve my beverage programs? How do I upsell more?” We never step back and ask those questions.
My suggestion to your readers is that they do that. Take four or five hours every week and don’t work in your business. Work on your business. Put together something that grows beverage sales. Put together a new table tent. Come up with a new recipe or house drink. A new bun. A new burger. Spend those five hours making your business better.
The problem is that people who make great burgers usually don’t make great cocktails and vice versa. There are exceptions but it’s not an unfair generalization. So if you’re in the burger business, hire a mixologist to create a great bar program.
Understand that people are in your restaurant an average of 42 to 50 minutes. The average person in a bar consumes two-and-a-half drinks in their first hour there. You can double your guest check with a beverage program. Double it! The most profitable opportunity that any restaurateur has is to sell spirits.
How important is it to hire the right people to do that?
Critical. For two reasons. You can get a Budweiser or a Dewar’s on the rocks anywhere. You have to come up with something that’s your own. We all struggle with creating a signature burger. I call it a POD, a Point of Difference. We all struggle with coming up with something that makes our business special.
And it’s no different with cocktails. If you can come up with three or four that are yours—no one has them; they’re your recipes, your glassware—you can make a fortune. You never make a fortune doing what someone else is doing. So hire someone who can create something fun and who has the type of personality people want to come see at your bar.
Understand that a bar is operated with a different mentality than a kitchen. In the bar business and the restaurant business, your front line is your bottom line.
We don’t serve hamburgers; we serve reactions that we create. When that hamburger on a plate hits the table in front of you, one of two things is going to happen. Either you’re going to sit up and react to it because the plate looks fantastic, or nothing’s going to happen. If you’re in a place that I run or put together and you’re 100 feet away from me when that plate arrives, if I can’t see you physically react to it then I’m going to redesign that plate 100 times until you do.
I understand that that cook in the kitchen is not making a burger; he’s making a human reaction. He’s achieving it through the burger. The burger is not the product; the reaction is the product.
The restaurateurs who understand that become millionaires. We don’t serve food; we serve reactions that we achieve through food. We don’t market; we create reactions that we achieve through marketing. If marketing doesn’t create a reaction it’s worthless.
We’re not in the burger business; we’re in the business of creating human reactions through plate presentations, through flavors and color and size. We create reactions.
Make no mistake: No matter how big, small, cheap or expensive your hamburger is, he or she who creates the best reactions wins. Period.
What’s the toughest part of getting that right?
You have to spec it; you have to spec human reactions. I discuss this in my book, “Raise the Bar.” Can you spec human reactions? Yes, you can. Disney’s known that for decades. I creates something called GROWS: Guest Reaction Opportunity Windows. They’re moments of time where I spec something into the business to make you react positively.
It could be something on a plate or the way a product is designed, something given you on your exit or the way an employee interacts with you. There’s something built into your business to create reactions. I own the term “reaction management.” I’ve created a science around creating guest reactions, causing them to buy what I want them to buy and causing them to come back.
Ah, repeat business is what everyone’s struggling for now.
OK, here’s a statistic. Somebody comes to your restaurant for the first time, sits down and has a wonderful experience. Perfect. The statistical likelihood of them coming back to your restaurant for a second visit is under 40%. Even though the experience was flawless. How many places have you been to where you’ve loved it but you’ve never gone back? Those places aren’t in your life pattern. They don’t fit in your schedule.
The second time someone comes to your restaurant, the statistical likelihood of a third visit is still under 50%.
The third time they come to your restaurant, the statistical likelihood of a fourth visit is over 70%.
Restaurants should never market for one visit. You should market for three. You should understand that everything in the restaurant business is about getting that third visit. Once I get you a third time it’s built into a pattern. Now it’s part of your cycle. And that never happens on a single visit. Don’t think that it does.
I put together programs to stimulate the first visit but then when you come in we have a way of knowing it’s your first visit whether it’s a coupon or an invitation or something else we do. You can have hostesses put red napkins in front of them when they seat them if they’re first-time guests. Red flags. They’re given something at that visit that encourages them to come back for a second visit. Could be a bounce-back coupon, an initiation to a special event. Something that’s given by management with management’s business card and a discussion so they leave knowing the manager, having the manager’s card and having an incentive to come back.
When they come back, we know who they are based on the incentive given them before and we give them another instrument to stimulate a third visit. We never market to one. It’s a waste of money.
A lot of restaurateurs believe that if I can get you in once, I’ll make you a repeat customer.
That’s because everyone tells them that. No one else will tell you what I just told your readers. Everyone else wants you to spend a lot of money on a first visit. All the media want you to do that. But I’ve been tracking more than 60,000 restaurants for more than 30 years and those are the numbers.
Market to three visits. Market beverages. Merchandise your business effectively. It starts with how you answer your phone.
Of the first-time guests at a restaurant, one out of 12 comes from a print ad. Do the math: if you spent $300 to $400 on a print ad in a magazine, how the hell are you going to make money on that at $20 a guest? The economics don’t make sense.
I suggest you do something different: Use the same $400 to give away 200 hamburgers. You create 200 cards that say, “My hamburger is the best in St. Louis. I’m so sure that you can present this card for a free hamburger when you come to my restaurant.” If they come in and drop the card and ask for a hamburger and a glass of water, they get it. Free. Friday night. Saturday night. Whenever.
I spent $400 on a print ad and I hoped that people came. But by giving away the burger cards, I don’t pay until they come. When they do come I give them a free hamburger and an instrument for a second visit. That way, I’ve spent the same money but I’ve gotten people to come. I’ve gotten to show off my best product and stimulated them to come back for visit two and I’ve made it work.
I would take almost all my money away from media and do programs like that in my neighborhood to drive sales. It works. I’d rather give away 200 burgers than buy a newspaper ad.
What’s your evaluation of discounting?
The worst thing in the world because people get used to it. You start giving 20% off, $2 off and people get hooked on it. Look at the Dollar Menu at McDonald’s. It’s an albatross they’re stuck with now.
I’d rather give you a hamburger once and never discount it again than discount it forever. You don’t expect it for free a second time, but a discount you get used to. That’s how I market.