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QFO: Food-Court Leases

Questions from Operators

We are more than happy to answer business or hotel questions from operators on any issue here on the “How We See It” blog. Today’s question comes from Mike concerning his lease on a mall’s food-court location.

I have a burger/fries business in a mall’s foodcourt.  My current rent is 1000.00/month and 10% of my sales over $10,000.00/month so a straight 10% of my sales.  The mall pays water, electric, garbage.  I pay gas.  My first years sales were $200,000.  I have seen you talking about rent being around 6-8% and sometimes around 10% so I guess I’m confused.  Is that a good lease?

I also budget for 30% Food Cost, 25% Labor Cost, and 10% for Misc Cost (Gas, Phone, Insurance, Payroll taxes, Pest Control, Linen, Credit Card Fees, and Upkeep.  Does all that sound reasonable?

So our answer is:

  1. Your total occupancy costs (everything it cost you to be in your location…rent, CAM, utilities, etc…) should total no more than 6-8% of gross sales. Since your effective occupancy rate is over 16%, I’d say this is definitely a bad lease situation.
  2. Payroll taxes go into Labor Cost.
  3. Without knowing more details about your concept or your product mix and looking at your P&L, it’s hard to say anything further.

To ask a question and have your answer appear here on our blog, simply submit it through the contact form below.

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You Have Two Options:

  1. Grow your business.
  2. Make excuses.

Our powerful business programs are about helping you and your business master the fundamentals and create positive, long-term opportunity. No other program(s) offers more value with the immediate impact or greater ROI than ours or creates the level of impacting and sustainable change necessary to grow your business.

Call Us Toll Free 888-998-8744 or use the contact form to talk about how we can help you realize an opportunity.

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QFO: What Can I Do To Make People Care?

Questions from Operators

Q: “What can you do to make people care about service?”

A: “Nothing.” [Could be service, food, sales, profits, cleanliness, organization, manners, other people, etc…] You can’t make people care about anything. They have to care about something on their own. The only thing you can do with people who don’t care about your business is to replace them with people who will. Same goes for motivating people. You don’t motivate people. You can only create an environment in which they are inspired enough to motivate themselves to do best work.

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To ask a question and have your answer appear here on our blog, simply submit it through the contact form below.

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You Have Two Options:

  1. Grow your business.
  2. Make excuses.

Our powerful business programs are about helping you and your business master the fundamentals and create positive, long-term opportunity. No other program(s) offers more value with the immediate impact or greater ROI than ours or creates the level of impacting and sustainable change necessary to grow your business.

Call Us Toll Free 888-998-8744 or use the contact form to talk about how we can help you realize an opportunity.

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QFO: Loyalty Rewards

Questions from Operators

Question: Since most loyalty programs involve some sort of comp (discount) what do you propose instead as the incentive?

Answer: Whatever they want – except my money!

If you want to be successful long term, you have got to have an ongoing conversation with your guests in order to understand:

1. who they are (segmentation) and
2. what they want from their relationship with you –  period!

Loyal guests (read raving fans) will tell you that they are not looking for discounts. They are looking for things from their relationship with you that mean/bring more value to the relationship, not their wallet. And they must be in direct correlation to the value they feel, that they bring to the relationship. The guest is saying, “If I bring you hundreds of dollars of

business each week, you best do more for me than buy me a cup of coffee once in a awhile.”

Other things can include, members only events, information, acknowledgment of their contribution to your relationship, first offerings, input into the process and to be a part of things going on, etc. This is about relationships, not money! If you continue to play in the price/money mud pit, you will never get out without some major pain.

Marty Neumeier wrote a book late last year called

‘Zag“ (must read!) and in it, he uses the same six reasons why loyalty programs don’t work, as I have used to denounce the use of discounts in general.

1) Most Loyalty programs are based on discounts, which ‘train’ existing customers to expect lower prices and wait out normal pricing,
2) They attract loyal customers who would happily pay a premium,
3) They discourage new customers by making them feel punished or excluded,
4) They encourage competitors to retaliate with me-too programs,
5) They reduce profit margins, which
6) Reduces the company’s ability to serve customers at formerly higher levels.

The truth is, loyalty can’t be programmed.

Two more of the biggest factors why discounts are not a long term strategy that we have yet to cover are the lost opportunity cost, and loading up on the ‘low return’ guest versus the ‘higher return’ guest, in terms of their long term profit contribution to your operation. I intend to address these in a post very soon.

Have Fun Today!
Jeffrey Summers

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To ask a question and have your answer appear here on our blog, simply submit it through the contact form below.

[mk_divider style=”single” divider_width=”full_width” margin_top=”20″ margin_bottom=”20″]

You Have Two Options:

  1. Grow your business.
  2. Make excuses.

Our powerful business programs are about helping you and your business master the fundamentals and create positive, long-term opportunity. No other program(s) offers more value with the immediate impact or greater ROI than ours or creates the level of impacting and sustainable change necessary to grow your business.

Call Us Toll Free 888-998-8744 or use the contact form to talk about how we can help you realize an opportunity.

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