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How small restaurants can survive and thrive: By Mark Hix

Everyone in the industry is feeling the pinch at the moment, so it's at times like this you have to keep your head down and really keep your customers happy. If they're going to survive, restaurants have got to raise their game, look more closely at what they're doing, and give better value. The most damaging expense for restaurateurs isn't wages, rent or even food � it's losing customers.

Value is key, and that doesn't just mean a cheaper menu, it means being more careful about what you're spending, yet still giving your customers quality food. When I opened my Oyster & Chop House last April, we put lots of lesser-known cuts of meat on the menu. Things like flank cuts, cheeks and shins, which might usually end up in the butcher's mincer but, with skilful cooking, are delicious. Better still, they're cheaper than an expensive fillet that doesn't taste of anything. It's the same with cheaper fish. I'm a big fan of gurnard, herring and mackerel.

You've also got to give your customers choice. A lot of restaurateurs think they have to have every starter under �10 and every main under �20, but it's more sensible to have a range. We might have a mackerel main course on the menu for �10 and then something like a sea bass for �25. If you don't give people the option to spend more, they're not going to.

Wine is always important, and different restaurants mark it up in different ways. You either go big to get maximum profit on each bottle, or you do what we do and give your customers a bit more value on higher end wines to encourage them to buy a second bottle. I've also started putting a few magnums on the menu. They're twice the size of standard bottles and are reasonably priced, from around �40 upwards, but it's also something a bit special for tables to share.

Meat isn't getting any cheaper, nor is fish, but restaurants can't afford to fall out with their suppliers. Too many people take advantage by not paying on time, but the industry needs to tighten up on this. You wouldn't walk into a restaurant as a customer and say, "Do you mind if I pay for my dinner in two months?".

Your suppliers are as important as your staff, and you've got to be able to trust each other, especially when times are tough.

Another big mistake is spending too much on design. The Chop House had a very low budget for refit. We kept a lot of the fixtures and fittings that were in the restaurant that used to be in the building, and kept things simple. You can blow a million pounds on a new restaurant and watch it flop. It comes down to having a good business sense. A lot of restaurants start up without any internal financial knowledge, and can go for months on end without knowing where they are. You can't get away with that � you need to know exactly how much you've made, or lost, from week to week.

Surviving is about the whole package � there isn't any one thing you can do to stay strong, but if you've got good food and a good atmosphere, you're halfway there.

Mark Hix is resident chef for the 'Independent' Magazine. He has two restaurants, Hix Oyster & Chop House in Smithfield, London; and Hix Oyster & Fish House in Lyme Regis, Dorset, and was formerly chef director of the Caprice Group

Balancing the books: The business expert's advice

1. Remember: cash is king. Focus on cash generation, not solely on profit margins. It's better to sell four bottles of wine at �5 per bottle cash profit than one bottle at �7.50 profit, hence the phrase, 'you can't bank percentages'.

2. Re-engineer menus and wine lists to maintain margins. Substitute lower cost alternative products and carefully tinker with ingredients and portion sizes. (But be careful: the public are very astute.)

3. Offer targeted discounts during quiet periods, rather than continuous offers all the time. Review competition and change promotions regularly to prevent boredom.

4. Remove backroom costs. Reduce larger costs first: payroll, energy, laundry. Demand suppliers offer discounts or other support or switch to cheaper suppliers. Identify trading peaks and troughs and adapt staffing, rather than follow historic patterns. Start with a blank sheet of paper and imagine how you would manage costs if you were opening today.

5. Recognise the value of your chefs and waiters � keep the best � and be prepared to lose those who make little contribution

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