Absorb More Revenue, Not Losses
|by William F. Orilio, MHS, CEO / February
Nation’s Restaurant News recently printed an article titled, “Operators eat losses as more than guests walk out the door” (February 10 th ). I found it to contain some astonishing revelations. The article clearly pointed out answers to the problems commonly declared by operators to be beyond their control. I have always found this assertion—that stolen property is simply an operating expense—to be ludicrous. There are only a few things that are actually beyond a manager’s control, and those are situations that exist in what is commonly called the “outer circle.” These include factors such as social trends, climate, political upheaval, acts of God, and the like.
Operators should not accept and expect serviceware and décor pieces to be purloined from establishments without doing anything about it. This makes the establishment just as culpable as the individual committing the act. Most of these items might be readily purchased instead of stolen if they were available for sale. As such, it is my belief that these operators are missing out on an additional revenue center. This is attested to by Charles A. Sennewald, of Sennewald and Associates, who stated, “This is such a specialized kind of crime that I don’t think anyone is watching it, or measuring it.” This statement alone indicates that there is a market available to retail these items. Why should Hard Rock Cafés, Planet Hollywood restaurants and other themed establishments be the only ones that have a retail area? Restaurants that have items that people want should be selling them as retail items.
Clearly, there are specific objects that people want or they wouldn’t keep disappearing. Most of the items the article discussed cost $15 to $30, and guests are walking out with them—affluent people who certainly have $15 to $30 to buy these items legitimately. One reason I’m sure of this is that I’m one of the people who wants these items. I have more than 2000 embroidered hats from different establishments. These are hats that you can buy and purchase. However, a small percentage of them, perhaps 10%, are not available for sale because they are only for employee use. In these cases, I have paid as much as $80 for a hat because I wanted it for my collection. I have gone to the manager and offered to pay whatever it took. In one instance, when I was at the Bull & Finch Pub in Boston (of Cheers fame), I wanted a shirt from there that was embroidered and read “Staff” on the sleeve. It wasn’t available for sale. I showed the GM my California driver’s license, as well as my plane ticket, to prove that I was leaving the next day. I promised him that I would never wear it in his restaurant, but that I wanted that item and was willing to pay up to $150 for it. In the end, he sold it to me at cost ($24).
These items are things that people want, because people want to be part
of something special. When the hospitality is so overwhelming that as a
customer you’re swallowed up in it, it’s human nature to want an object
that is representative of that experience. The experience itself is intangible.
You can’t touch it, feel it, or show it to your friends. You can try to
share it with them, but it’s impossible to share it at the same level at
which it was experienced. Your guests, among them loyal patrons, affluent
customers, lovers of cuisine, and appreciators of excellent service, want
to have something to show others:
This is a great compliment to those operators who find these items walking out of their restaurants, like the shakers at the Atwood Café. They disappear because someone wants to tell many other people–not one or two, but many other people–that they got these salt and pepper shakers at this awesome restaurant, where they had a fantastic time and great food, and these shakers were the coolest they’ve ever seen. What I’m describing are “ritual objects” associated with a particular experience, emotion, or state of mind. The particular object used during the individual experience is believed (usually subconsciously in Western civilization) to be the repository of the energy of the experience, and to transcend time and provide a connection with the event. This is also the basis of “contagious” magic as defined by Sir James George Frazer in The Golden Bough, and also the basis of things like psychometry/teleurgy, in which diviners, psychics, or witches use a personal object to make a connection with the person it belonged to. This concept is an aspect of Native American religions, Wiccan practices, and tribal religions the world over.
The point is that for a lot of people, it probably needs to be the particular item that was on the table and actually used, even if they can’t articulate why. As an option for those who wish to have the item that they used at the table, the items could be listed on the menu or on a tasteful table tent. Clean the item, if necessary, arrange it in a nice gift basket, along with a personalized card with the patron’s names and date of visit, and charge them for the service. The definition of hospitality is “cordial and generous reception of or disposition toward guests.” Guests expect, at the very least, to be cordially and generously received. In this industry, we all strive to exceed expectations. The problem with doing this is that, when you exceed someone’s expectations intangibly, it just can’t be equitably explained as it is when you fail to exceed someone’s expectations intangibly. When you fail to meet someone’s expectations intangibly, the passion that they have in explaining how you failed can be greatly exaggerated. That guest will tend to recount your failure to others, who then attach themselves to that intangibility. On the flip side, their delight when expectations are exceeded is difficult to exaggerate to the point that others can understand and latch onto it. As such, guests take “souvenirs,” be it silverware, a plate, or art off the wall. If they’re taking it, it’s because they want it. Therefore, you should sell it.
There is no rule or business concept dictating that only theme restaurants can have a retail department. That said, the most upscale restaurant in the world should have a retail department, selling the things that people want the most. Not only logo attire, shot glasses, ashtrays or recipe books, because those aren’t things that are directly associated with the guest’s experience. Sure, Tavern on the Green has a retail store, but they don’t sell anything that is an actual part of the dining experience. Anyone can buy a hat or shirt that says they’ve been somewhere, but to have a plate, wine opener, a set of silverware, vase, etc., says more than “I’ve been there.” It says, “I’ve experienced it, I loved it, and I’ve got a piece of it.” This, in itself, is a compliment to the operator. Unfortunately, as these items continue to walk out the door, operators continue to look at them as the cost of doing business instead of as a revenue center.
Operators should not be supporting thievery. They should be using the items that are being taken the most as a revenue center. Sell them, even if you have to sell them at cost. That’s still better than losing them. The people who buy them are going to be proud to talk about the items and their experience. You wouldn’t have these items on your tables and in your establishment if they didn’t add some value to the aesthetics of the entire environment. Those aesthetics are then translated to a tangible object that guests can proudly display in their home or office. Macy’s, Nordstrom’s, Neiman-Marcus, Dillard’s…they all sell food and beverage. Why can’t food and beverage establishments sell retail?
Ian Schraeger’s hotels do this very simply. Everything in the guest rooms are for sale, and if something’s missing, he bills the patron. Personally, I think that is going a little overboard, unless it’s a really expensive item. But it’s not that far-fetched. You already have a cocktail menu, a martini menu, an appetizer menu, an entrée menu, a dessert menu, and an after-dinner drink menu. How difficult would it be to have a retail menu?
If everything in your restaurant is for sale at any given time, guests will buy these items instead of stealing them. People don’t steal because they want to steal. They steal because you’ve given them something they want to keep forever, and an intangible memory isn’t going to last. But a charger, saucer, or artsy salt and pepper shakers will. They will buy them if you sell them. The proof of that is in the “Operators eat losses” article: “90% of the items that operators complain about being stolen cost less than $30.” The average logo polo shirt costs at least that much, and people buy those by the dozens. Ten years ago, that shirt or hat proved that you were at that restaurant and were proud to talk about it. Today, anybody could have a shirt or hat from anywhere, but it doesn’t mean anything. But to have a plate, a set of silverware, cutlery, a cup, a saucer, a vase from the center of the table–that’s worth having even if as a guest we have to steal it. The average customer would rather pay for it than steal it. Doesn’t it make more sense to print a menu and sell these items than to let them walk out the door?
Mr. Orilio is CEO of Grantham, Orilio & Associates, Inc., a Hospitality Consulting and Mystery Shopping Company headquartered in San Diego, California. For more information go to www.goashoppers.com
GRANTHAM, ORILIO & ASSOCIATES, INC.
William F. Orilio MHS
4490 Fanuel St. Suite #222
San Diego, CA 92109
|Also See:||Simplicity, Not Basics; Post Hospitality Bubble of 2000 / William Orilio, MHS / Nov 2002|
|Super Bowl Deception Leaves Bad Customer Perception; Short-sighted Greed Overtakes Hospitality in San Diego / William Orilio, MHS / Feb 2003|