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Four Financial Trends Offering a Rare Opportunity

Q: As we start a new year I’m looking at trends in many different areas. I’m curious, what are the major issues in the financial areas?

A: Every year starts fresh with new ideas, energy, hope, interest and challenges. As we begin a new year, the restaurant industry has a rare opportunity to address and fix some issues.

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The easiest way to make money through the holidays

Q: I forecast I’ll do about 35 percent of my sales during the holidays. What is the easiest way to take advantage of the significant increase in business?

A:
During the holidays consumers spend more money. Many have budgeted and saved all year long in anticipation of purchasing gifts, shopping and dining out. Swarms of people visit malls, retail outlets and restaurants. This is the season for sales opportunities. The easiest way to make money during the holidays is by maximizing gift card sales. They carry an automatic profit margin themselves.

Gift cards are smart to sell any time of year, but especially during the holidays. They rank as the second-most given gift by consumers, the most-wanted gift by women and the third-most wanted by males. In addition, it’s estimated as much as 20 percent of gift card value is not redeemed so selling $100 worth of gift cards results in about $80 of redemption with the balance either floating on a card or lost somewhere in the balance either floating on a card or lost somewhere in the world. The highest redemption I’ve seen is 93 percent.

Since this is such a windfall for restaurants and such a desired gift item for consumers be aggressive in selling them directly to the consumer. Set a goal to sell 50 percent or more gift cards this year than last year and don’t discount the cards. Many large chains will discount gifts cards to sell more. Discounting is unwise when the consumer is geared to purchase a gift at full price. It’s much better to offer an incentive on top of a purchase than to discount it.

Consumers have a budget in mind when they purchase a $100 gift card, it’s $100. You’ll make more money if you give a free $20 gift card to the purchaser than if you discount the original amount and you won’t cheapen your brand. The first place to offer a gift card is not in your restaurant; it’s on your website. A significant number of consumers use websites for reservations and menus. With a few modifications a website can be tuned to sell gift cards as well. Talk to your webmaster to make sure gift cards as well. Talk to your webmaster to make sure gift cards are featured on the home page of the website. The consumer should be able to click or fill out a simple for to order. A person at the front desk or an administrative person can address an envelope and send the card to the consumer directly in a personalized manner. A simple note of thanks will engage the guest to think again about ordering online or stopping by to pick up another one.

The next place to offer a gift card is at the entry of the restaurant. Feature a beautiful sign offering to make holiday shopping easy by placing the order through the front desk and either fulfill the order for those running in and out or offer to complete the purchase when the guest check is presented.

The third place to sell a gift card is at the table with a tastefully done table tent, coaster or any other piece of marketing collateral. As well as use the service staff to sell gift cards. The server should have an incentive to sell gift cards, run a contest and reward those selling the most gift cards in total but also per hour worked so those working slower shifts have an opportunity to “win” as well.

Lastly, plan for gift card redemptions. A National Retail Federation survey of holiday shoppers found 36 percent of gift cards were redeemed within the first two weeks after the holidays. Be ready for the influx of people redeeming gift cards and get them to come back by offering to reload a card that has been redeemed. Since most gift cards are indeed gifts, keep your staff motivated to deliver top-notch service. Many restaurants are extremely busy during the holidays and there is a letdown after the crowds die down. It’s important to finish the holiday season strong by by keeping a sense of urgency and focus after main holidays are past. A strong January can give a boost to a new year and keep the buzz of the holiday season alive all year long.

For more information on improving profitability ad driving sales, contact AMP Services at rbraa@ampservices.com. Rick Braa is the co-founder of AMP Services, an accounting and consulting firm specializing in helping companies grow profitability.

Script Your Success

Q: We’re heading into a new fiscal year with a positive but cautious attitude. How can we drive ahead to get the best results during the next 12 months?

A: Quarter 4 is full of the promise of a new year and a rekindling of goals. As the leader of the organization, provide a framework within which the team can write great goals. Here are five areas on which a successful restaurateur must focus his/her team. Have each person on your leadership team take a fresh look and meet with them to discuss after your discovery process.

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