Chip Klose: Boosting Restaurant Profitability & Marketing | Restaurant Leaders Unplugged

In this episode of Restaurant Leaders Unplugged, we sit down with Chip Klose, a seasoned restaurant consultant and expert with over 24 years of experience in the hospitality industry. Chip shares valuable insights on how restaurant owners can tackle rising costs, enhance marketing strategies, and create sustainable business models. He discusses the importance of building customer loyalty without relying on discounts, navigating the challenges of increasing labor and food costs, and providing actionable tips on how to set your restaurant apart in a competitive market.

Chip also dives deep into leadership, sharing his thoughts on how owners can balance both leading and managing teams to ensure long-term success. Whether you're struggling with operational efficiency, customer retention, or pricing strategies, Chip offers practical advice to help your restaurant thrive in today’s ever-evolving landscape.

Connect with our guest:

• LinkedIn: https://www.linkedin.com/in/chipklose/
• Social Media Links: https://www.instagram.com/chipklosecoaching/
• Website: https://www.chipklose.com/

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Transcript

(0:00 - 0:21)

There's a disconnect between how we value our product and how we think other people are value our product. And the problem comes is that when labor goes up, right, because that's what happened over the last three years. And when the cost of goods go up, we're afraid to pass that along because we think about our competitors, et cetera, said, well, down the street, they do this.

(0:21 - 0:50)

The bottom line is we have to create a business that has no competitors, right? Welcome to the Restaurant Leaders Unplugged podcast, where real talks with restaurant leaders take center stage, discover the challenges and victories that define success in the culinary world, dive into essential strategies for marketing to operations and gain insights that will transform your approach to your restaurant business. Don't just keep up. Lead the way.

Join me, your host, Sebastian Stahl, on this journey to excellence. All right. Welcome to the Restaurant Leaders Unplugged podcast, Chip.

(0:50 - 1:14)

It's really a pleasure to have you here. Glad to be here. All right, well, let's start from the beginning, right? So how did you get started in the restaurant business, in the hospitality business? Can you share a little bit about your background, how you got into this and really your process and how you evolved in your roles over time? Yeah, I mean, I think like a lot of us, I took the backdoor into the industry.

(1:14 - 1:24)

It was my first job. I think it's nine out of 10 Americans say the restaurant industry or hospitality in some way was their first job. It was my first job, folding pizza boxes in high school.

(1:24 - 1:35)

I waited tables through college and I moved to New York City to be an actor. So I came here to do theater. And what do you do as an out of work actor? You get a job in a restaurant.

(1:35 - 1:43)

And I did that. It was I'd work in a restaurant, then I'd go away and do a gig and I'd come back and I'd work in the restaurant. I'd go away and do a couple more gigs and I'd come back.

(1:43 - 2:01)

And for a long time, it was just the lily pad I kept jumping back to. And at a certain point, I don't know, maybe like six or seven years into it, I sort of looked back at my theater resume and looked back at my restaurant resume. And I was like, you know, the theater resume is okay, but the restaurant resume is sort of lights out.

(2:01 - 2:18)

I'm a creative person. It was all sort of wrapped up in the creativity that I wasn't finding in the arts and the creativity I was able to connect with in the restaurant industry. I was working with incredibly skilled, incredibly passionate, very creative individuals, chefs, restaurateurs, other operators in there.

(2:18 - 2:34)

And I was actually able to fulfill a lot of that because sort of feed the creative part of my soul. The rest is history. I did just about everything you could do front of house, eventually working all the way up through operations, then into the back office, doing a lot of marketing, which is when I started consulting, doing marketing for a lot of restaurants.

(2:34 - 2:43)

I'm sure you know that well. That ultimately led me through the pandemic, back to school. I got my MBA and now I run a coaching program for restaurant owners.

(2:43 - 3:01)

So it's a truncated 24 year journey there. For sure. And Chip, so through your whole journey, what really inspired you? What made you really think of making the move and going into restaurant consulting? So I had the great fortune of working with some big little organizations or little big organizations.

(3:02 - 3:11)

And they did the details really well. I did a lot of openings through my career. And I found that was sort of like opening a show, the same thing, right? You're working really hard to get it all ready.

(3:11 - 3:18)

And when the curtain opens, you've got to be ready to go. That sort of lit me up in a way that other things hadn't. So I did that through a lot of my career.

(3:18 - 3:33)

And at a certain point I looked back and I realized, and maybe this is probably a conversation, not an interview, but I found that a lot of restaurants either didn't do marketing at all, or they didn't do it very well, simply because they didn't understand it. And I took a certain view to it. I just thought it's easier than most people are making it out to be.

(3:33 - 3:43)

And I think innately they could be really good at it if we could just boil it down. So I think what I got really good at doing is saying, Hey, let's strip it away. Let's not use any fancy words.

(3:43 - 4:01)

Let's take away all the technical aspects of it. All we're trying to do is convince people to come in, right? Like trying to figure out, Hey, who likes this kind of cuisine? Have you tried us? Well, let me convince you to try it, which is easier said than done. But I sort of had a knack for boiling it down and simplifying it, which I think is what I'm really good at now too.

(4:01 - 4:17)

Definitely. So we're talking here about marketing and you get into operations as well and you're a consulting business. What do you think are the most common mistakes or what do you see like independent operators falling into as it relates to operations and marketing? What do you see? So it's a great question.

(4:17 - 4:36)

And when I answered that question, I always said there's two pieces to it, right? There's restaurants that struggle and restaurants that fail. We know all the statistics and all that stuff, right? The X number of percentage of restaurants all fail in their first three years or whatever it is. And the average independent restaurant makes no more than 6% operating profit every single year.

(4:36 - 5:01)

Well, that's different, right? A restaurant that can't make it through its first two years, I think has a lot to do with marketing. It has a lot to do with product market fit, has to understand what a market has, what a market needs. How do you serve a market? When I say a market, it's a group of people, right? How do you serve a community in a way that they're maybe not being served now? And I think too many owners don't ask that question or don't properly answer that question.

(5:01 - 5:24)

So there's this like marketing foundation that I think most operators skip over. And that's why you get a lot of pain for a couple of years. The other thing then is on the operation side is there are restaurants that do know how to serve a community and provide a really great product for people, but they just can't do it profitably, which I sort of wrap up with sustainability, right? Like you can't do it profitably, you can't sustain yourself.

(5:24 - 5:46)

And so you're not going to be able to feed more people and employ more people. And that has to do with the operation side of it, which is understanding how much do I have to charge? Where's my limit for what I can pay for goods or people or whatever? What do I need to do to be able to do this over and over and over and over again for years or decades? That's an operations thing. So it's marketing, which is why restaurants fail, I believe.

(5:47 - 5:59)

And the profitability piece, the operations piece, which has to do with being able to do it sustainably profitably. For sure. So, I mean, you're kind of preaching to the choir here when it comes to me, but for the audience, you know what I mean? Like we're talking the same language, man.

(5:59 - 6:08)

And we see this thing all the time. And one thing that you mentioned in your book, and we'll talk about it in your book in a little bit, is that marketing is an afterthought. And I deal with this also on a regular basis.

(6:08 - 6:20)

It's like, I have these guys that they've been established for 15 years and they've never spent anything in marketing, just like some girl going there to do like pictures and stuff. And they were okay because they were in a great location, the first location. But when they try to open new locations, they were struggling.

(6:20 - 6:31)

Sometimes it's people that are educated. These are not people that you would think they wouldn't know. But why do you think it's an afterthought? I'd be really curious to know your answer to the question before I answer that.

(6:32 - 6:49)

Why do you think, because I have a very firm belief in this, but why do you think that is? I think it is still a lack of education in part. And then the other one I think is just this optimism that operators have or restaurant owners. Like, if I open, they will come.

(6:49 - 6:51)

My food is great. My office is great. Exactly.

(6:52 - 7:07)

My ability to come. And I went through that too, Chip. Like as a restaurant owner myself, because I opened a restaurant a long time ago and I kind of had that same idea, being a marketer, mind you, because that was my background, but opened the first restaurant and we're like, okay, cool location, Wynwood in Miami, like super hot, right? At that time, it really wasn't.

(7:07 - 7:14)

It was still like being gentrified. But it's like, if you build it, it will come. And didn't have the time to market because I was operating.

(7:15 - 7:24)

I just didn't really have the time. So I think those three things is what happens. And then what I see with people that are already been established, they get kind of used to not doing it and they're like, yeah.

(7:24 - 7:30)

And then when they see their sales going down, it's like, now we need to invest in marketing, let's run, give me miracles. Yeah. Yeah.

(7:30 - 7:38)

So I would agree with everything you just said there. And I think what I'm going to say is going to dovetail nicely on that. I agree.

(7:38 - 7:54)

If we build and they will come. No, not necessarily. For me, the other piece to the answer is that they just have been talked down to for so long and that marketing feels otherworldly, it feels complicated.

(7:54 - 8:23)

And very technical. And while there are pieces in the digital age, there are pieces of marketing that are very technical or can be very technical for me, I think we have to boil it down to its basic, right? Which is what is marketing? Marketing is just, I always say it's answering three questions, right? What's your product? Who's that product for? And then how do you reach them? We can either do it two ways, right? We can come up with a product and then figure out who wants that product. That's mostly what we do in this industry, which is why I think we have so much trouble.

(8:23 - 8:41)

Or we can look around at our community and say, Hey, who needs something? You need something that I'm uniquely qualified to provide. And if you look around at the need, then it becomes a very generous act of bringing something to them. And really all we have to do then is tap them on the shoulder and say, Hey, that thing, you need this, right? And they go, Oh my God.

(8:41 - 8:50)

Yeah. I say, I got it. Like I built it for you, right? That's the genius of Apple, right? Steve jobs famously wasn't trying to make a phone.

(8:50 - 8:58)

He was trying to make a pocket computer. And his team said, people already have their keys, their wallet and their phone in their pocket. They're not going to put another thing in their pocket.

(8:59 - 9:05)

And he says, why can't this be all three? And they said, it just can't, which of course they were wrong. It is. It's all of them.

(9:05 - 9:10)

He said, then pick one and replace that. And they picked the phone. It was the easiest to them.

(9:11 - 9:17)

They felt like it was the easiest they had. That was the piece of technology people already had in their pockets. So we'll just do the phone that does so much more.

(9:17 - 9:34)

But his, his initial plan was to create a pocket computer. Cause he said, I think there's going to come a time, but people are going to need to be way more connected than they are right now, which man, it couldn't be more true. We do need to be more connected to the world than we did 15, 20, 30 years ago.

(9:34 - 9:45)

So when we come at it from the restaurant perspective, I think it's very easy. You figure out who needs what you have and you let them know that you have it. For me, marketing is about getting people to raise their hands and follow you.

(9:46 - 9:51)

Right. You walk into a busy room, say, Hey, let me see show hands who here likes barbecue. Bunch of people raise their hands, say, great.

(9:51 - 9:58)

You're my people. Everybody who raised their hands, follow me. And you march them outside to your truck, right? Like it's most basic.

(9:59 - 10:18)

That's all we're trying to do. We're trying to identify people who need what we have or want what we have, or could possibly enjoy what we're making. And then we're convincing them to take action, to change their behavior rather than order in to come out rather than go to the place they already know to come try somewhere new rather than come to us once a month, come to us once a week.

(10:18 - 10:47)

That's all marketing is, is getting people to raise their hand and change their behavior, really. And when you boil it down to that, you say unique customers, marketing really is about figuring out, say, Hey, unique customers, right? Let's figure out who are your customers and how we might reach them and how we might convince them that your thing is worth going out of their way for it or trying for something new and the methods we use, the channels, the tools at our disposal are going to change all the time. They continue to change over a hundred years, 200 years.

(10:47 - 11:00)

But marketing ultimately is interested in figuring out who wants what you have and how do you convince them to come get it? I think you said it really well, Chip, because everything else, they get distracted, I think by like you're saying the technicals, how do you say all these channels, everything. Those are just, I say the same thing. These are channels.

(11:01 - 11:22)

We need to figure out strategy. Like, okay, how do we get in front of these people? So anyways, another perspective, Chip, is like you were talking about profitability, I know you also be on this with restaurants and I think it's just a complicated situation in these days, right? Because there's labor costs that everybody knows it's just been raising and raising and raising spending, especially in certain states and cities. And then we're talking about food costs, inflation and all that stuff.

(11:22 - 11:47)

So margins have continued to just thin. What are you seeing or what are you recommending when you work with restaurant owners in terms of how do you see that they're able to still get a good profit margin with this current situation? Because I see some operators, they're just kind of giving up, especially like in the full service restaurant segment, which they say, man, this is just the margins there are, we can't really get any better than this. I mean, yeah, it's some things you can't control, some things you can't.

(11:47 - 11:58)

So tell me you can't. Ours is one of the only industries where we're so afraid to charge what we need to charge. Airlines are the most expensive they've ever been in the history of the world, flights this past summer.

(11:59 - 12:19)

Anywhere you want it to go was anywhere between 30 and 60% higher than it was the previous summer. And still let's just use Americans, still Americans traveled on airlines at a record rate. So there's a disconnect between how we value our product and how we think other people are value our product.

(12:19 - 12:34)

And the problem comes is that when labor goes up, right, because that's what happened over the last three years. And when the cost of goods go up, we're afraid to pass that along because we think about our competitors, et cetera. I said, well, down the street, they do this.

(12:34 - 12:51)

The bottom line is we have to create a business that has no competitors, right? Category of one is something you hear a lot in business. There's only one Disney world. If your kids are dying to go to Disney world and you're like, yeah, I mean, if you listen to get really expensive this year between airfare, the hotels, the parks, we can't.

(12:51 - 13:04)

So listen, we're going to go to six flags. They're going to go, what? No, they want to go to Disney world. There's only one Disney world and you will pay what they tell you to pay because it is in a category of one.

(13:04 - 13:10)

There is no, and maybe you just can't afford it. That's fine. But there is no alternative to a Disney world vacation.

(13:11 - 13:31)

So it's a big exaggerated example I'm using, but the bottom line is I think most operators have created a product that's undifferentiated from so many around them. You look at Chinese food, you look at sushi, you look at so many Mexican restaurants, you look at an Italian place. It's like they all got carbonara.

(13:31 - 13:39)

They all got bolognese. They all got Pomodoro. They got like, where's the differentiation, right? I always talk about the commodity mindset versus the luxury mindset.

(13:39 - 13:53)

Not luxury goods, but the luxury mindset, right? What we have in food service and restaurants is a luxury. Make no mistake. Americans dine out two to three times a week between ordering in right from takeout and delivery and going out.

(13:53 - 14:05)

It's about two to three times a week. On average, a hundred years ago, it was two to three times a year is when people went out. Like it's an industry that really didn't even exist a hundred or 150 years ago.

(14:05 - 14:10)

Certainly not like it does today. That's extraordinary. But nobody needs what we have.

(14:11 - 14:22)

People can go to the supermarket and feed a family of four for pennies on the dollar for a fraction of what it costs them to feed a family of four at a restaurant. They come out because they don't want to shop. They don't have to fuss.

(14:23 - 14:29)

They don't have to do all the cleanup afterwards. They just want people to wait on them. They say the experience of that is worth.

(14:29 - 14:36)

I just, man, I've been working really hard. I just want to get taken care of for an hour, which is fair and incredible. And I'm the same way.

(14:36 - 14:53)

What happens is when we get into the commodity mindset, right? When we say, well, that people aren't really going to pay this, it means that it's undifferentiated, right? A commodity means all things being equal, right? Flour, gasoline, eggs, milk, they're commodities. Most people don't know the difference between this milk and that milk. It's milk.

(14:54 - 15:08)

I'm going to pour it on my cereal, right? It's gasoline. It's going to make my cargo from here to there. The commodity product, right? All things being equal, right? A consumer will make their decision based on familiarity, convenience, or price, familiarity means famous.

(15:08 - 15:19)

You're never going to be the most famous burger joint. You're not going to be the most convenient because there are way more McDonald's than your hamburger shop, right? So you can't be the most famous. You can't be the most convenient to the most amount of people.

(15:20 - 15:34)

And you're certainly not going to compete on price because the big chains have huge purchasing power and they'll drive you into the ground. It's becomes a race to the bottom. So the only alternative I see is to create a product where people are willing to pay a little bit extra for, are willing to go out of their way for.

(15:35 - 16:20)

That's one of the biggest problems that we're facing right now, because I can go into any sushi restaurant and get a rainbow roll, spicy tuna roll, and a yellowtail scallion roll. So why does it matter if I go to this place, that place or the other place? I'm going to make my decision based on commodity criteria rather than that luxury criteria, right? Why would I go out of my way? Why would I spend a little bit extra? We have to take a little bit of that thinking and apply that to a product. Otherwise we're just going to watch places go out of business because if we're guarding those margins, we're afraid of charging more than the pizza place down the street or the sushi place down the street, well, then the only people who win that are the landlords and our vendors, and we have to be willing to pass that expense along to the consumer.

(16:20 - 16:33)

Makes a ton of sense, Chip. And that's, again, from different conversations with restauranteurs, that's where they're heading. It's either two things that we're seeing, completely streamlining, which they should do anyways, or they're doing, and then adding to the experience, which was what you're talking about.

(16:34 - 17:01)

I firmly believe there's a problem in the middle, right? That people now are choosing food based on convenience or experience, right? Either I just need something quick, quick, fast, delicious, convenient, nearby, et cetera, or I'm willing to go for experience. And what happens to that messy middle where it's just, okay, I don't think people are going to be willing to spend. We're going to make them spend on just an okay meal.

(17:01 - 17:28)

So people in the middle either have to figure out, are they going to streamline? Are they going to be more efficient? Are they going to be able to be cheap or are they going to make the experience more expensive and then make the experience actually be worth the additional cost we're going to ask them to pay? I think everybody in the middle is going to have a really hard time over the next five to 10 years. Yeah, a hundred percent. And Chip, now talking about all this stuff, I know you've interviewed a lot of restaurant leaders, Ninja with your podcast, Restaurant Strategy.

(17:28 - 17:54)

Is there a trend that you're identifying in every conversation that you have in with restaurant owners of patterns and challenges, particularly in operations and marketing? What are you seeing? It's exactly what you've just brought up, right? We know the challenges that we're facing in labor. We know the challenges that we're facing with the increased cost of goods. The only challenges in our unwillingness to raise prices.

(17:54 - 18:09)

Again, the airlines didn't think twice. Everything else that we pay for has gone up and up and up and people have paid it. And we just have to be better at communicating why people should go out of their way.

(18:09 - 18:18)

Why people should leave the house and spend more than they otherwise would have, or more than they were used to paying. I mean, that's the whole issue. That's what I hear so many people trying to wrap their head around.

(18:18 - 18:37)

Cause the answer is not make less money. What we do is really too difficult and way too important. The tax revenue we generate for states, the jobs we provide for communities, the way we feed people, give them a place to celebrate or get a quick bite when they just don't have enough time to make food, they're running out the door, what we do is way too important to not make money doing it.

(18:37 - 18:52)

And I think the communities will really suffer if we can't serve them. So let's talk a little bit about your book, Chip. So in one part, you're talking about building customer loyalty beyond promotions, right? Because I think that's another thing that restaurant owners think about marketing, just saying, ah, discounting, discounting.

(18:52 - 19:02)

I hate that. I'm not going to do marketing. Of course you can do it in many different ways, but what's an example of building customer loyalty and retention beyond promotions? Yeah.

(19:02 - 19:16)

So in the book, so it's called the restaurant marketing mindset. And remind me at the end, cause I'll make sure I'm going to give you guys a way for all your listeners to get the book for free, all you have to do is pay for shipping. I'm giving away cause we've got a, I don't know, like 300 copies left of the first printing.

(19:16 - 19:20)

And so we're giving all these copies away. So remind me at the end. There's two frameworks I introduced.

(19:20 - 19:38)

There's a bunch that I introduced throughout the book. Number one is something called the ABCDs of marketing that has to do with that product market fit, really understanding what do people need? How do you provide that, right? How do you compete with, you know, those that are in your category? How do you separate yourself? All of that. The other way, the other framework that I talked about is okay.

(19:38 - 19:54)

Once we know all that, now what, like how do we actually market? And I introduced something called the triangle principle because in my experience, there's really only three things we need to do, right? We need to get people in the front door. That's customer acquisition. So how do we raise awareness, build trust and convince them to come try us? And there's customer retention.

(19:54 - 20:02)

So we say, Hey, thanks for trying us. Why don't you come back, right? Getting our regulars or our existing customers to come back with greater frequency. That's customer retention.

(20:03 - 20:09)

And then the third part is what I call evangelism, which is really word of mouth. Right? That's the only three things we need to do. We got to get people in.

(20:09 - 20:17)

We got to get people back. We had to get people talking. All of that I think is a healthy scaffolding for us to answer the question that you just asked and to have the rest of this conversation.

(20:18 - 20:29)

Retention is the most important piece, which is I'm guessing why you asked this. Retention is the most important piece of all marketing. I firmly believe that we've got all the customers we could ever possibly need.

(20:29 - 20:56)

We don't need to get any more customers. I think we should keep trying to get new customers, but we don't need new customers if we can do a really good job at retaining them, I think the biggest missed opportunity we have, but we've heard this statistic come out a lot over the last couple of years, right? Which is that 70% of all first-time diners will never return to a restaurant. But 70%, who knows what made them walk in on this night? It becomes our job.

(20:57 - 21:14)

So I think if we can fix, you asked for an example, you asked for one area. If we can just focus on identifying first-time diners and finding a way to get them back. This is as simple as a bounce back program, right? So server greets the table and says, hi, welcome to restaurant XYZ.

(21:14 - 21:22)

My name is Chip. I'll be taking care of you. Have you dined with us before? We've been asked that thousands of times over our lives, right? But what happens is that somebody says, oh no, we've never been here before.

(21:22 - 21:27)

And then what do you get? The server goes, oh, well, welcome. And that's it. Like, that's what you got.

(21:27 - 21:33)

You got to like a brighter greeting. And really that's the beginning, right? Oh, well, welcome. Listen, you're in good hands.

(21:34 - 21:39)

I'm going to make sure to point out all the signatures. I'll show you some of my favorites. I'm going to make sure you guys have a great time tonight.

(21:39 - 21:48)

And then they need to walk over to the manager and there needs to be a system in place, a playbook. Where the server goes, the manager says table 10 in the corner. It's their first time here.

(21:48 - 21:56)

And then the manager finds a time and opportune time to come over. And we're not talking 10 minute conversation. We're talking in 90 seconds.

(21:56 - 22:05)

It's more than a hollow table touch, less than a get to know you, right? They just stopped by and say, Hey, I'm so sorry to interrupt. I just wanted to introduce myself. My name is Chip.

(22:05 - 22:18)

I'm one of the managers here. And as I understand it, it's your first time here, right? And you ask them a human question. Do you guys live in the area? Are you new to the area? Are you visiting? How'd you hear about us? What made you come in tonight? You ask two of those five questions.

(22:19 - 22:29)

You will learn a lot more about your existing marketing. You'll learn a lot more about how people are finding you. When you ask every new person, you'll learn more and they're going to answer the question.

(22:29 - 22:42)

You're going to ask them another natural question. And at the end of 90 seconds, you're going to go, well, listen, I don't want to keep you from your meal, right? I don't want to keep you from your conversation, but I did just want to introduce myself and I want to leave you with these. And it's a simple bounce back.

(22:42 - 22:45)

It's a business card. It's a postcard. It's a poker chip.

(22:46 - 23:08)

I've done that with restaurants and just says, Hey, this gives you $10 off your next visit back anytime in the next 30 days, come on back. My name is Chip again, ask for me, or if you want, I'm happy to make a reservation for you right now. And so we'll get you, but you do that to every single first time diner, are you going to get a hundred percent recapture? Absolutely not.

(23:08 - 23:29)

But I promise you'll get 20 to 30% recapture from that. And that will profoundly change that drop-off that 70% drop-off that will increase top-line revenue in ways you can't imagine until you put that into place. So whatever that system is, whatever the promotion, whatever the deal, whatever the, I don't know.

(23:29 - 23:34)

I mean, I know what's worked. I know what I do. I'm not going to profess to know what will work for everybody.

(23:34 - 23:47)

But if you make that a priority, identifying first time diners and jamming something in their hand that gets them back in the next 30 days, it's a whole new business in 30 days. That's great, Chip. And it's so simple, right? But we can be totally missed.

(23:47 - 23:53)

We don't have to even go into like digital and all that stuff. It's just like simple, like Orwell's experience. And they're just having that type of communication.

(23:53 - 24:11)

And Sebastian, it's really a flywheel, right? So this flywheel idea, if anybody's not familiar with it, right. Jim Collins wrote about it in Good to Great back in 2001. The flywheel is the idea that like, it's a little cylinder within a big cylinder and you push the big cylinder and then it makes the little cylinder go really, really fast.

(24:11 - 24:31)

So you don't have to really work to get the little one. You just do one big one on the big one and it makes the little one go. What happens is when we know there's a trip wire that we know everybody who comes in, we're really good at identifying and we're really good at getting a percentage of them back and we know that we're really good at getting reviews from our existing customers, right? That's a flywheel.

(24:31 - 24:46)

So we know that everybody who comes into the system is definitely going to be invited back and is definitely going to be invited to leave a review. Then we can focus on customer acquisition. This very technical piece of SEO and SEM and paid ads on meta and things like that.

(24:46 - 24:52)

And then we can focus on getting them in. But a customer acquisition is hard to do. It's really cumbersome and it's really expensive.

(24:52 - 25:04)

So before we spend the dollars there, let's make sure that we're maximizing the lifetime value of every single customer who comes in. We do that by making sure that all of them are raving fans. All of them are invited back and all of them can't help, but go rave about us.

(25:04 - 25:45)

Their friends, family, and everyone they know on Yelp. Make sense? Yeah, it makes total sense, Jim. So how do you bridge the gap when it comes to, okay, this is a simple stuff, like, okay, here's a card for coming back and now we're transitioning to digital, right? Because you talk about in your book also about data and we preach about this stuff all the time, right? Because having a database is full, right? How do you bridge that gap between these simple things as a card and how do you get into data acquisition through these simple processes? So I think we'd probably agree on this list growth is the single most important KPI in the year 2024.

(25:45 - 26:00)

And I'm guessing 2025 email list growth is the single most important KPI for a successful restaurant. The best restaurants that I work with have a really good way of measuring not their list, but their list growth. They know how many emails they grow every single month.

(26:00 - 26:15)

So number one, it's understanding what are your channels for capturing that? Luckily online orders as a channel, a reservation system as a channel should have something on the website. We should have a pop-up. We should have gated wifi in the restaurants.

(26:15 - 26:26)

We should have a loyalty program when we take the payment table side. All of these are ways that we can grow our list. Once we have their information, we can remarket to them.

(26:26 - 26:37)

We can have deeper conversations and many, many more conversations. We have to get that. So number one is what are we doing to nurture our list, but really what are we doing to grow our list? But I go back to this four walls, this very like organic, simple things.

(26:37 - 26:50)

And honestly, a lot of times when I talk to people, I say, listen, how many walk-ins do you think you get a night? Like on a busy Saturday night? Like, oh, I don't know, 50, 60 covers, right? Like, okay, what do you do? How do you guys manage the wait list? Right. Oh, it's a girl with a clipboard. Right.

(26:50 - 27:01)

And they have the name, Jack, party of four, right. Cindy, party of two. We have all these names and none of them are getting put in or even in a restaurant that can easily see you, right.

(27:01 - 27:05)

The number of people walking, Hey, can you guys do a table for two? Right. And they say, yeah, absolutely. Right.

(27:05 - 27:13)

This way. It's a missed opportunity. So even just there, I used to do this years ago, back when I was opening restaurants, I used to do the maitre d', I used to be at the front door.

(27:13 - 27:25)

And it just struck me as strange that we wouldn't stop and introduce ourselves. So people would come in and say, Hey, I'm sorry, any chance you guys have a table for two? And most of my colleagues would say, yeah, absolutely right this way. But I would stop and say, yeah, we can do that.

(27:25 - 27:32)

My name's Chip. What's your name? And they would say, oh, and they would, you know, we're not psychopaths. I have introduced myself.

(27:32 - 27:38)

They'll introduce themselves. And I said, great. Are you in our system? And I would take 30 seconds to say, well, let me just get you in here.

(27:38 - 27:45)

This way we know in the future, we take their phone number and their email address. And the people that don't really want to do that, we'll tell you, I'd really rather not. And you say, okay, problem.

(27:45 - 27:59)

Have a good meal. And then you're back to the beginning, but I would say 80% of the people will easily give you their stuff. So it's another data collection point, right? Somebody walks in off the street, let's know who they are so we can thank them later.

(27:59 - 28:13)

So we can remind them later of the great meal they had. So understanding list growth, all the channels and understanding that we can bring that into the four walls and actually do this very organic, very hospitable things. Just introduce yourself when they walk in and ask for a table for two.

(28:13 - 28:20)

It doesn't have to be quite so transactional. We have 30 to 60 seconds to be like nice human beings to each other. That's great, Chip.

(28:20 - 28:29)

And I love hearing that, man, because we talk about this all the time, but it's difficult, I think, for restaurants to implement it. They're just like, oh, the host won't do it. They're afraid they don't want to do it.

(28:29 - 28:43)

It's uncomfortable, whatever it is. But I think it's part of, because they don't really see the value of what they're getting. What I talk about all the time when we talk about hiring, training, culture, all of that, right, four-step process.

(28:43 - 28:47)

Number one, you hire for it. Number two, you train for it. Number three, you model it.

(28:47 - 29:05)

And number four, you coach. So you hire people, meaning you find people who have the capacity, meaning maybe that's just poise, confidence. Is this the kind of person who will do that when I tell them to do that, right? If they're too shy, if they're too afraid, if they're standoffish, then that's not for you.

(29:05 - 29:09)

So you control that when you hire them. Then you train them. You say, okay, great.

(29:09 - 29:15)

This is what we do. You systematize it. Say when someone comes in, when we get a walk-in, we always introduce ourselves.

(29:16 - 29:20)

Yeah, I can get you seated. My name is Hannah. My name is Chip, whatever your name is.

(29:20 - 29:27)

What's your name? And you stick out your hand and you shake their hand. We're human beings. So you find people have the capacity for it.

(29:27 - 29:37)

That's who you hire. You train them for it, meaning you walk them through it and you make sure they're comfortable and confident in doing what you need them to do. If they don't have the capacity, you don't hire them.

(29:37 - 29:46)

If you try to train them, they show they're incapable, then you don't go any further. And then you model it, meaning you get up there and you show them how to do it. You show it in real time.

(29:46 - 29:57)

And then you turn to them and you say, you see what I just did there? You see how we did that? That's how it should feel. And then finally you coach when they're doing it, you pull them aside and say, Hey, I just heard you at that table. That was great.

That was perfect.

(30:04 - 30:14)

Or I just overheard you and you know what I might've done or next time I would work on this. That's how you coach in real time. It's not like we trained for a week and then we let them out to the wolves.

(30:14 - 30:31)

We continue fortifying the lessons and we continue getting them better and better. And I'm sorry, we're never that busy as busy as we are in the weeds. We're never that busy that we can't just provide that ongoing training and coaching in real time.

(30:32 - 30:33)

Yeah. Yeah. No, that's a great tip.

(30:33 - 30:53)

So this is actually getting into a little bit of leadership, right? Which I also think you're big on. And I think a key in any business or restaurant industries is very important. So what do you see as the biggest challenges with restaurant owners that they're facing as leaders and how do you coach them for those challenges? First problem is really understanding the distinction between leadership and management.

(30:55 - 31:02)

That leadership is setting a vision, setting a coursing, that's where we're going, meaning this is who we are. This is how we do things. This is why it's important that we do things that way.

(31:03 - 31:21)

And then the manager comes in and maybe this is one person wearing two different hats, but you have to be the leader, which is setting the vision, explaining what we do, how we do it, why it has to be done that way. And then the manager is really interested or responsible for implementation, execution. So this is where we're going.

(31:21 - 31:30)

So let me teach everyone how to dip their oar in the water and row together. We teach everyone, that's how we're going to get across the lake. We need everyone going all together.

(31:30 - 31:44)

We need everybody rowing in the same direction, all of that. Those are two different things. And the other thing is that what happens is that so many, especially at the independent level, is that the owners feel like they got to do everything, right? They can't rely on people.

(31:44 - 31:55)

They can't trust people to do it. And that's a failure on the part of the owner. And I mean that in the most respectful, most wonderful way possible, right? If you're responsible for the problem, you get to own the solution.

(31:56 - 32:15)

I always talk about the importance of systems and goals, right? The system is just a repeatable set of actions. So we're going to get from point A to point B, meaning this side of the lake to that side of the lake, or we're going to grow check average by $5 over the next 60 days. Okay, well then what are we going to do? What are the repeatable set of actions? Well, I'm going to get the right people on the boat.

(32:15 - 32:33)

I'm going to give them all an oar and I'm going to make sure they're all rowing together so you get there as efficiently as possible. That's how we get across the lake. And it's the same thing with growing check average, right? So we say, hey, we want to increase PPA per person average by $5 a head over the course of the next 60 days.

(32:33 - 32:38)

Well, what are we going to do? Maybe we're going to look at the menu. Maybe we're going to look at our steps of service. Maybe we're going to look at our server scripts.

(32:38 - 32:44)

Maybe we're going to retrain our team. Maybe we're going to offer some new items and specials. There's a million ways we can do it.

(32:44 - 33:03)

One is saying this is important to the health of the business to grow our revenue. And the other side, the manager says, okay, then nuts and bolts, brass tacks. How are we going to do it? And who's going to actually build the scripts and who's going to actually do the teaching? Who's going to provide oversight and check to make sure that people are doing what we need them to do, et cetera, et cetera.

(33:03 - 33:20)

Most of that management stuff can all be delegated out and really should be delegated out so that the owner can continue to step away and observe. What happens is when you can step away, you get perspective. When you're mired in it, right? We always talk about the importance of working on the business rather than in the business.

(33:20 - 33:39)

The difference becomes that when you step out, you then have perspective. You then say, oh, oh, I didn't realize, you know, until you sit there and you like have a meal in your restaurant or just observe things from the front podium or from service bar, you then see the crunches, you see the bottlenecks. You hear the common complaints all the time.

(33:39 - 33:49)

You see where servers gravitate. You see where the managers are, you need the ability to step out and do that. So it really comes down to, for me, those two different pieces, leadership and management.

(33:49 - 34:07)

It's a very important difference to note because again, I think it can be mired in and confused as well. So thank you for that, Tim. So in your experience, Chip, from all these conversations that you're having with restaurant owners and everything we've talked about here, where do you see the restaurant industry heading? What are the trends that you see happening? Of course, we already talked about a couple, but where do you see the industry going? I don't know.

(34:09 - 34:26)

I think I know it's getting more expensive. I know people aren't independently wealthy. So the average consumer, the average diner has the same amount of discretionary income and it only gets them two meals a month out instead of three or four meals a month out.

(34:27 - 34:36)

That's inevitable. I feel that myself as much as I do this, as much as I work in this industry and I love going out to restaurants, I'm not independently wealthy. So there's only so much I can do.

(34:36 - 34:45)

Sure. And I think people are going to pick and choose where they go, where they choose to spend their dollars. But that's no different than it was two months ago, two years ago, 20 years ago.

(34:45 - 35:05)

It's the same thing. I think now it's just at such a point that people are really being forced to make determinations. And so the people that answer that question are going to be the ones that win, right? If you're in the convenient space, the people that are the most convenient, the swiftest, the quickest, the most delicious.

(35:05 - 35:13)

So why Uber Eats is so successful? Because they've got the reorder button, right? I talked to everybody. I talked to POS companies. I talked to online ordering platforms.

(35:14 - 35:38)

I said, as soon as you put in a reorder button, we can fight back against DoorDash, Uber Eats, Seamless, et cetera. Right. The number of times I'm trapped at my computer, I'm working, my wife's working, my son's getting hungry and nobody's started dinner and I'm on a very important call and I can just look down and go click, click, click and reorder the sushi order from two weeks prior, because that's pretty much what we're going to like.

(35:39 - 35:49)

Yeah. The people that can win that are going to win that. And on the experiential side, the people that create experiences that they can't find at home, they can't recreate at home, they can't get anywhere else.

(35:49 - 35:56)

Those are the people that are going to win there. That's what I think the next, I'll say three years is about. And I think the middle is going to have a really hard time.

(35:57 - 36:20)

Are people still going to go out to eat on a Wednesday? I think they'll grab food on their way to work because they're running late. They'll grab food on their way to soccer or dance class because they're running late and I think they'll go celebrate birthdays, anniversaries, promotions, et cetera, but are they going to go out on a Thursday just because, I don't know, certainly not at the, with the frequency that they have in the past. Yeah, no, that's exactly same thing that I'm seeing.

(36:20 - 36:37)

And I think everybody is, it's a great answer, Chip. I think that's where it's heading. So for new restaurant owners, people getting into this, what advice would you give them, anything that you would want to share? Brand new restaurant owner has to build the business in reverse.

(36:37 - 36:49)

You have to reverse engineer your business. I had the great fortune of having John Taffer on my show a couple of months back, and he talked about Taffer's Tavern, a couple of different locations. And he talked about how he completely reverse engineered that restaurant.

(36:50 - 37:09)

He reverse engineered it to be no more than 50 to 52% prime cost. For those of you who don't know, prime cost is cogs plus labor, right? Cogs and labor make up for the most part, usually half to two thirds of our budget. And I think anybody listening to this knows that 50% prime is sort of like a pipe dream in this current climate.

(37:10 - 37:18)

John Taffer said, he's like, I think food's only going to get more expensive. I think labor is only going to get more expensive. And so we need to build something that prepares for that.

(37:18 - 37:29)

So his restaurants run it between 50 and 52% prime. I think that's what we're going to have to do. I think you have to reverse engineer your restaurant to be able to be really efficient.

(37:29 - 37:56)

It doesn't matter what you can serve or what you want to serve. It's what you can serve profitably. What can you do with the least amount of prep, with the least amount of personnel, get the biggest bang for the buck, because you have to be able to run efficiently because 10 years from now, if you're running at 60, 65% prime cost now, it's going to be at 75 or so in five, 10 years, then you're going to be sunk.

(37:56 - 38:06)

There's no way you can operate. A hundred percent. We actually had a conversation with one of our partners the other day, and they're investing more in this concept that it's basically that, right? It's, it's an Omikase concept.

(38:06 - 38:10)

So the experience is there. The high value perception is there. Your operational costs are way less.

(38:11 - 38:22)

Your food costs is less, your labor costs less, and it's just a very good and profitable model. So now they're like, okay, forget about all this full service dining, which is more complicated. And this is like the new way to go.

(38:22 - 38:27)

So right on. And Chip, last question for you. This is on a lighter note.

(38:27 - 38:42)

What's one thing about you that most people don't know about and would find a surprising? A lot of people are surprised to find out that I started in theater, although now I have a podcast and I'm on stage. So that's usually my go-to answer. Although we sort of started, we sort of led with that.

(38:42 - 38:54)

So I don't know that it's as surprising to your listeners now, but yeah, I had a whole career in theater. I was an actor, dancer, singer, choreographer, director, producer. I ran an off-Broadway theater company for five years.

(38:54 - 39:04)

And all of that was sidelined of my restaurant career. And I think people are surprised to find out that I got a BFA in theater and an MBA in food marketing. And I don't know how they dive together, but they do.

(39:04 - 39:08)

It's a good mix. I think it fits you well. And of course, what you do now.

(39:08 - 39:19)

Chip, and lastly, it's just for people that wanted to get your book, can we talk about, of course, sharing the link, sharing something with them? Where can they find it? And also they want to get in touch with you. Yeah, for sure. So you can get the book.

(39:19 - 39:24)

It's called the Restaurant Marketing Mindset. You can get it anywhere you find books. You can go to Amazon, all of that.

(39:24 - 39:35)

If you want to get it for free, so I'm guessing that's going to be appealing to people. If you want to get it for free, just go to our Instagram page at restaurantstrategy, send us a DM. We've got a many chat automation set up.

(39:36 - 39:48)

So if you just DM us the word book, literally B-O-O-K. If you are in the United States, we will send it anywhere in the United States for free. We tried international, it's gratuitously expensive for us to send it.

(39:48 - 39:56)

I wish we could. But if you order it, we send you a PDF of it right away. So shipping is like $3.92. All you have to do is pay shipping.

(39:56 - 40:06)

Otherwise you get the book for free. You also get a month of our membership community, totally free. So go in there, absorb all the content, download all the free resources that are there at the end of the month.

(40:06 - 40:12)

If you don't want to do it anymore, it's like $97 after that. So if you stay in, I hope you get a lot of value and you stay in. If you don't, I don't care.

(40:13 - 40:20)

Just cancel before your free month is out. So you get the free book and you get a free month of that. The online content is really meant to match the content in the book.

(40:21 - 40:26)

That's how you do it. Go to at restaurantstrategy on Instagram, just DM us the word book. You can connect with me directly there as well.

(40:26 - 40:32)

If you just send me a DM, we can start a conversation. Fantastic. Well, thank you again, Chip, for all these great insights.

(40:32 - 40:38)

It really has been a pleasure to have you on the show. So thanks again. And again, I hope to talk to you at some point very soon.

(40:38 - 40:42)

I appreciate it. Good luck and congratulations on launching this show. Thank you so much, Chip.

(40:43 - 40:43)

Appreciate it.