Rick Camac

Should Restaurants Move to Dynamic Pricing?

abaker — Tue, 11 Apr 2023 16:13:25 +0000

Should Restaurants Move to Dynamic Pricing? abaker Tue, 04/11/2023 - 12:13 ICE's Executive Director of Industry Relations Rick Camac examines the feasibility of a new way of restaurant pricing. April 11, 2023

By Rick Camac

There’s a compelling reason for restaurants to move to dynamic pricing. But what is dynamic pricing anyway? And how can a business model notorious for having narrow margins employ a dynamic pricing strategy?

Dynamic pricing has been done in many other hospitality-focused industries for years.

Major airlines do it. Hotels have revenue managers whose primary job function is to figure out what to charge for a room at any given time. Online tickets to sports and entertainment also fluctuate based on demand. Utilities work that way as well.

What is dynamic pricing?

There are a number of definitions available but, simply put, the typical dynamic pricing definition is the adjustment of pricing due to demand (or lack thereof).

A robust dynamic pricing strategy also often includes room for adjustments due to the change in the product(s) cost (especially when fluctuations may be great).

Dynamic pricing benefits

The dynamic pricing benefits are substantial.

Consistent margins

A dynamic pricing strategy allows you to keep your margins consistent. If your goal was to have your COS (Cost Of Sales) stay, as an example, at 32%, by adjusting your price based on what you last purchased the product(s) for, you would consistently maintain your margin.

Whether due to supply chain, pandemics or other cost swaying reasons, cost for products has never, in recent times, fluctuated to the degree it does today.

To become or remain profitable, restaurateurs have to concern themselves with KPIs (Key Performance Indicators). Besides labor and occupancy (which is typically a fixed cost), COS is a ratio (KPI) that is necessary to maintain one’s profitability. It would solve a big problem.

Offsetting rising labor costs

Dynamic pricing helps with labor as well (for the same reason it helps with COS). If pricing goes up along with rising labor costs, your KPI remains intact.

And, lowering your pricing during off hours can help to pay the rising cost during slow periods of the day or year (especially for a seasonal business).

Tips From a Restaurateur: How To Run Your Business

Dynamic pricing risks

The primary dynamic pricing risk would be that customers would not know what they’re paying at any given time.

Significant fluctuations

The fluctuations in pricing may be great. Chicken increased by 13% over the last year, and at one point was closer to double that number. Other products had similar price fluctuations.

Once a price goes up, is the venue really going to bring it back down? They should, as they may no longer remain competitive, but there would be consumer concern that fluctuations only go one way.

At times, a venue that raises and lowers pricing may be deemed to not have competitive pricing. If I raise the price of my egg dishes (based on rising egg costs) and my competitors don’t, I surely could lose business.

Public perception

Also, pricing sensitivity is at an all-time high. Value perception is very important to the dining public. Due to the internet and social media (to a lesser extent) and online reservation systems, price shopping becomes easy. You could lose diners based on the perception that your pricing is too high.

Will customers understand that your pricing is different solely because of the time of day? As a restaurateur, you may be willing to charge less for the same menu item purchased at 5:00 pm or 10:00 pm versus 8:00 pm.

Possible regulatory issues

To note, New York State Attorney General Letitia James’ office proposed a series of rules governing enforcement of New York State’s Section 396-R of the General Business Law, which restricts price gouging.

One rule states “The proposed rules establish a presumption that price increases during a disruption beyond 10% are unconscionably excessive if they are not needed to preserve margins."

While the proposed rule in New York is limited in scope, it may signal coming regulatory battles over pricing as inflation continues to eat at consumer disposable income.

Can a dynamic pricing strategy work for restaurants?

The National Restaurant Association, in its State of the Industry 2023 report, claimed some 79% of adults have a favorable view of variable or dynamic pricing.

In order for dynamic pricing to work, communication is key.

How do you explain this model to consumers (your diners)? Will they understand, or worse, dislike this method of pricing? While some risk is inevitable, I believe over time this method will become more prevalent, especially in these times of pandemics, fluctuations based on supply chain, international uncertainty and stability, etc.

How will the dining public react? We will see.

More from Rick Camac: What to Look for When Hiring for Hospitality

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How to Perfect Your Pitch

ablustein — Mon, 28 Feb 2022 19:25:53 +0000

How to Perfect Your Pitch ablustein Mon, 02/28/2022 - 14:25 Here’s the quickest way to get investors to write the check. February 28, 2022

By Rick Camac

Pitching investors is key to creating a successful food business — even for small companies just starting out — and the way you pitch will not only help you land investors, but will help your food business become a profitable one.

Success is about pitching a concept that sets you apart from the rest, and there’s a lot that goes into taking that initial idea to become a lasting brand.

Here's how to perfect your pitch.

Executive Summary

Understand that many of the people who are looking at your plan may be doing so online — you may never get the opportunity to “pitch them” in person. So, what is it that’s in your plan that’s going to get them interested? You need to make it personal. What is it about your concept you’re so passionate about? Why should an investor be passionate about it? What’s the “USP,” or Unique Selling Point? Is it “UDD,” or Unique, Desirable and Deliverable? It may not be unique but it has to be desirable and deliverable! Three out of three is even better.

Projections

This is not a time to brag — be conservative but show five years of growth. (It’s better to over-deliver.) If your first year performs way under budget, you’ll have investors watching and questioning your every move from then on out. Keep in mind that usually the projections have to show an investor return on investment (ROI) of three to five years. That will typically require a 10-15% net profit (on revenue). If you do better, great!

Use of Proceeds

Show how you will be spending their money — every dollar of it. Whatever it costs to get the doors open plus some rainy day money (working capital/contingency) should be documented. In order to get the necessary ROI to satisfy investors, plan to spend 50% or less of one year’s projected revenue on all of the above.

Get Them in the Mood

Get them to picture how it would feel to spend time in the space. Use mood boards, renderings (if possible) and some menu pictures and descriptions. The closer you can get to an investor being able to picture themselves in the space, the better.

Be Realistic

If you’re a new entrepreneur, say so. (You can’t hide it anyway.) Do a proper SWOT analysis (Strength, Weakness, Opportunity, Threat) in your business plan. It’s smart to show any flaws in your plan — it shows you know what you need to work on and that you have considered how to mitigate risk. Add that you’ve worked with a consultant or experienced partner to show you’ve acquired the necessary expertise.

Sell Yourself!

Are you going to stick?

What happens when, in the first quarter, the venture is doing terribly, way below projections? Are you going to leave the project? What’s holding you there? What assurances can you give investors that you’re there for the long haul? Think about their concerns and assure them otherwise (and mean it).

Skin in the game

Have you put anything financial into the venture. Most new (and established) entrepreneurs would prefer to put in “sweat equity” i.e., no financial contribution. Even a relatively small sum ($25,000) shows you're “in the game.” It shows you believe in what you’re about to do. It also helps show you’re willing to stick around if things get tough.

They’re writing a check to YOU

Understand no one writes a check to a business plan. It’s one of the most personal things anyone can do. By writing that check, they’re saying “I believe in you.” No one writes a business plan that says “we’re not going to make money.” They will all show profitability (at some point), with a reasonable ROI. So, that’s not why anyone’s writing a check — they’re writing a check to you!

Create your own business plan with Rick Camac in Restaurant & Culinary Management at ICE.

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Exit Strategy: How to Get a Greater Valuation For Your Concept

ablustein — Thu, 11 Nov 2021 20:35:48 +0000

Exit Strategy: How to Get a Greater Valuation For Your Concept ablustein Thu, 11/11/2021 - 15:35 What to know when you want to get out. November 11, 2021

By Rick Camac

Rick Camac, Dean of Restaurant & Hospitality Management at ICE, talks through what to consider when thinking about an exit strategy for your business and how to drive up the value of your concept.

When you begin to think about your first concept, it’s also the right time to consider your exit strategy. That may seem odd at first, but what you want down the road has a lot to do with how you start.

Whether you want to run a mom-and-pop in the Caribbean or start a QSR that ultimately grows to 100 stores, the decisions you make from day one can greatly affect your plans down the road.

A fairly standard valuation for a restaurant venue is based on bottom line profits, or EBITDA (earnings before interest, tax, depreciation and amortization). Typically, depending on several factors, you may be offered five to seven times EBITDA. That said, it could be as low as two times, and I’ve heard of as high as 13 times. So, what makes that difference in valuation? Let’s explore what an investor may want to see (noting that investors invest for many reasons).

Expandability

Will you be able to expand your concept geographically? Could you open (assuming you have available financing) 10, 25, 50 or even 150 stores? Does it have that “approachability factor?” While you may be able to expand a Mexican concept to 100 stores, a Southeast Asian venue may only work in 25 geographical areas. (Twenty years ago, that number may not have even been 10.) To get a high multiple of earnings, expandability will matter to savvy a investor.

Most investors would not give you a multiple of 10, which assumes, all things being equal, it would take 10 years to get their money back — that’s too long. A smart investor will not want to take the risk on waiting more than three-and-a-half to five years to see a return on investment (ROI). What accelerates their return is building out more stores (and quickly).

Study these management essentials with Rick at ICE New York.

Scalability

It’s helpful if your concept is adaptable to bigger and smaller spaces. Can it be scaled for food trucks, arena concessions or kiosks? Can it scale up to a larger space? Does adding a raw bar component, a private event space or a rooftop bar work with the concept?

How complex is the menu? Is it chef-driven? Can it be easily duplicated? Is it farm-to-table? If so, how could you have the same concept in NYC, Miami and San Francisco? What type of cooks do you need to execute the cuisine? Will training be difficult? How much training will a cook need and how will you train them? Think about these things before you plan to open five stores in 10 years.

Brand

Being recognizable makes a big difference, so strong brand recognition may be the most important thing you bring to the table to a new investor. Strong marketing and PR, a strong brand message, staying on point and delivering on your brand promise is everything — it’s what makes the sum worth greater than its parts. Your IP (intellectual property) and brand equity could be worth considerably more than your cumulative bottom line.

Profit

Ergo, do you make money? A reasonably healthy EBITDA for a casual full-service concept is 8% to 12%. For example, if you owned three stores that did $3M each at 10% profit, and you only received an offer of five times EBITDA for your entire company, you would net $4.5M. Not a bad exit!

Management Team

Does the bulk of your team want to stay on board? Is it a strong team? Have they been with you long? What’s your average employee turnover rate? (Many venues turn over as much as 75% per year — and that was pre-COVID.) An incoming company (purchaser) does not necessarily want to reinvent the wheel. They may replace some key people but they’re not typically looking for a “fix what isn’t broken” approach (this may vary widely but we all need good people, especially today). Your managers could very well be an asset to the purchase.

Systems and Procedures

Have you built strong systems? Are you taking advantage of software and products that streamline your business? Are you organized? Do you have SOPs (standard operating procedures), steps of service, a well documented and up to date employee handbook? Are recipes in electronic form? Video how-to’s? That all matters and saves time to an incoming team and mitigates the risk of your team bailing out on new ownership.

The bottom line is this: Whether you want to sell in five years and get out, sell and stay in or just continue to make a good living and not sell at all, please consider all these things prior to opening your first venue. These important decisions will greatly affect how an outside company will view you in the future.

Learn more about Restaurant and Hospitality Management classes at ICE.

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What to Look for When Hiring for Hospitality

aday — Tue, 13 Jul 2021 01:26:07 +0000

What to Look for When Hiring for Hospitality aday Mon, 07/12/2021 - 21:26 8 soft skills for recruiting great restaurant workers July 12, 2021

By Rick Camac

Dean of Restaurant & Culinary Management Rick Camac shares the soft skills he advises restaurant managers and operators focus on when hiring, especially amid a national staffing shortage in the hospitality industry.

It’s odd that we often overlook the obvious when drafting a job requirement or description when we are ready to hire new employees. Based on those requirements, we often create a checklist to follow during the interview process, which is good and very organized. The problem is, we are looking for the wrong set of skills! And we are asking the wrong questions, especially when reviewing resumes.

We even make the wrong decisions on who to bring in for an interview in the first place because our criteria for hiring an applicant can be all wrong. Then we’re surprised and disappointed when the applicant (whom we’ve now hired) doesn’t work out.

Our job placement ads will oftentimes list the following requirements (derived from a real job post for a New York City venue):

Familiarity with POS systems such as Micros, Aloha, Posi Touch, Rpower required
Strong knowledge in food and beverage (wine knowledge is a plus)
Understanding of how to upsell
Tendency to meet guests needs on the restaurant floor with peripheral vision
Open to working morning and evening shifts, week days, weekends and holidays
Keen sense of attention to detail ensuring tables are served and bussed properly.
Basic understanding of polishing, marking, spot-checking and crumbing tables.
Ability to lift up to 50 pounds required

Now, for all the things listed above, which do you think is not relatively easy to teach? Virtually all of the above can be trained in hours, if not days, and one may take somewhat longer. Strong knowledge in food and beverage? Okay, that may take time to acquire, but can I teach someone relatively smart and ambitious most menus in a week? Yes! Can I teach my point of sale system in a day? Yes! Can I teach upselling? Easily, across a few sessions. Polishing? C’mon, really?

One of the smartest requirements above is in bullet No. 3 because generally speaking, you cannot teach good peripheral vision. We can teach employees how to “scan the room” looking for things that are amiss. But those same employees will step over a napkin laying in the middle of the floor three times if that’s just not a soft skill they possess.

There are skills and abilities inherent in our DNA, that are either there or they are not. If they are not, I submit, you cannot train people to do or possess them. It is my opinion that you cannot make a messy person neat. Their version of neat may be to take everything off the floor and cram it into the closet in a ball so it’s not seen. You can force people to do some of these things that do not come naturally to them, but it's highly unlikely for that training to stick or come easily.

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So, why do we ask for easily trainable skills and forego looking for the skills that really matter in a hospitality-based business? Some of us call these soft skills. I believe Danny Meyer calls them the 51%ers. Here are some of the skills I think are considerably more important than what we typically look for in an applicant:

Curiosity
Perception
Energy
Enthusiasm
Drive
Ambition
Problem solving
Conflict resolution.

Of all the points above, how many do you think are teachable? Perhaps the last two (to a degree), but for the most part, you cannot teach them. Can you teach someone to be curious or enthusiastic? I have found curious people to be some of the smartest people, wanting to know how everything works so they seek out the information. How do you teach drive if it’s not there? Can you get employees excited about something? Yes, but it’s usually not sustainable, just like everything else on my list (and more).

These are important skills for hospitality and they are hard, if not impossible, to teach. Conversely, we can all learn how to use a POS system in a few days. It’s time to change what we are looking for and how we interview and ultimately hire. I guarantee you will be more successful bringing in the right people into your organization, not to mention improving your organization’s culture.

Study restaurant staffing, HR and more business skills with Rick in Restaurant & Culinary Management.

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Are Additional Grants Enough for Restaurant Relief?

aday — Tue, 13 Apr 2021 15:03:01 +0000

Are Additional Grants Enough for Restaurant Relief? aday Tue, 04/13/2021 - 11:03 Our dean of Restaurant & Hospitality Management weighs in on the latest stimulus. April 13, 2021

By Rick Camac

PPP1 has come and gone. PPP2 is a distant memory for most. The American Rescue Plan (ARP) Act of 2021 includes the Restaurant Revitalization Fund (RRF), hard-fought-for grants for the hospitality industry. Tribeca's Kitchen Director of Operations Rick Camac shares his take on this round of restaurant relief.

While the number is impressive ($28.6 billion), we’ve got quite a deep hole to climb out of as an industry. Is this the government’s way of making it up to us? Is it too late?

The details of each round of small business paycheck protection have been covered extensively in the media, but I will summarize the latest round of grants. PPP1 was misunderstood, came way too late, and was too stringent in its application (rent and payroll) and its deadline for usage.

For PPP2, the government loosened up the usage, gave more time and got it out to everyone quicker. Unfortunately, this pandemic is stubborn and has stuck around way longer than anyone ever expected. In NYC, restaurants were closed for six or so months (many of us longer as some restaurants saw no reason to open with limited capacity, for good reason). Restaurants reopened at 25%, then at 35% and finally at 50% capacity. Making a profit at even 50% capacity is virtually impossible without huge landlord abatements (not deferrals, as that’s just “kicking the can down the road,” as they say).

We are now more than a year after the initial shutdown and many restaurants are already out of business (about 5,000 or so I’ve heard). Many have been deferring rent for so long they could easily be in six figures of debt.

RRF is the biggest grant program to date and may be the last. The highlights:

The first $5 billion are earmarked for small businesses with sales under $500k.
The next is for minority and woman-owned businesses, over the first three weeks.
Then comes most everyone else who is not public or doesn't have entities of 20 or more.
The goal is for funds to be delivered by the end April.

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The funding is calculated by subtracting a restaurant’s 2020 gross receipts from 2019, then subtracting PPP1 and PPP2. The net results can be staggering. As an example, let’s say you were only open for three months in 2020 and did $500k in business. In 2019, you did $2.5 million. The result is $2 million. Then subtract about $200k for PPP1 and $300k for PPP2, and you get a check for $1.5 million.

Some may say that calculating from topline when some make single digits is too much. If in 2019, you made 10% to the bottom line, that’s $250k. Now you’re receiving a check for $1.5 million, which is six times your bottom line. Is that fair? I think so. Here’s why:

As mentioned, many of us are coming out of a huge hole. Some may not come out of it. Restaurants may owe $500k or more in rent alone.
Restaurants can use the funds for myriad uses for the rest of 2021, not lining the pockets of owners or investors.
Business will be slow to come back for health concerns and the lingering pandemic that we are not out of yet.
As mentioned, restaurants are not profitable at 50% capacity, so we need to pass that threshold just to begin to have hope of turning a profit.

Our industry could be halfway through 2022 before we see a light at the end of the tunnel. So, I hope restaurants use the funds wisely. We need and deserve it. Every day counts as expenses mount. Let’s get out there and get back to business!

Study business skills with Rick in ICE's Restaurant & Culinary Management program.

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Public Speaking for Restaurant Professionals

aday — Thu, 04 Feb 2021 18:21:55 +0000

Public Speaking for Restaurant Professionals aday Thu, 02/04/2021 - 13:21 Chefs Jameeale Arzeno, Michael Jenkins, Adrienne Cheatham, Michael Garrett and Kwame Williams (Culinary, '07) speak to students at ICE. Chefs, managers and owners alike can benefit professionally with comfortability speaking to groups. February 6, 2021

By Rick Camac

The ability to speak well publicly comes into play often in the restaurant industry. Restaurant managers and owners need to represent the venue and often the company anywhere from a community board meeting, public hearing or vendor meeting, to company-wide meetings or a meeting with a team. Speaking comfortably and confidently with conviction, passion and integrity will go a long way toward achieving company and personal professional goals.

It’s hard to be a leader in any business without being able to speak well in groups. Better public speakers tend to become leaders more easily and rise through the ranks of organizations quicker. It’s really hard to communicate your points or goals to your teams, venues, company, investors and others without a comfort with public speaking.

Dean of Restaurant & Hospitality Management Rick Camac

Early on in my career as a restaurateur, I found myself having to speak in front of groups that eventually were in the thousands. Public speaking did not come naturally to me, nor do I believe it does to most of us, and I was forced to confront my issues head-on. Learning how to speak in public should be part of every college or vocational school curriculum. I believe it to be one of the most important things we can learn. And, as is the case with most things, it takes practice. The more you do it, the easier it gets.

All things being equal, if two candidates are in contention for a job or a promotion, the one that is comfortable speaking in front of people will likely get the nod. Good public speakers come off with more confidence, and seemingly, more knowledge. By no means does this mean we all need to run for office or aspire to speak in front of thousands or millions. But being comfortable with speaking in front of 10-20 people will likely come up many times in your business career and even your personal life.

In Restaurant & Culinary Management classes at ICE, I have students start off with easy subjects for a few minutes, and by the time they are ready to graduate, they are comfortable speaking in front of the class for 20-30 minutes.

As with many other interpersonal skills, I think most people have become more comfortable with communicating in other ways, from phone calls to emails and then texts. We all know people that would do anything not to have to communicate directly with anyone. Now, during the pandemic, we have Zoom. The less we have to get in front of others, the less comfortable many of us will be doing so (and the more we’ll resort to other forms of communication).

Chef and restaurateur Susan Feniger speaks to ICE students.

Here are the tips that have helped me to this day.

1. Practice. If you’re comfortable speaking to one, practice speaking to three. Use family and friends. Talk about topics that you are 100% comfortable with. Talk about your dog or favorite color. Keep growing until the group is a little bigger and the subject is a tad more unfamiliar.

2. Blanking out: That was my biggest fear. I’d forget what I was about to say. When that happens, just go back to the subject matter. Speak logically and forget your notes and what you tried to memorize. Trying to remember what you memorized is scarier than just speaking from what you know. Try just leaving yourself a few key points to speak to. Start with the subject matter you know well.

3. Knowledge is power. This is never more true than with speaking. Get to know your material as well as you can. Having knowledge to offer gives you confidence. Know that you have something valuable to say. Before I get in front of a large group, I tell myself I have something to convey that people want to hear. I tell myself that I know more about the subject than anyone in the room. It may not be true, but it gives me confidence.

4. Do not memorize anything. Then there’s nothing to forget. Know the material well and give yourself bullet points to speak from. Memorization works well for some and is paralyzing for others. That said, do practice your speech often — just don’t try to memorize every word.

5. There's no need to fear failure. An audience does not want you to fail. Most of the time, showing vulnerability goes a long way toward getting an audience on your side.

6. Make them laugh. Be self-deprecating. Get them on your side quickly. I usually say something humorous to start just about every speech I make. Get the audience to laugh and you've got them! This may be my best tip and it works well for me. I immediately relax once I get a group to react positively.

7. Be honest. Be heartfelt and try not to read from a script (that’s what trips many of us up). Be confident about knowing your subject matter and be yourself.

8. Get comfortable and start small. Once you’re comfortable speaking in front of 12 people, 50 is a breeze. It stops mattering.

9. Focus your attention. If it helps, take turns looking at one person in the audience and speak to them like it’s a one-on-one conversation. Then, after a minute or so, focus on another. And so on. After a while, you’ll stop doing that and then be able to scan the room as you speak.

10. Hint for online speaking: I don’t like to see myself on screen when I’m talking (I’m used to that now) so I used to turn my own video off when I spoke. Seeing myself speak made me self-conscious. Now, I don’t care. And, again, concentrate on talking to one person as if there’s no one else in the (virtual) room. Ultimately, you’ll get comfortable with looking up and scanning the room, without even realizing it.

Hear excerpts from our virtual guest speakers in 2020, and study more management skills in Restaurant & Culinary Management at ICE.

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Are New York Restaurateurs Becoming Their Own Greatest Competitors?

aday — Wed, 29 Jul 2020 16:51:53 +0000

Are New York Restaurateurs Becoming Their Own Greatest Competitors? aday Wed, 07/29/2020 - 12:51 Former restauranteur and Dean of Restaurant & Hospitality Management Rick Camac reflects on the shifts in New York City dining since the pandemic shutdown. July 31, 2020

By Rick Camac

Clearly, the restaurant world has dramatically changed over a few short months and will continue to do so. COVID-19 changed the way restaurants operate, and some of these changes will continue on forever: better sanitizing, contactless menus, and definitively, better delivery.

Restaurant strategies that were on the downslope when COVID-19 hit, such as fine dining, got hit much harder, and those on the upslope, such as ghost kitchens, QSRs, and yes, some fast food, are going to grow exponentially quicker.

Independent restaurants and restaurant groups that never, in a million years, would have thought they’d be doing delivery and takeaway (or, at least, not a significant amount of it) are now, in fact, doing so. Reasons for not offering delivery previously included fine dining food not traveling well, the function only accounting for a small fraction of business, third-party delivery costing too much or an operator’s inability to control what happens once food leaves an establishment.

At the same time, diners have changed how they eat and their preferences. Since the pandemic impacted the industry, the following things have changed dramatically:

They’ve become better cooks — many of us, much better.
They’ve become accustomed to dining at home (whether cooking, picking up or getting delivery).
Delivery service, quality and options have improved.
Delivery and takeout packaging has improved, providing meals closer in quality and presentation to the dining-in experience.
Even more meal kits with quality ingredients and easy instructions are available.

No longer are diners relegated to soggy pizza and poor quality, overcooked burgers with delivery. The best restaurants in town are delivering or offering window or curbside pick up. Will that end once COVID-19 has passed? For some entities, yes, but for many more, I think not. Most establishments cannot afford to turn away incremental revenue, and the cost of that business has come down dramatically since third parties’ egregious practices have been regulated.

Just three months ago, would I have thought about paying $100 for delivery? Absolutely not! Now, when I can order from Rezdora, Wayla, Daniel (I’ll get back to this one shortly), Crown Shy (takeaway), Osteria Morini, Eataly, etc. and get a really quality meal, I will and have. In the past, once delivery went north of $60 or so, I would usually opt to go out (at which time I would likely spend a good bit more). Since COVID-19, I have ordered from some of the best places in the city. What I’ve learned is that having a really nice meal (that I don’t need to shop, prep, cook or clean up for) while watching another episode of my favorite Netflix show, is a pretty good experience. And mixing my own Negronis with ingredients (via Drizly delivery) that cost me about $100 all in but will make me more than 20 drinks, isn’t so bad either.

A few weeks ago, my wife and I celebrated our 20th wedding anniversary. With basically nowhere to go dine in, we opted to get a weekend package from Restaurant Daniel. It included dinners for Friday and Saturday and brunch for Sunday. Yes, the charge was fairly significant, but for the cost of a dinner there (maybe less than the cost of one dinner), we had a weekend of incredible meals (and leftovers that lasted into the next week). It was a truly memorable experience at home.

Now, once things open back up, and the “new normal” sets in, will we go back to dining out? For the most part, yes! We are social beings. We don’t live in NYC to stay home and get delivery. However, has the way New Yorkers dine changed? I believe so. I predict the following:

Initially, there will be a rush to get back to restaurants. Once it becomes clear that the experience will not be (for a while) what it once was, we will dine out less. Maybe four to five times per week becomes one to three.
Takeout will continue to be prevalent.
They will order delivery more frequently. Restaurants that got into the game will not easily leave it as that would render them less relevant in this “new normal” world.
They will cook more.
Restaurants will be more expensive.

The news is not all bad:

New players will enter the industry with better models and do well.
Most restaurants that exist today (and make it through) will pivot to better business models as well.
Better takeout and delivery is here to stay.
Ghost kitchens and ghost food halls will flourish (if they have strong business plans, strong capitalization and stronger management).

Many restaurateurs will want to go back to the way things were. They will want to pull back from delivery and takeaway. Many will not. We’ve created our own monster. It’s not such a bad thing. It could just be part of a better way to do things.

Read more about restaurants amid COVID-19, and navigate the industry with a diploma in Restaurant & Culinary Management.

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Why Culinary Business Training Can Cure the Industry's Vulnerability

aday — Mon, 04 May 2020 18:31:32 +0000

Why Culinary Business Training Can Cure the Industry's Vulnerability aday Mon, 05/04/2020 - 14:31 A Restaurant & Culinary Management class at ICE Education will be more important than ever in the post-pandemic world. May 4, 2020

By Rick Camac

In thinking about the future of our industry, there is understandably reluctance to enter it after restaurants and hotels shut down worldwide, but on the other side of this, there will be more opportunities than ever and it will subsequently be more important than ever to have the necessary skills, information and tools to be successful and profitable in this era.

After personally going through 9/11, the 2008 financial crisis (that had lasting effects that have not completely dissipated to date), and Hurricane Sandy as a restaurant owner, I can attest that each and every time, there were adjustments to make in my business model. I think this will be our industry's most challenging catastrophe to date.

Let’s face it: These crises exposed us as unprepared and unsophisticated. When things go well, we can hide our deficiencies and flaws. My apologies (and congratulations) to those that strategized and reacted well, but as an industry, and especially those that represent the small independent restaurants (as I did), operators do not plan, train, educate or execute well for crisis management. Many didn’t spend enough time training managers, lacked capital, maintained razor-thin margins, lacked adequate financial planning and usually had no contingency plan for a rainy day. Well, it poured! And most got caught without an umbrella.

No one expected COVID-19 to happen but something much less would have toppled us as well (basically anything that stopped us for 30 days or more) and was already beginning to.

Steve Zagor instructs a Restaurant & Culinary Management class at ICE.

The problem starts early on. Here’s why so many of us fail to begin with (use any industry statistic you want):

We don’t start with enough capital and usually open with little to none because we fail to budget properly.
We don’t spend enough time on projections because we don’t understand why they’re important. If you’re smart, you know it determines what should be your maximum capital budget and how much you should spend on your lease. You likely still don’t understand that significance.
We fail to understand that although our lease is a much smaller percentage than our cost of sales or labor, if things go poorly, it’s harder (virtually impossible) to make the adjustments needed to get our ratios in line.
We fail to understand that knowing and understanding basic general business principles is critical to restaurant success. How many bartenders, cooks, chefs, servers and managers do we all know that opened without business experience? Do you know many other businesses where that’s the case? I don’t.
We don’t like or understand new technology and therefore don’t take advantage of how it can assist us (and in how many ways).
We have no contingencies or crisis management plans. We probably never even considered them.
We have never been trained in management (many of us have worked in venues where the best server becomes the manager – and with no more training than to follow someone else around for a few days, who also may not have been so good or had formal training).
We don’t understand the complexities of purchasing and have no idea where our money went until it’s too late.
We are weak in negotiations, strategy, leadership (team building), creating a strong culture (70% annual turnover industry-wide) and operations.

Now we understand why we are vulnerable to failure. It doesn’t take a pandemic. The good news is all it takes to fix this is education (and execution), which has never been more important than it is today. The stakes are higher than ever, and while there will be many losses in the coming year or so, there will be big winners. I can make an argument that there’s never been a better time for new players to come into the business. And I know that seems counter-intuitive at this time.

The restaurant industry needs strong, educated leaders to recover from this disaster. Our business has always had a low barrier of entry, and it will continue to, but those that will rise to the top of many companies or run their own venues will be armed with the skills described above. This is no longer a sector that can succeed with creativity, guile, will and guts (all good features). It will always take more. Plan accordingly.

Strategize for your future in food with career training in Restaurant & Culinary Management at ICE.

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When Disaster Strikes

aday — Thu, 19 Mar 2020 19:22:29 +0000

When Disaster Strikes aday Thu, 03/19/2020 - 15:22 Dean of Restaurant & Hospitality Management Rick Camac advises on emergency preparedness and management. March 20, 2020

By Rick Camac

As an industry veteran of 20 years, I have personally had many ups and downs. I’ve had successes and failures. After three years of passive bar ownership, I decided to open my first restaurant, 5 Ninth, in the then-burgeoning Meatpacking District in 2005. I put in everything I had, I borrowed from friends and friends of friends. When we were ready to open (about a year and a half later than planned) we hosted our first Friends & Family service, and we had a fire. When I saw the firemen coming in with hatchets, I thought my time was over before it started.

Thankfully, the firemen did a great job and we reopened about two weeks later. Had it taken longer, we may have never opened. We had no more capital, nowhere else to turn and were out of time. The pressure to make it happen is enormous. You’ve hired staff, taken investors' money, purchased products you have not yet paid for and you have to live up to expectations publicly.

In 2008, the world changed forever. New York City changed permanently. Black cards and big events went away. Up until that time, Thursdays were the night out for locals. It wasn’t a matter of whether you were going out. The conversation was about where.

Now, instead of Thursdays matching the sales of Fridays and Saturdays, it evened out with a Tuesday or Wednesday. Sales would never approach pre-2008 numbers and after 10 years, in 2013, our landlord announced our new rent would be $75,000 per month. In 2003, it was $7,500.

After Hurricane Sandy, I had two restaurants close (both downtown), which took us weeks to reopen. Our insurance was absolutely no help, blaming ConEd and claiming my business interruption insurance would not be able to be used (What was it for? I wondered). We barely made it through, lost thousands in product and more in revenue. Our staff lost wages and we were in no position to help. We stayed in business but never fully recovered or made it back to the revenue numbers we had attained prior.

During these times, you feel for yourself and your family, your company, your staff (maybe more than anything else), your vendors and your investors. At times, I handled these situations very poorly. Anyone can feel helpless and not know where to turn or who can help. As many of us don't experience a natural disaster, terrorist attack or health scare to prepare for such crises, advice and resources can be sparse.

Here’s a point-by-point guide for when disaster strikes your restaurant.

Be Informed

Whether a natural disaster, safety threat or health epidemic, monitor official updates from industry associations and local and national news outlets. In New York, that includes the National Restaurant Association (NRA), New York State Restaurant Association (NYSRA), and New York City Hospitality Alliance (NYCHA). In a pandemic like the COVID-19 outbreak, monitor updates from city, state and local governments, as well as the Centers for Disease Control (CDC) and World Health Organization (WHO). Seek legal counsel when necessary.

Ongoing resources for the restaurant industry amid the COVID-19 outbreak.

Communicate

Reach out to your staff and advise them of what’s happening, continually keep them informed and provide resources when necessary. Monitor your team's safety, mental and physical health, and financial security.

Strategize

Proactively, take the proper health and safety precautions advised by the CDC and local, state and federal health departments.

Reactively, when cuts are necessary, cut menu items and then staff hours. Consider the minimum necessary to maintain quality and consistency.

If and when full-service is eliminated, convert to grab-and-go by removing seating and providing carry-out packaging. Consider offering or implementing takeout or delivery services with a skeleton staff. You can avoid delivery app fees and deliver yourself: Check the Department of Health website for regulations. The cost can be limited to a few bikes, helmets, locks, vests, IDs and some insurance considerations. Contact your insurance broker to make sure you have the appropriate coverage.

Develop menu modifications. I would suggest significantly limiting the menu to items that sell well, travel well and are quick pick-ups.

Evaluate your packaging needs. Certain packaging will continue to cook your food more than others. Try various methods of packaging keeping in mind travel times, modes of transportation and how to secure and ensure your menu item will arrive the way you want it to. Continue to test until the outcome is exactly what you would expect if ordered and eaten in your dining room. Consider deconstructing some items (separate the bun from the meat, if you are concerned the juice may leak through the bun, for example).

To Close Temporarily

Freeze any product that can be frozen. Alternatively, if you have limited freezing capacity, donate or send staff home with all the low-cost frozen food to preserve expensive protein.

Donate all expendable food to a charitable organization, shelter or kitchen to support your community and prevent waste.

While you can continue to pay staff, take advantage of the opportunity to do a real deep clean in the restaurant with the bonus that you’ll be able to open more quickly once this passes.

Seek credits or outright refunds from liquor distributors.

Set the temperature as low as reasonable to save on electricity but not allow the pipes to freeze. I recommend 66 F in the winter, 76 F in the summer so the humidity doesn’t get too high.

To Compensate Your Staff

Ask about state and federal government assistance for paid leave during shutdown. There may be help available. Stay on top of this news and apply as it becomes available.

Consider asking managers to take half pay during closure (at least for a period of time). If there's a financial threat of layoffs, this could be a reasonable alternative to cutting all your staff. The coronavirus pandemic has led to restaurant relief funds across the country, another option for compensating workers through crowd-sourcing.

To Delay Costs

Immediately talk to your landlord: Ask about abatement, discount or deferrals. Contact your real estate lawyer or whomever negotiated your lease for direction on paying or negotiating rent.

Call the appropriate agencies to see if penalties will be waived to defer utilities and insurance payments. Ask your insurance provider if you have force majeure clauses for business interruption coverage and discuss which expenses related to the closure qualify.

Look into low-interest lines of credit to shore up your cash flow needs. You may choose to use it for payroll.

Consider bankruptcy, a viable option for restaurants that have no choice other than going out of business. This will allow you to reorganize, stop any proceedings against you and put some power to negotiate back on your side. It will keep you in business. You can likely get a free consultation from a bankruptcy lawyer if you have no other options.

Silver Lining

Ultimately, there is some light at the end of the tunnel. This is an opportunity to take a hard look at your business model. At ICE, we educate management students about the evolving and ever-changing dynamic status of food businesses.

Being quick to adjust is the key to coming out of crisis. Whatever you do, do not stand still. Take action. More than ever, the necessary strengths and skills going forward are strategy, negotiation, management skills, leadership skills, fast execution and a strong understanding of key performance indicators (KPIs). It took me 10 years to learn what we teach at ICE in seven months.

Add business skills to your repertoire in Restaurant & Culinary Management.

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Restaurant Revenue Strategies

aday — Mon, 28 Oct 2019 13:35:55 +0000

Restaurant Revenue Strategies aday Mon, 10/28/2019 - 09:35 There are tricks of the trade for selling more menu items for a higher profit. October 30, 2019

By Rick Camac

Our New York campus dean of Restaurant & Hospitality Management shares four business strategies for aspiring managers, restaurateurs and entrepreneurs.

Average Check

To understand the grand plan, you first must understand some general terms. Most (all) restaurants calculate their average check by adding the average price of a starter, entrée and drink (depending on venue style – small plate, big plate, drink). This is a very important figure for a restaurant and what they base their projections on. If an average starter salad is $10, a salmon entrée is $28 and a glass of white wine is $12, the average check would be $50. For everyone that comes in and has tea and splits a salad among four people, you need others to purchase that grand tower of seafood. The “goal” is not to meet your average check but to surpass it. Managers get bonuses and/or raises for doing so and servers get bigger gratuities, among other things (promotions, better shifts, etc.).

Check Builders

That’s where these come in: Check builders are menu items that help raise check averages. So when the table adds a dozen oysters to start (which a good waiter will offer with that first round of drinks), they already have a great chance to get a bigger check average on this table. If the oysters are $3 each, that’s $36 divided by 4 people, so you just added $9 per person to the check. Examples of check builders are charcuterie, pickles, cheese plates, olive bowls, raw bar, a bread basket and much more (like dessert!).

Upselling

Here’s where star servers shine. A good server raises check average imperceptibly and uses a well-written menu to get them there. For example, when a table orders two glasses of wine, the server can suggest a bottle and specifically site one they recently tried that’s preferable to your selection and slightly more expensive. The server doesn’t recommend a bottle that’s $25 more, only $10, which can be imperceptible. And, who would buy the one for $28 that the server is clearly not recommending. This server might also recommend a dozen clams (at $2 each), which would go great with your wine choice. The server has the opportunity to add $42 (wine) plus $24 (raw bar) to the check with these suggestions.

Menu Engineering

Menus sell your concept and should be directly tied to the above strategies. The menu should be your best (and least expensive) marketing piece. It should say who you are without having to walk into your venue.

Here are some menu aspects to be mindful of.

Dollar signs: Studies show we shouldn’t display dollar signs on a menu. It makes the customer think about money. For the same reason, never put menu items or a wine list in order by price or format pricing in a straight column down. Simply include it at the end of each item description to discourage price comparison.
Photos: Well-placed, professional photos will help sell your product. A picture of a beautiful tower of raw seafood or a cheese and charcuterie plate adds to the appeal.
Colors: Use a color scheme throughout your concept and in your menu to help tell your story. Leave bright red and blue to fast food and QSR chains. Subtle, earthy tones sell better in full-service venues.
Descriptions: Studies have shown that better descriptions correlate with better sales — as much as 27% more. What do you think you’d sell more of: “hamburger with lettuce, tomato, cheese, mayo and pickle on a toasted bun” or “hamburger: house-ground beef, brisket and short rib, with butter lettuce, heirloom tomato, aged cheddar, aioli and homemade pickles on a toasted brioche bun”? One restaurateur I know changes his menu descriptions monthly and doesn’t stick to one until the item is selling enough.
Specials: Smart restaurants use this as a way to move product. Yes, it may be something great they saw at the greenmarket today. Just as easily, it could be the halibut that didn’t sell well last evening that’s in the salad you’re eating today.
“Siberia:” The lower-left corner of the menu is where items go to die. Use it to add to your value proposition but know it’s the last place people look.

Learn more about restaurant sales and marketing strategies in Restaurant & Culinary Management.

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