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February 18, 2011 > For restaurants, knowledge is profit

For restaurants, knowledge is profit

By Denny Stein

The City of Hayward and Hayward Chamber of Commerce sponsored Survive to Thrive, a seminar for restaurateurs, on February 7. Approximately 40 delegates heard Louise Dawson explain how to remain profitable during economic downturns. The gist of her message is one's own initiative and perseverance will make the difference between a thriving business and Closed for Business, not luck

Nationally, restaurant revenues are down 20-30 percent which is a devastating loss in an industry where the profit margin is 3-5 percent in good times. Normally, 65 percent of restaurants cease trading in the first three years.

Dawson's strategy is to enter "Restaurant Emergency Mode." She knows because she has owned two restaurants. She recalls opening for business only to find the street and sidewalk being dug up for construction on that first day. Customers could not drive to her eatery much less reach the front door. Pragmatically, Dawson's solution was to go out to find and secure the business she needed. Serendipitously, a film crew was working across the street and she offered to feed them; this proved to be the first of many catering contracts. Even if a film crew is absent, there are steps restaurateurs can take to gain control of their business and guide it through these trying times.

Not one to operate in the abstract, Dawson walked the participating restaurant owners through the steps and forms necessary to get a grip on their day-to-day income and expenses.

"It's a game of pennies," Dawson explained, "so the difference between profit and loss can be 18 cents spent on the hamburger plate's garnish or charging $4.79 rather than $4.29 for a sandwich."

This illustration highlighted the fact that all the money comes through the menu. So, owners of restaurants of any kind must analyze their menus: cost out every plate of food. Make a "Recipe Card" for each plated item and price out the ingredients. Know the cost of each serving and what it will produce in net income. That income pays vendors, staff, utilities and rent, marketing and oneself.

The second part of Survive to Thrive focused on Marketing Technologies and Strategies to Boost Sales. A panel of marketing service providers introduced their products and explained how they work and how they improve business in a concrete, measurable fashion. Five of the six panelists provided internet services, from monthly newsletters to on-line ordering programs and text messaging alerts. Each approach seemed simple, inexpensive and proven to enhance sales and profit. However, the entrepreneur must research the business' needs; taking advantage of these new technologies is the first step.

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