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Diagnosing Falling or Stagnant Sales

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Too many restaurant operators mistake marketing problems for operations problems.  They look at falling or stagnant sales, and they think I’ve got to increase marketing spend to get my sales back up.  How do you know if your falling sales are a marketing problem or operations problem?  Here are a couple of questions you can ask yourself to help you determine the cause.

  • Have I recently changed my marketing spend?
  • Have I recently changed how I’m marketing?
  • How are my online reviews? Are they getting better or worse?
  • Have I recently increased my prices?
  • Is there a new competitor in your area that is affecting your business?
    • Be careful in just blaming competition, it is very rare that a competitor can put you out of business overnight; people want to blame outside forces vs. taking responsibility for their issues.
    • Having said that if a newer better mall or dining area opens up and you are in the old one, that can be an issue, and you may need to consider moving, opening a second location, or asking for some rent relief.
    • If it is a competitor, then you have to focus on beating them in the marketplace with service and value.
  • Have you recently lost a key team member?
  • Are my comps going up?
  • Are my complaints going up?
  • Does your food taste as good as it did six months ago?
  • Am I experiencing higher than normal staff turnover?
  • What was your most recent health inspection score; was it higher or lower than your previous score?

If you have made major changes to your marketing program, that may be the cause of your sales stagnation.  If you have recently stopped couponing or changed/stopped advertising then you may truly have a marketing problem.  The easiest solution, if you made a change, is to go back to the old way of doing things if that was working for you.

If you can’t go back to what was working before than solving a marketing problem takes patience, and it takes a plan.  Don’t just spend money to spend money that doesn’t work.  You may need to make a change in your marketing channel, change in ad’s, or an increase in marketing spend.  You should always be looking for an ROI in every dollar that you spend on marketing.  In theory, marketing should pay for itself so increasing effective marketing spend should pay for itself with sales increases.

If you have determined that your issue isn’t marketing, then you may have an operations problem.  Operations problems are good and bad.  The good part of an operations problems is that running better operations are completely within your control.  The bad part of operations problems is that fixing them can be hard and take patience and consistency.

The first thing you need to do is figure out who or what is the cause of your issues.  In restaurant’s most of your operations problems come from a team member(s) who is either doing something wrong or who has a bad attitude.  It’s not like there is a restaurant machine and it can go on the fritz, we are a people business, and almost everything that we do involves people.

If it’s a training issue, that is easy to fix with a little training.  If it’s a people issue, those are harder to deal with quickly.  I’m not an hr expert, but I can tell you this.  You need to decisively, and legally, deal with any people issues quickly.  One bad team member can wreck an entire operation, they are like little cancers and must be dealt with swiftly and decisively.  Start a 3 step process of coaching them up, if they resist or don’t change, then they need to go before they do more damage to your business.

Every bad guest review on Yelp can cost your restaurant 30, potential customers.  In my experience, I have coached several employees back from the brink but the 80/20 rule is in full effect and for every two employees that I coached up, eight employees ended up firing themselves.  There is something about people when they make up their mind, and either consciously or unconsciously they fire themselves.

Ultimately when you identify that you have an operational problem, you need to get back to basics and fix it as quickly as possible.  Once it is fixed, it can be a long slog to get back to growing sales.  It goes back to being an experience by experience battle.  Every good experience earns you back a little goodwill, and every bad one erodes it.

One of the best ways to drive operational consistency is to put in systems and hold your team accountable to following them every shift.  Management by checklists with follow-up is one of the fastest, cheapest, and easiest systems to implement.  Checklists drive consistency shift-to-shift and better operations.

To see a list of the checklists that every restaurant should be doing, I invite you to check out this other blog post.

If you are interested in seeing OpsAnalitica in action, click here to watch a recorded demo video.

Written by

I've been in the restaurant industry for most of my adult life. I have a BSBA from University of Denver Hotel Restaurant school and an MBA from the same. When I wasn't working in restaurants I was either doing stand-up comedy, for 10 years, or large enterprise software consulting. I'm currently the Managing Director of OpsAnalitica and our Inspector platform was originally conceived when I worked for one of the largest sandwich franchisors in the country. You can reach out to me through LinkedIn.

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