MAXIMIZING YOUR SALES PER GUEST
by Jon Taffer

n the last issue of The Publican, we explored reaction management, and now we’ll look at how to increase revenue by maximizing your sales per guest. This first step in your revenue growth plan is the easiest. It’s also the only marketing initiative you’ll ever make that has a guaranteed result. It will increase your sales every time. It’s crazy that almost no one really does it. Instead, many skip this critical step (with guaranteed results) and move right into expensive and risky external marketing programs, promotions, or discounting to drive business. So, my goal here is to change the way you market forever, to teach you the value of marketing from within first, then moving to outside marketing.

When you increase the sales potential of each guest, every promotional and marketing program has far greater potential. Conversely, when you invest in promotions or marketing programs without assuring your revenue per guest is maximized, the effort and expense cannot possibly achieve your best result.

Revenue growth must be approached from the inside out. As mentioned in the Winter 2007 issue of The Publican, we often increase revenue by 12-18% by only implementing the tactics listed below. Then, with this foundation in place, we achieve far greater sales per guest, and, as a bonus, we lower food and beverage costs by over 1%.
The combined impact of increasing revenue by over 10% and reducing product cost by a point or more is very significant. We’ve seen increases in profitability of up to 20% from using the tactics and programs identified below, which can apply to pubs, bars, entertainment venues, and casual restaurants. Let’s start with food sales.

Different types of bars and restaurants must employ very different food merchandising approaches. If your operation is a pub, you must first define the purpose or objective of your food program. It must be driven by a prevailing logic. Why does it exist? What should it be? What should it sell?

Effective Food Operations
In a bar environment, a food program exists for one of the following four reasons:
1. Convenience Dining
Convenience dining provides quick, inexpensive food as a convenience to guests while they are drinking and partying. With this food program objective, your menu, products, and pricing must fit into this logic. To be successful, this type of food program must be convenient, easy, and inexpensive. Table or server service does not typically work for convenience dining. This is fast “grab & go” style merchandising.

2. Cooperative Bar Dining
These products “co-operate” with a bar experience. This approach is most successful in lower energy bar and lounge environments. When this objective is identified, food products are merchandised and sold in the bar for consumption in the bar. This approach is totally different from Convenience Dining. This program survives only when guests are compelled to spontaneously order food. If the program is not set up to stimulate spontaneous buying, it will fail every time.

3. Interactive Dining
The objective here is very different from the above two. It must provide a separate environment and experience to capture couples or groups seeking a more intimate, less energetic “break” from the noise and energy of the bar. In this case, the environment is the initial attraction. The environment, music, service, lighting, and other aspects of the area and products must cause appeal through an intimate environment. In this case, a guest chooses to visit this area/operation to be in the environment, and the guest's frequency is driven by food/service quality.

4. Signature Dining
This dining objective has a total focus upon the culinary experience. Examples include a prime steakhouse, sushi operation, a raw bar, and maybe even an amazing gourmet pizza parlour. A guest’s buying decision to visit this operation is based upon a curiosity or desire to try the food offerings. Like Interactive Dining, a Signature Dining objective requires a separate dining room experience.

A well executed food operation should always begin with an understanding and commitment to achieve one of the above four objectives. Once the objective is identified, virtually every decision relating to the menus, products, dining areas, service sequence, presentations, and price points must all tie together with a cohesiveness that achieves the identified objective.

Without this focus upon the food program’s purpose, the environment, menus, products, presentations, or other critical elements will miss their mark, leaving the operation with far less potential, or in many cases, unprofitable. When a program is properly targeted and positioned to achieve one of the above four objectives, a foundation for success is established. With that foundation, it’s time to merchandise and develop sales. 

Menu Engineering
Menu engineering is the greatest single marketing opportunity for any restaurant. It’s also a huge opportunity for food operations in a bar. But few really do it.
Rather than “steer” guests to buy more profitable items, most restaurants give the guest a “free for all”, or worse, unknowingly steer guest menu selections to their lower revenue, less profitable items. Consider these techniques:
• Boxing an item on a menu will increase the sales of that item by 
20%! Wow. After all, don’t we all want to order a restaurant’s best or
most famous item? How do guests know which item that is? 
We box it.
• Shadowing an item on a menu will increase the sales of that item
by 14%.
• Adding adjectives like “Chef Special”, or “House Specialty” can
increase the sales of that item by 12%.
• The listing order of items also matters. Guests have a propensity 
to order the top one and bottom two on a list of items (entrées,
appetizers, etc.).
• Price points also provide opportunity. For example, a food item
priced at $5.50 has the same value perception as an item at $5.95. 
So, you can pick up an extra 45 cents every time the item is sold with 
little or no negative guest reaction. This will add up to a lot of money.
Conversely, increasing an item’s price from $5.95 to $6.00 will
likely cause a significant change in perceived value, for only a 
nickel! Far more often than not, menus leave a lot of money on
the table - probably yours too.
• Menu options that sell can also make a huge impact upon your
sales. Red Lobster gives their guests an opportunity to “add on” crab, 
shrimp, or other items to their entrées for about $8. Many do - 
millions of dollars a year worth. We can learn from that. Here are 
some quick ideas:
Entrée add-ons - If you sell steaks, implement a “surf & turf” upgrade. You can use pre-skewered shrimps and other easy items. If you sell lots of fish, do the opposite. About 30% of guests ordering the steak will upgrade.
Two-sized appetizers - We have had lots of success with two-sized appetizers. For example, rather than just a six-piece shrimp cocktail, why not also offer the “king cocktail” with 8 pieces of shrimp? About 30% of guests ordering the shrimp will order it, and, as a result, you’ve increased your check by $3-4.00.

The big beef motivation - If you sell steak, feature a big one - a 24-ounce porterhouse or similar. About 30% of male guests ordering steaks will order it, raising your check by $8.00 or more! It works with burgers too.

Smaller desserts - We feature “The World’s Smallest Hot Fudge Sundae” and sell the heck out of it. Guests who do not normally order dessert get it because it’s only a few bites. And, we add $3.00 to lots of checks because of it.
Special, unique items - If Outback Steakhouse’s “Blooming Onion” was simple onion rings, would they sell as many? Of course not. Yet, we take the simple approach all the time, especially in bars. Seek out new presentations for old things and fun names that create interest. Don’t accept mediocrity. Make your program and food items stand out and create appeal! 

Here is the process to follow when engineering your menu: 
1. Identify the highest profit contributors for each menu category 
(appetizers, entrée groups, desserts, etc.) in dollars, not
percentage.

2. Next, develop your menu using all the sales increasing ideas explained
here as well as others to maximize your potential.

3. Then, once you know how many items you will have, select the proper
sized menu format (one panel, two panel, or three panel). Make sure
your font is not too small or your menu too large.

4. With the knowledge of which of your menu items are the most profitable
in dollars, design your menu using boxes, shadows, and adjectives
placed in “just the right” (visual) places. Remember, every menu format 
has a visual “sweet spot” - the spot that gets the most attention by the 
human eye. Those sweet spots are where you want your most profitable
“boxes”.

Using the above techniques will steer your guest selections to profitability, and will typically increase client food revenue by 8%. This works just as well with your beverage/cocktail menu.

Beverage & Cocktail Merchandising
Like food sales, maximizing your beverage sales per guest also requires special techniques. With bars, nightclubs and entertainment venues, the programs identified below are very powerful. Often they can have a combined effect that increases beverage revenue per guest by over 11%. In a restaurant environment, increasing beverage sales always increases bottom line profits because beverages have a lower cost than food. Below are a few solid ideas and programs that will increase your beverage sales per guest.

Martini Board - Hang a 4-foot by 5-foot “Martini” or “Special Beverages” board over your bar. Guests will respond to great names, interesting items, and special beverages that are prominently displayed (not table tents!). Regardless of your concept, this can work. It can be elegant lettering in gold framing for fine dining, or a sports motif. The purpose is to place your best and most profitable beverages centre stage. 

Signature Drinks in Special Glassware - In nightclub environments Tooters work as do shot glasses with “hooks” to hang on glassware or bottles. But it should not stop there. Drinks that are made important become important, so name your house drinks well - get them noticed. Names can be risqué, downright vulgar, cute, or elegant depending on your market. The point is that if you want to sell a particular mixed drink, give it a name that gets it noticed, serve it in a cool glass, and top it with a unique garnish. Then, you’ll sell some drinks.

Special Garnishes - Great garnishes and toppings can go a long way. A Bloody Caesar can be garnished with a butterfly shrimp, others with jelly beans, white chocolate, floating sliced Jell-O, and millions of other garnishes. Why not go for it and have something special?

Up-selling by Size & Price:
Wine by the Glass - We often feature a two-size wine by the glass program. With two-sized wine glasses, you can feature a standard 6 ounce and a 9 ounce wine pour. Research shows that approximately 30% of all guests who order wine by the glass will order the large glass, significantly increasing wine by the glass sales results.

Draft Beer - Like wine, if you are not offering and selling a large glass of beer, you are missing an opportunity.
Premium Soft Drinks - We hate iced tea. We hate refillable pop. We love premium soft drinks in bottles. In our client restaurants, we often implement a display of popular bottled soft drinks including SoBe, Snapple, Jones, diet flavoured colas and a few waters. These beverages add appeal, command a far higher price and do not get refilled. 

Language
Effective language programs work. For example, what would happen if a restaurant answered their phone by saying, “Thanks for calling Jon’s restaurant, home of Canada’s best prime rib.”? Then, the hostess mentioned that the prime rib was amazing. Then, the server mentioned it too. Then, it was boxed on the menu. Would they sell more prime rib?

A bar in a hotel can implement similar language programs to steer knowledge and spending preferences. I’ve done speeches to thousands of hotel, nightclub, bar, and restaurant operators. I’ve never had more than a few hands go up when I ask the question, “If I go to your operation and order a vodka tonic, would your staff suggest an up-sell (i.e. Absolut) every time?”

When a language program is implemented (including a by the drink up-sell program), we find that well brand sales are reduced by almost 35%. Remember, call brand drinks are more profitable in dollars regardless of their cost percentage.

Incentive
Involve your staff. Involve your management. Want to sell a lot of Jamaican rum? Send the sales winner to Jamaica! Want to sell a lot of Cabo Wabo Tequila? Send your sales winner to Cabo.

Length of Stay
The longer a guest stays the more he spends. Typically, a guest can consume 2.5 beverages in the first hour, then about 1.25 beverages each hour thereafter. So, the longer your guests stay, the more beverages they will consume. There are five elements that are critical to maximizing length of stay:

1. Music & Entertainment Programming - The targeting, energy flow,
presentation, and selection of music are huge contributors to a 
guest’s length of stay. If your music is not perfectly flowing during
the night, fixing it should be a major priority. Even live entertainment
can be boring. We never allow more than thirty seconds between
songs, and make sure our live bands keep their energy properly 
positioned as the evening progresses.

2. Sound System - A weak, poorly designed, or improperly used sound
system will greatly shorten your guests’ length of stay. Too much
bass, improper equalization, too few speakers, and other factors will
cause strain on guests’ ear drums and cause premature guest
fatigue, so they leave sooner. Inexpensive sound systems are never 
a good idea.

3. Room Lighting - If lighting is too bright it will lower the length of stay.
Conversely, too dark a room will lower guest interaction and reduce 
your overall guest experience.

4. Guest Flow & Comfort - Obviously temperature, room smoke, fresh 
air flow, and seating/standing comfort will all impact your length
of stay. Overcrowding will also have a negative impact.
Overcrowding rarely increases revenue. Find your proper fill level
to maximize your revenue. Typically holding back a bit will create
better sales per guest.

5. Room Dynamics - This can add greatly to length of stay. Various
types of dynamic exercises can be featured including slams of
great music, special sets, special shot merchandising, staff activities,
and other efforts to add to the experience, excitement, or appeal
of the operation.

There you have it, the first step of the reaction management marketing plan. If you effectively implement the programs identified above, I promise you a sales increase of 8% or more. That’s a lot of money, and we haven’t increased your guest traffic yet. Look for the Summer 2008 issue of The Publican for step two: Maximizing Guest Frequency.

Jon Taffer is founder and President of Taffer Dynamics, Inc. and the Neighborhood Marketing Insitute. He can be reached at 561-625-3225, or visit www.tafferdynamics.com.