June 30, 2019

Cut costs,

but at what cost?

One of our favourite restaurants changed management 4 months ago. That was followed by a replacement of all service staff, a reduced menu and, as we found out at the weekend, unavailability of certain dishes as the ingredients had run out.

This is a restaurant that 5 months ago was thriving, then in a drive to reduce costs replaced the management that had made it a success, and the consequence is that it is now mostly empty and like many other restaurants, likely to be heading towards closure.

Having already ordered our meal and only at serving point finding out that some of the dishes we had ordered lacked the ingredients necessary, we were brought alternatives without the forethought of preparing us and managing our expectations as to what we were actually going to get. Our stand was to stand up and leave.

And so, after months, probably years spent building your brand, as soon as you don’t take care to manage your relationship with that individual, your previously loyal customer will likely go elsewhere.

This is the outcome of the myopic approach of restaurant operators towards cost cutting without paying attention to four critical factors around the success of a restaurant brand – deliver great food (product), great service (people) and a great experience (place), at the right price. This restaurant once had all four, now barely has two.

What operators are focusing on is the bottom line without paying attention to the line below which a customer will not go.

In tough times, as we are experiencing today, managing expectations has become more critical than ever. If you make changes to your product line, staff, experience or price, inform your audience of the changes and why these are taking place.

Take the time to create new expectations that still align with their wants and needs and maintain their loyalty, whilst ensuring longevity for your business albeit with a different business model.

This serves to safeguard your brand whilst the world around you changes.

Stefano Ferro

Managing Partner