With competition getting tougher, minimum wages on the rise, and many other factors, restaurant and bar owners are not making as much money as they once were. So what do you do? It’s time to start finding new profit centers you can add to your business!
In This Episode You’ll Learn:
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Hey, what’s going on everybody? Welcome to episode number 12 of Bar/Restaurant Breakthroughs podcast, Adding New Profit Centers To Your Restaurant or Bar.
The first thing I’m going to cover is why you should seriously consider focusing on creating new profit centers for your bar or restaurant business, obviously to make more money, but also kind of the things that we need to look forward to here in the near future. I’m also going to tell you guys exactly what I’ve just recently done to add a new profit center, how I launched and how I plan everything out, and also the results that we’ve gotten so far.
Before we get into that, I just want to make a special announcement to anybody who is not currently on my email list. I just want to go through something briefly, really quickly, because you’ll probably want to take advantage of this. Over the last couple of weeks, I sent out a couple of emails to my email lists about two different free trainings that I’ve wanted to do.
The last two presentations I’ve done from the stage over the past three months have been based on – one of them was how I put different systems in processes in my business to where I only have to work two to five hours per week on both of my bars. And from doing those presentations – it was the first two times I’ve done them out of any presentations I’ve done over the last three, four, or five years. And I got a huge reaction from people saying, “This is the best thing that I’ve seen. This is exactly what I need.”
I’ve never really taught this stuff. It’s always just been about marketing and promotions. But what I’ve realized is a lot of my clients and subscribers say they don’t have the time to do this and they don’t have the time to do that, because they have so much going on in their business. It’s very common. And some people just aren’t good at or don’t know where to look or how to create these systems and processes in order to offset more work.
So that is one of the trainings that I wanted to teach, is exactly the systems and processes that I give my managers and staff to take care of things for me so that I don’t have to worry about that. That way, I can focus on the $500 dollar an hour jobs such as marketing, building relationships, putting more systems in place to make sure my staff can get these certain tasks done and just kind of turn the business into a franchise type of model where it runs itself.
The other type of training that a lot of people have reached out to me for is Facebook marketing. Facebook is one of the highest ROIs you can get on your marketing dollars today, and my managers at both places pretty much handle all of my Facebook marketing for me. They never knew how to do Facebook marketing or any of that, but I trained them how to do that. So I wanted to put another training together for that.
I asked everybody within the emails to click which one they’d want, and the results came through that about 33 percent more people wanted the Facebook training. So originally, that’s what I was going to give away free. I wanted to do this free four-week master class on one of the two. And I thought about it, and if I give away that Facebook course on how to do this, still the big hurdle that I see with clients and subscribers is not having enough time.
So I decided that I’m actually going to give both of these trainings away for free. I’m going to give two, four-week master classes on these, and I’m going to give them away absolutely free as kind of a little test that I want you guys to try something out of something that I’ve launched. So I’m going to give these away for free. I’m going to give you guys more information on this, but after I create these four courses, I will be selling them for $1497. So I’m going to give away about $3,000 dollars’ worth of courses.
So if you’re not on my email list, if you have not heard about this, just go to barrestaurantsuccess.com. There are links down below the show notes if you’re watching this on YouTube or somewhere else. If you’re on my website, you can obviously see on the right-hand side that there’s probably a different free download or something that you can get, but get on the email list. You’ll get more information about this.
May 1st is when I’m going to launch everything of when people can get signed up for this, exactly what it’s going to include in each of the four weeks, and kind of the new thing that I’m launching that I think is going to be pretty big in the industry. So if you’re not on my email list, take a look at it.
Again, if you’re listening to this, watching this, reading this episode and it is past May 9th, obviously it’s over, because we’re going to start the first master class on May 9th. We’re talking in the current date right now, so just make sure you get on that, I would say, before May 7th in order to take advantage of this, if this is something for you. It’s not for everybody, but there’s going to be more information out there.
With that said, let’s dive in to why we really want to start thinking about new profit centers in our bars and restaurants. Number one, as we all know, is costs are going up. And one of the big things, just with all the blogs and websites and everything that I’m reading, the big scare is – it hasn’t hit Illinois yet where I’m at – minimum wage. It’s starting to kill some bars and restaurants.
Some people are really freaking out, which they should. And then there are some restauranteurs out there that are doing really well with it and think that it’s better versus the non-tipping. Everybody has their different opinions. I’m not going to get into that here, but as we all know, minimum wage is probably going to hit every state eventually, which means less money in our pockets. And we want to make enough money to retire and live a good, comfortable life.
Also, at the time of this recording, we just bombed Syria. There’s stuff with Russia and China going on. A lot of people are worried about what the future holds, and when people are worried about the economy and what’s going to happen in the future, people start holding onto their money even tighter. So this is another reason to why we need to start thinking, how can we make more money besides just from people coming in and ordering off the menu and coming in and having drinks?
So here’s a few things that you can do. One is you can create some kind of subscription or membership in your business. There’s a book that I just recently got and read. It’s a great book. It’s called The Automatic Customer by John Warrillow, and it gives a bunch of different – I think it’s seven – subscription/membership-type models that can be done in multiple types of different businesses, and it does give one in there about a high end restaurant.
I’m not going to go into the details on that now, but as far as doing a subscription or membership, you could do that based on loyalty programs. People pay $20 or $50 bucks a month, and then they get some kind of value for more than that $20 to $50 dollars a month. Read that book. Definitely get it. Get it on Amazon. I’ll put the link to the book down below, but I think that will open your mind to a lot of possibilities.
The other thing that I thought about with that too, that kind of goes into the second thing I was going to say, is adding catering to your business. If you don’t do catering, that’s something that can add quite a bit of money for you. I’m going to give you my experience with that. I know nothing about catering. I ended up hiring a catering chef, and I’ll get into that here in a second. But you could even add a subscription model to the catering, which is something I did, and I’m going to get into that here in a second.
The third thing is that you can sell advertising. I’ve done this before, and I’m trying to get more consistent with it. If you have an email list, which I sure hope you do, if you have ads going along your TVs, you can sell ad space there. You can sell space in your emails. You could also send out Facebook posts for these certain people, and you can charge certain businesses $200, $300, or $500 dollars a month for this advertising, as long as they see that they’re getting great value, and also if they’re seeing results from this.
One thing I would advise is don’t have them run ads that they cannot track and manage. If they’re going to be running ads, they’re going to want to see that they’re getting results. So don’t just tell them to put their logo and their phone number and ‘here’s why we’re great,’ but put some kind of offer out there. Use some kind of direct response marketing tactic with it so that you can track and measure the results and they can see that it’s actually working.
So those are a few things: subscription/membership type of models within your business, sell advertising, work with other local businesses in your area, and then also add catering. That’s what I chose, and that’s what I’m going to talk more on. And I want to get into exactly how I got started with this. Again, I’m not a food guy. I don’t know anything about a kitchen, and the cook that I have knows nothing about catering.
So I ended up reaching out, found a chef locally, and he wanted $41,000 a year starting off. And where I’m at, Rockford, Illinois, which is rated the third worst city to live in in the entire United States according to Forbes Magazine, that’s pretty good money. And I was a little hesitant on that, but when I looked at the numbers and when he told me how much business he can bring and what he was doing elsewhere, it made sense. It’s just I knew it wouldn’t happen at the beginning.
So I negotiated a deal with him. The first 30 days, we’ll do X amount of dollars. After that, we’ll bump it up to what that $41,000 would be weekly. And then from there, another 60 days after that, we’ll evaluate it and see where we’re at. If he’s guaranteeing me, “Hey, I can bring X amount of accounts and this is the kind of money we’re going to make,” OK, we’ll do it.
Then I invested a couple of grand into different catering equipment, pans, chafing dishes, all that stuff that we needed. So I put an investment into it, but again, if you don’t make changes in your business and you want to make more money, nothing is going to change. But if you want to make more money, you’ve got to do something different.
You have to invest in yourself. You have to invest in your business. And if you don’t know how to do it, go and invest in somebody else, which is why I went and found somebody who knows something about catering and has done catering to kind of take that over and manage that for me.
The thing is that it was a big risk for me, but the one thing I’ve always learned is if you believe that you’re going to be successful and you take the right actions that are going to get you to that level, then you’re going to succeed. But if you just do it and you don’t take action and you don’t do anything with it, and if you don’t believe – if you do something and you just don’t believe it’s going to work, it’s not going to work.
So you’ve got to have that right mindset in order to do that, and I just kind of wanted to throw that in there, because yeah, it is a risk. When you want to add new profit centers, you need to invest in different things in the business, but if you believe it will work and you know that it will work, obviously that’s going to take off for you.
The subscription model that we put into place with this – so after reading that book, The Automatic Customer, I started thinking, you know, I want repeat business, just like my repeat customers. I want loyal, repeat catering clients.
So what I came up with when we launched this – and I’m going to get into how we launched the catering side of things. But the subscription model that I came up with to start with, and we’re just testing this, is if they order at least one time per week, some kind of business doing lunches, we’re going to give them ten percent off their catering and then we’re also going to give them free delivery. So far, that’s been working pretty well. This is the first week that we actually finally started getting caterings, but it’s been three weeks since I hired this chef.
My whole game plan when we got started, once I hired him – I want to go through the game plan and kind of how we launched this and got started with everything. Number one, I told him to create the menu, get the food costs, and all that stuff. Let’s get the pricing down. Give that to me.
Step two, I’m sending it to a designer to get a nice menu made up. That was the second thing we did. And then after that, I created a lead capture page, a one-page website that would capture the leads of people who wanted our catering menu.
Anytime I’m launching something, I always start with my warm list, my customer list, my database. So I sent out an email first, and I sent out two different emails to let people know about the new services that we’re doing, and if they’re interesting in catering, click this link. That takes them to a one-page website that just says, “Hey, interested in catering? Here’s what we can do for you. Put in your information here, and we’ll send you the catering menu.”
So we don’t just let them download it, because I want leads. I want leads of people who say, “Hey, I’m interested in catering. I will maybe order catering from you,” but these are people who actually do cater. And on there, I actually asked them, “Is this going to be for business, or is this going to be for personal use?” I wanted to segment my list, because the businesspeople are obviously going to be more profitable.
I’m going to show a picture here, if you’re watching the video. If you’re listening to the podcast, you could watch the video as well on the website unless you’re watching this on YouTube. I’ll show you kind of the back and then the marketing system that we put into place. But from just the emails alone, we got 27 leads of people that signed in to get the menu delivered to them, and then six were businesses.
So I was pretty happy with that, but now I have a way to follow up with these people to say, “Hey, you opted in to get our catering menu. Is there anything that you see? If you don’t see exactly what you like, we can customize to your needs. Give us a call. Let us know what you need.” It’s just a way to open up a conversation with them to build that relationship with them, to kind of get things going so that we can start doing catering for them.
The next thing I did was Facebook ads and Instagram ads, and those, I didn’t drive to the lead capture page. Those, I did within ten days, and if they called and booked and mentioned that ad, so that I could track where it was it was coming from, we’re going to give them 20 percent off their first catering. We did get two booked from that. We haven’t served them yet. And we spent, I think it was, $100 dollars on ads for that over the first weeks’ time. So we’re just testing that. We’ve got to get back into testing that again.
The other thing I did was I bought a direct mail list with addresses, company size of at least 50 to 20, within a five-mile radius of my business. That was like 582 leads that we got, and I got Jeremy, my chef, to just start calling them. Call them and see if they do caterings, find out who is the right person to talk to, and send them an email. And then on that spreadsheet, if people didn’t do caterings, we would just delete them. So we took them off there, but if they did do caterings, at least we had a good list of people who we know do caterings.
The other thing I did was I just asked people. I started calling people, texting people, people who work at different businesses. Hey, do you know anybody that does catering? And there was a golden nugget that I discovered.
Pharmaceutical reps cater anywhere from one, two, to three times per week, and I happen to know one. So I got his business, and so far this week, we’ve done two caterings for him, and they’ve both gone very well. And at each catering, we dropped off some menus and things like that, just to get people to know who we are, where we are, and other food items and everything that we have there.
These two caterings so far have resulted in, I think it was, $853 dollars so far just this week. We did one on Monday and one on Wednesday. In the second catering, someone said, “Hey, this is great. I want you guys to do my rehearsal dinner.” So that will be at least $800 to $1,000 dollars alone right here. We have another one coming up this Sunday.
We have a catering coming up for the Rockford Police Department. That’s going to be, I think, between 50 to 75 people, Jeremy told me. Then we’ve got three more booked within the next month, so things are going well so far with the start. I anticipated with this launch and what I’m paying Jeremy probably to lose money in the first month that I’m paying him, but that’s my investment into it. It will take time to scale.
But the good thing is the first pharmaceutical rep that I worked with said, “Hey, I’ve got four other guys for you that will order catering from you as well.” So that’s been kind of my focus now, is reaching out to anybody I know in the medical field, saying, “Hey, do you know any pharmaceutical reps? Do you know anybody that does catering?” We’ve just solely been focusing on that, because if these guys are catering one to three times a week and they’re charging it on their company credit card because they’re allowed to, these are the prime target market to go after.
So again, always think about any type of promotion you’re doing, who are going to be the most profitable people to target, and what’s going to be the best message or offer you can put across to grab their attention? Me, I’m trying to leverage relationships that people have with other people in that industry. So everything is going really great so far with the catering, and I just wanted to share my story.
Business, I believe, is going to get tougher for all of us. Again, there is going to be more competition. There are going to be higher wages that we have to pay, obviously increasing costs. And again, people are worried about what the hell is going on in the world. They’re going to start hanging onto their money. That just happens, but I think things are going to get tougher.
If we want to make more money, we need to start adding new profit centers to our business and start thinking about how we can do that. And then when we do that, if we can’t do it or if we don’t know how, let’s be resourceful and figure out who can do that for us. Me, I don’t know shit about catering, but I found someone who does. I had to invest in them. I had to believe in them, and I had to believe in my marketing and my focus and my drive to be able to recoup that investment and actually make more money than what’s going on.
So again, here are a few things you can do. Get that book, The Automatic Customer on Amazon. I’ll put the link within the show notes here. Read that. You’ll get some ideas. You could do catering. You could sell advertising with the e-blast TV doing different banners in the business.
So that’s kind of the closing to this. I hope you guys got some value from it. Hopefully, I intrigued you guys maybe to do catering if you haven’t done it. If you’ve been scared to do it or don’t know how to do it, I didn’t either. Find somebody who does, and work out the best deal that you can, where it works for you.
My agreement with Jeremy was, hey, we’ll give this a 90 or 120 day test run, and if it works, it works. If not, it doesn’t. But we had that mutual agreement, and he believed he could make it work. I believe I can make it work, and so far, things are taking off better than I anticipated.
So thanks again. I hope you guys got some value from the episode. Also, if you guys are not on the email list, get on my email list at www.barrestaurantsuccess.com, because I’m going to be giving away those two trainings that I’m going to be eventually be selling within the next 60 to 90 days for $1,497 a piece.
So again, at barrestaurantsuccess.com, get on the email list. You’ll get a lot of content, strategies, and updates on these videos and podcasts as well. Have a good one.[End of Recording 0:18:48]
Nick Fosberg is known as one of the highest paid, marketing and promotional consultants in the bar & restaurant industry and he owns 2 bar / restaurants in the Chicagoland area. He's famous for creating some of the highest grossing digital marketing promotions in the history of the bar & restaurant business..... without spending a penny on marketing. All done through e-mail & Facebook posts. Click here to get a free copy of my latest book.