Hammer And The All The Nails

The old saying goes, ‘If your only tool is a hammer, everything looks like a nail.’ That describes one of the owners of Carney’s Corner. The male half of the couple, his answer to increasing business is always: Cut prices.

Which is fine. An increase in perceived value will definitely motivate customers to buy your product, or more of your product, when they might have been inclined otherwise. There’s a reason for all those 99-cent Meal promotions the fast food chains throw at us. Or package-deals many higher end chains offer – salad, entree, side dish, dessert for one great price.

Discounting really works. But it only works with its teammate, Promotion, at its side. That’s where our owner is blowing it. Since the economy has taken a percentage off restaurant sales across the board, he’s tried all kinds of discounting schemes: 10% cash discount, 25% off bottle wine sales after 8:30 p.m., introducing a burger to the menu, $10 off the bone-in rib eye special (regularly $55 for a 28 oz. cut), different appetizers priced two-for-one.

But he’s implemented each of these deals without a speck of promotion. They are available to customers who have already chosen and arrived at our restaurant, and are sitting in the dining room. He doesn’t understand that these people have already been sufficiently motivated to eat dinner at Carney’s. All he’s doing now is cutting into his own profit, for no reason at all.

I acknowledge that given enough time, even this half-assed method will be successful. People will learn by visiting the restaurant, and come back again or more often because of the value. It would take a year or more.

But wasting a year to accomplish this is like selling your SUV for a rock-bottom price in order to buy a top-priced Hybrid, in order to save money on gas. You could lose $10k on the car switch, in order to improve your mileage 50% which is great; maybe you spend $200 a month on gas instead of $400. But that’s only saving $2400 a year. Obviously it’d take four years to recoup the $10k you gave up ‘saving money.’ Meantime, who’s to say gas doesn’t drop back to a relative price more consistent with personal income (as it already has recently)?

Same thing at Carney’s. So he builds up the business again with lower-priced fare sold to customers who had come in anyway not expecting any discounts, but he’s lost all that profit the past year. How long is it going to take to recoup that in increased business at the lower prices?

Quick note: He also runs different food specials entirely in the bar/lounge. But I have no quarrel at all with that. He writes them on a blackboard; they are smaller-portion versions of dining room entrees, mostly. This works beautifully, because the blackboard is Promotion. People sitting in the bar are the general public, and most have not come to eat. They’re there to have a drink or two. They see the specials, decide it’s a good deal, and pop for some dinner or a snack. And it has worked beautifully. The bar business has been positively booming, even in these times.

So tonight in the dining room it’s decided to duplicate a very popular bar special: Filet Mignon topped with melted blue cheese and sauteed mushrooms, with salad. The bar price is a ridiculously low $29. (This is prime beef.) The owners decide to offer the same special in the dining room, but with the usual accompanying side dishes instead of the salad, at a $10 discount. In other words, same entree that’s usually $45, but with added blue cheese and sauteed mushrooms. Which is, by the way, excellent.

It’s hard to get a grip on the logic here. Again, people in the dining room don’t know there’s this deal going on. They’ll order filet anyway and strip out $10 profit from the restaurant and not know any different.

Enter me. I just didn’t tell anyone about the special per se. I merely added to my usual ‘spiel’ that we’re experimenting with an add-on for the filet mignon that’s been very well-received. For $3 you can add the BC-Mush combo. It’s fantastic.

Result? Twenty covers, sold five Filets, three with the add-on – new price $48. And the people were ecstatic. That was $59 increased revenue – most of it profit – above what the $35 special would have generated.

It was a pretty strong night. Walked with $195.

I was off early, so I went home, mixed a martini and watched the Lakers struggle past the Nuggets.

Today, Sunday, I’ll be working on the script for the first time in three days. Also might do some fix-it work around the house. And lastly, clean up the office of the all the unfiled papers.

Happy Sunday!


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