De­liv­er­ing din­ner— and keep­ing the profit

Inc. (USA) - - CONTENTS -

Re­cently, Inc.’ s leg­endary Norm Brod­sky vis­ited Michelle Gau­thier and Justin Schwartz, founders of the thriv­ing New York City–based fast-ca­sual chain Mul­berry & Vine. Mul­berry & Vine has carved out a niche in a hotly com­pet­i­tive mar­ket with its healthy fare—but like many city-based restau­rants, it faces chal­lenges with ris­ing costs and the ad­vent of de­liv­ery ser­vices like Grub­hub. Luck­ily, Norm was there to lend an ear—and weigh in.

NORM: So, in the res­tau­rant busi­ness, it boils down to per­cent­ages. What is your rent as a per­cent­age of your to­tal costs?

Michelle: It’s less than 10 per­cent at all of our lo­ca­tions.

Per­fect. Ten per­cent is the magic num­ber. What about food costs?

M: About 27 per­cent. With pack­ag­ing, though, we’re prob­a­bly at 30, 31.

OK. That’s an ac­cept­able rate.

M: Other costs are the prob­lem. De­liv­ery, which is 30 per­cent of our busi­ness, has re­ally taken a chunk of the prof­its.

We have that prob­lem at our restau­rants too. Every­body does. It’s ex­pen­sive. I see you use mul­ti­ple de­liv­ery ser­vices.

M: We out­source it. But we are very close to do­ing it our­selves, be­cause it’s su­per ex­pen­sive. With those ser­vices, we’re giv­ing away close to 35 per­cent of rev­enue on de­liv­er­ies.

One of my part­ners says, “De­liv­ery stinks. We don’t want it.” But if you’re stay­ing within your per­cent­ages for ev­ery­thing that you’re do­ing, then de­liv­ery should re­ally be an add-on to your profit. It won’t make your rent go up, and you’re not adding any ex­tra help to do it. Do you have a cater­ing menu?

Justin: Yes.

So, here’s a trick most peo­ple don’t know. At my fast­ca­sual restau­rants, we use our cater­ing menu for de­liv­ery, be­cause, even though it’s the same as the in-store menu, the prices are much higher.

M: That’s so smart. Seam­less won’t let you charge a dif­fer­ent price, but that lets you get around it.

Our cater­ing menu is prob­a­bly 20 per­cent higher than our reg­u­lar menu. Is that about what yours is?

M: Yeah, roughly that.

So that will let you off­set most of the cost of the de­liv­ery ser­vice charges.

M: Have your cus­tomers ever ques­tioned your de­liv­ery prices?

It’s hard to know. The peo­ple who are or­der­ing have the prices in front of them. I guess if they didn’t like them, they wouldn’t or­der.

M: Right.

What about your in-store prices? How of­ten do you raise them?

M: We raised them about two months ago, but that was the first time in about five years.

A tip on that: Even if it’s just pen­nies, you’ve got to do it ev­ery year. When you wait longer, you raise them big, and every­body com­plains. No­body sees it if it’s a nickel or a dime or a quar­ter.

J: I agree 100 per­cent. We just did a pretty big menu change. Our prices be­fore were very static. No mat­ter what pro­tein you bought, for ex­am­ple, it was the same price. It was re­ally hard to feel like we could change the prices be­cause it was re­ally no­tice­able. Now that’s not the case. So, in six months, we can raise some­thing a lit­tle bit and it’s not go­ing to be a big shock.

Now, what about the cost of your food ver­sus what you sell it for? Say, for these gluten-free baked goods?

J: They’re huge sell­ers, but, un­for­tu­nately, not a huge profit gen­er­a­tor. We buy them from an out­side ven­dor.

This is a great way of dif­fer­en­ti­at­ing your­selves. What I’d do is, in­stead of sell­ing some­thing as is, re­brand it. Buy this same dough­nut and call it what­ever you want. The Vine Nut, or some­thing. You could be­come known for it. How many lo­ca­tions do you have?

M: Three. And we’re open­ing a fourth in about two months, and a fifth about a month af­ter that. J: We’re ei­ther do­ing well or we’re crazy. We’re not sure which.

Well, you’ve got to be a lit­tle crazy to be an en­tre­pre­neur. That’s part of the mys­tique.

FAST CA­SUAL Michelle Gau­thier and Justin Schwartz in her apart­ment, from which they run Mul­berry & Vine.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.