Even though people are still going out to eat at restaurants and visit their favorite bars in the midst of a troubled economy, it doesn't mean owning either type of establishment is a surefire path to success.
Perhaps no one knows this better than Jon Taffer, a 27-year veteran in the nightclub and restaurant operations business who also shares his expertise via his consulting company Taffer Dynamics. Spike TV has tapped Taffer to host Bar Rescue, an upcoming Kitchen Nightmares-type show that has him attempt to improve the images of restaurants all over the country.
Recently, Taffer was filming in Chicago for the show, so I gave him a call to discuss the biggest challenges for bars and restaurants.
First off, how does the bar and restaurant scene in Chicago's problems compare with the other cities?
Jon Taffer: I find that as I travel around the country that this city has a slightly higher bar than a lot of other major markets. That's a starting place in Chicago that makes it different than some other major cities. But the problem in the industry today is obviously disposable income levels are down, and it's impacted our industry in two ways: guest counts tend to be down and spending is down. So it's a double whammy for us.
Also, there are virtually no national brands that are tracking ahead of last year. And when the national chains are doing $20 dinners for two, $5 lunches, and slamming ridiculously low prices it becomes a little more difficult for the independent entrepreneurial operators to commit to traditional pricing levels. So it's a squeeze.
How can people fight the squeeze?
The ways to fight it are experientially. What makes a great restaurant special is the way it feels in more cases. It's not absolute value, it's a perceived value. I'm of the belief that restaurants don't sell foods and bars don't play music. They both achieve guest reactions. The plate of food isn't the product -- the reaction is the product. The plate of food is simply the vehicle. I look at business differently. Every plate has to create a reaction. Every song we play has to create a reaction. Every drink we sell has to create a reaction. I don't mean necessarily a physical reaction, but the interaction aspects of the server. The presentation, the flavor, the glassware, the plates. We have to create reactions.
How do you do that?
In this world where we're being squeezed from all sides, let's face it: He or she who creates the best reaction wins. The way we achieve that today in my company is using three basic tricks.
First of all, we use a concept called GROWS, which stands for Guest Reaction Opportunity Windows. We build touch points into the business. Moments where you say, "Huh." It might be entry, being seated, a plate, something sent out by the chef. Any one of a multitude of items.
Once we know what those reactions are, we infuse three types of staff-dynamics training: personal dynamics (how you present your personal self), mechanical dynamics (how you move and the mechanics of the facility), and interactive dynamics (how to make every guest feel special). If we can make the magic happen by creating the kind of guest reactions that we need to. Nobody leaves a great experience and says, "That was expensive." They only leave a marginal experience and say, "That was expensive." So we have to create exceptional experiences. It can be a dive bar, per se, but if you create guest reactions and the place is cool -- then the place is just frickin' cool.
So of those three areas, what's the one you see as most lacking here?
Well, first of all, some of it here is just simple density. There's a lot of properties here in Chicago. One of the locations we're working on here is Blue Frog in River North. This is an area that's a sophisticated part of the city. High-income levels. It's an area where there's bedrooms as well as offices. There's a community of sorts but it's also a huge tourist area. The operation had a price point that was about $8 below everybody around them and had a casual environment.
In this facility, I had to bring it up in perception, not bring it down. The prices were too cheap. The experience was below the marketplace. What we're doing there is elevating an experience, bringing it up to something that has some sophistication and meets the lifestyle of the people around it. In many other cases, we're doing the opposite.
But Chicago is a city that loves bars and neighborhood taverns. It's a very neighborhood city in my view. Local bars, local places, smaller intimate places seem to be blossoming all over Chicago, whereas the predominance of larger facilities tend to be slowing down. I think that neighborhood character is something that can really be exploited in Chicago, compared to other markets.
Have you seen the ubiquity of group-buying sites like Groupon change the way restaurant or bar owners approach their businesses?
Yes and no. Everybody thinks Facebook is going to change the future of their business so they create Facebook pages and groups. Then three months later they're shocked that their bar isn't filled with 2,000 people from Facebook. It's not easy. [Laughs.] Just the fact that you click some buttons on your computer doesn't make it easy.
Same thing with the other Internet-based services. Don't get me wrong, you can hit a home-run, but it's not a sure success in any way, shape, or form. You gotta know how to work it and manipulate it. "We're gonna slam the hell out of Yelp," and then they sit there and wait for their restaurant to fill up. It doesn't work that way.
Most bars need to recognize that their future typically lies within five to 10 blocks from where they are. You don't need to own a bar on two corners and market to the whole city of Chicago.That's just not realistic. Own your backyard. If you own your backyard, your business will be successful. That's the trick. Market from the inside out, not the outside in.
Is there a bar or restaurant in Chicago you point to as the sort of gold standard establishment everyone should aspire to be like?
I'm not sure I would pick a particular bar. I would pick some operators. A La Carte comes to mind. They're a larger local one but still very much an entrepreneurial company. Rich Melman and his sons come to mind of course, because of the numbers that they do. Publican is really pretty terrific.
But today there's really some delineations in the business that weren't there before. We have our mixology-driven operations. We have our beer-driven operations, wine-driven operations. The segmentation today is really significant. Some people say, "Gee, I'm scared to be known only for beer, so I'm gonna try to do everything." Then you're nothing to nobody. You have to pick something and be known for something today. The greatest restaurants in the world are the ones that you know what they do. You gotta be known for something.
I'd rather you sell five menu items and be really known for one. Have the best hamburger in Chicago, have the best something. If you don't have something to hang your hat on, if you just have a business, it's not going to work.