I had been brought up in the soft drink world. Pile it high, and sell it cheap had been the motto of my mentors Bud Longanecker and Fred Adamany of the Royal Crown Cola Company. Could I bring that theory into the restaurant industry, and would it be successful enough to save my business? I had decided to try it, using specials that would sound almost crazy to my customers and my competition.
The initial result of this crazy pricing (Pork Chops $3.95, Chicken Dinner $3.95, Sirloin Steak $4.95, etc.) was, of course, that sales went down. People who had come in to just eat dinner and would have ordered something else ordered the low-price item instead. This was what had always haunted me when I had tried this before. But this time I had little to lose, and I decided to go for broke. I hung in there. The fall was really hard, and we had to borrow money to pay our taxes. Looking back on the numbers, I dont know how we kept things afloat.
But more and more people were coming. The word was getting around. By the holidays, we even managed to have a small increase over the previous year. January was OK, but in February we set a record for increase. Two things enabled us to have the largest increase in the history of the business. Jen Bunjan, who helps me out from time to time, suggested that I call the specials Adult Happy Meals. That was a stroke of genius. And Troy Tucker, who runs my kitchen, controlled the costs. Without Troy saving us so much money on the product, none of this would have been possible. It was back to the Fred Adamany model. Produce a product cheaper, pile it high and sell it cheap.
There is something totally honest about $3.95 or $4.95. Of course, I did require the purchase of an alcoholic beverage. That was a stroke of genius, too. I instructed the staff to tell the customers that the specials were loss leaders designed to sell drinks. They were and still are. Of course, none of this would be possible if I didnt go directly to the wholesalers in Chicago, the market. Without the extra margin generated by cutting out the middleman, none of these specials would be possible. That is one reason I dont fear imitation. A competitor would have to decide to go to the market a couple of times a week, and that is hard work, not to mention the process of learning the market.
I first started going to the market for quality alone; the savings were a side issue. I had always considered using the savings to promote on many occasions, but turned away when it reduced revenue. The economy under George W. Bush had pushed me to try something out of desperation. (Anyone who buys the Bush robust economy bull simply isnt paying attention or is ideologue delusional. The car manufacturers cannot sell cars without giving them away. The airlines are all going broke, and gas is $3 a gallon. Tried and true restaurant owners are going broke in Rockford, people with years of success under their belt. The success of $4.95 proves my point. People want to go out, but their means are limited.) There is a silver lining in every cloud. Desperation has produced the most successful period in my little business. We had lots of lemons and wound up making lemonade.
So where is this going, you ask? What has all this summed up to? I plan on writing about that on a future date. All this has arrived in a new business model that I believe can be expanded. The plans for that are sort of in the works, but not complete enough to write about at this time. In the meantime, I will go back to writing my regular column. The kind of column some of you like better. Thanks for the kind comments from a lot of you on this series.
Mike Leifheits Hanging Out In Rockford reviews locally-owned restaurants, businesses and Rockford life. These columns are available on his Web site, www.IrishRoseRockford.com. Leifheit is owner of the Irish Rose restaurant in the downtown River District.
From the Oct. 5-11, 2005, issue