How to Maintain Customer Relationships During a Recession

Bob LeRose   

Learn how one small Westport, CT-based restaurateur manages customer relationships in a very tough economy.

Transcript

John: Welcome back to the CreditFYI Café. I'm your host, John Fischer. During tough economic times, many people trim their budgets by cutting down on visits to restaurants. In fact, with the exception of fast-food places, most restaurants suffer. Some even have to close during an economic downturn. Today, though, we'll learn how one mid-size restaurant owner uses quality service and best utilizes separate arms of his business to keep things moving. We're here with Bob LeRose, owner-operator of Bobby Q's Barbecue and Grill, located in Westport, Connecticut. Welcome, Bob. Thanks for joining us today.

Bob: Thanks for having me, John.

John: Bob, let's get right into the challenges of trying to earn a profit in tough economic times, especially in a field where many people have begun cutting back on spending. Bob, maybe you can start by telling our listeners a little bit about Bobby Q's.

Bob: Okay. Well, we are a family-friendly restaurant, located in the affluent town of Westport, Connecticut. We specialize in barbecue, but we also have lots of other items, like salads and sandwiches and entrees, because we serve a very diverse customer base. We're located in a main shopping area with lots of national chain stores. Our price points range from $5.99 on an appetizer, all the way up to about $25 for an entrée. Our business is mainly dine-in. We do offer take-out, and our catering business is really taking off. And in the summertime, we actually have an open-air roof deck that we actually utilize for live music and private parties.

John: I see, and given especially the last six months, Bob, with the news just being dominated by economic shortfall everywhere, have you noticed a shift in customer spending habits?

Bob: Well, I think what's happening now is that consumers are staying with tried-and-true favorites. So I think what I'm seeing in my particular business is people are coming in, they are ordering what they always order. There's not as much risk-taking. And I'm sure that probably applies to some other restaurants, like maybe if you're new on the block. I don't know if this is the time that people will be giving you a shot — unless there's something in it for them. And those are the things we've been concentrating on: Trying to give some more reasons to come in and dine with us at Bobby Q's.

John: Understand. What about from an advertising standpoint, Bob? In a recession, a lot of businesses — in fact, most of them — tend to cut back on advertising. Can you talk about how you've managed that aspect of things, and what adjustments you might make in future advertising efforts?

Bob: Yes. We actually look at this time as a moment not to cut back on anything. We think that this is the time to be out there. We want to be top-of-mind because if people are tightening up their purse strings, we want them, if they're going to go out to dinner, to be thinking about Bobby Q's. We actually have stepped up our efforts in the community, as far as sponsoring different events and doing different fundraisers. I recently had a bunch of second-grade students into the restaurant, learning about goods and services. So that was a wonderful opportunity to reach a whole different demographic and their parents. We have stepped up our efforts as far as direct mail is concerned, and actually with our direct mail, we've placed coupons in that effort. And with my e-mail communication, we send out probably one-a-month general communication as to what's happening with the restaurant. We actually attached a coupon on our latest publication, so we're looking at this as a time to outspend the competition and really step up our efforts on all aspects of the business — no cutting back whatsoever.

John: It sounds like whatever you're doing certainly seems to be working; especially from a bargain-hunting standpoint. It sounds like that part of things is driving your advertising efforts. Is that, in fact, true?

Bob: Yeah, well you know, we're fortunate. Specializing in barbecue, we are a comfort food. There's a perceived value in barbecue, so I think that plays to our advantage. It's just that I think that our food is probably the right choice right now. And let's face it, if you send someone a coupon for ten dollars off for spending over $60, that's like sending cash. It's like a little stimulus package. If you're going to go out, why not go where you have a little bit of savings? Just this past weekend, on Saturday and Sunday, we had 20 redeemed gift certificates. That may not seem like a lot, but that probably equates to about 80 people who may or may not have come to Bobby Q's. That's a lot of people redeeming gift certificates.

John: Understand. Well, that's certainly a good model, not only for tough times like now, but for moving forward. You mentioned that you are primarily a dine-in operation. At least in the last few months, have you noticed an increase, for example, in take-out orders?

Bob: We actually have not. We still see quite a few people still going out. I think, again, people are still going to go out — at least in our area here. I think they want to go to the tried-and-true. And they want to make their dining-out experience as great as they can make it. So if they can save a couple bucks, get a great consistent meal, get good service, I think they still want that social connection. And that's what's great about a restaurant. We have not seen a dramatic shift — or any shift — in dine-in versus take-out, because I think people still want to cling to those moments to spend time with their families and spend time with their friends. So we're not seeing that shift.

John: Understand. Just to take a quick step back in a broader view, Bob, since you opened in November 2004, what have some of the challenges been during that four-year period? And how have they been magnified by what's gone on — really in the last six months nationally?

Bob: Well, there are all kinds of challenges when you open up a restaurant; especially for us. This is a new venture for us. We didn't start out as restaurant people, so the big challenges for us were really learning the right levers to push and learn the business — obviously, making sure you have enough capital to fund the different initiatives. You need to understand that this is a business that is really defined by the customer, just like a lot of other businesses. So you have to really listen to what the customers want. There are a lot of false starts — a lot of mistakes that you make — but we've kind of honed in on what we think our customers want. And every year for us, it's getting a little better operating-wise, because we're not taking crazy risks and putting out initiatives that aren't customer-focused. We really try to listen to what the customer wants, and we react to that. As far as the past few months — what's changed — I think you just have to do even more of what you've learned. You can't stop. I think a lot of people are making mistakes right now by halting quality, by halting their customer service initiatives, cutting back on staff — all the things that help you grow your business. Now is not the time to cut back on those things. As it pertains to the restaurant, if I cut back a server and you don’t get the kind of service you're looking for, well, then, that hurts me, and you may not come again. Or if I cut back on my quality, you're going to say, "Oh, it's just not the same, they must be cutting back." And we're trying to avoid all those things, and I think a lot of companies out there are not trying to avoid those things. They're actually cutting in places they really shouldn't because they're panicked.

John: You mentioned during the course of our discussion some of the ancillary arms of your business. Can you talk a little bit about any deals you might have with outside vendors, like local markets or even national supermarket chains?

Bob: Well, we were doing some things to pursue some retail opportunities. It was actually, for us, kind of a separate business. That's one area that I would say we're cutting back on. We're kind of reeling it in a little bit, and we're staying focused on the Bobby Q's enterprise. So within the Bobby Q's enterprise, right now, we're looking to expand our catering business. We see that as just a wonderful opportunity, because to your point earlier, there is a segment of the dine-in business that could suffer, and I'm sure it could get worse. But people are going to want to entertain more at home. They still want to have fun — maybe not spend as much money — so you're going to see a lot more home entertaining. Well, our business of barbecue is perfect for that home entertaining. We happen to have an award-winning barbecue sauce from the American Royal Barbecue Association. We are in the process of developing a retail package to start selling that — hopefully, nationally. But right now, we just launched an online store where we're offering up our barbecue sauce, and we're offering up our T-shirts and things like that. So we're just trying to stay within our means, not trying to get stretched too thin, and going after where we think our real growth opportunities are. And for us, I believe it's catering and selling our barbecue sauce.

John: Bob, thanks again for joining us today. And we look forward to discussing these topics a little bit more down the road.

Bob: All right. Well thank you, John.

John: So you heard it folks: A lot of hard work, a clear understanding of your customer base, and the need to give people quality service and a social outlet are the things that drive customer relationship management — not only during an economic downturn, but any time. Thanks again to Bob LeRose, owner/operator of Bobby Q's Barbecue and Grill, for an insider's look into the restaurant business. I'm John Fischer for CreditFYI.com. We'll see you next time. And remember, the biggest factor in controlling your credit destiny is you.