Building a $3,500,000 Business for Two Strangers in 52 Minutes

Summary

• I met Calvin and Air, a husband-and-wife duo running a successful Thai restaurant making $3.5 million a year. They're opening a second location and need guidance to ensure success.
• Their restaurant enjoys impressive margins at 19%, serving over 100,000 guests annually, which is commendable for the restaurant industry.
• They aim to expand to 20 locations and surpass $80 million in revenue over the next 5-10 years. This ambition requires carefully scaling their operations while maintaining quality.
• A significant portion of their sales comes from organic traffic and word-of-mouth. This indicates their food's quality is their best marketing.
• Alcohol sales only make up 1% of their total sales despite being high-margin items. Improving this can significantly increase profitability.
• To improve their business, I suggested modifying pricing, especially using $16.99 instead of $16, which could result in a 30% profit increase due to perception.
• Consider implementing weekend pricing with slightly higher costs, like $2 more on weekends, to capitalize on peak times.
• Training staff is essential for upselling alcohol and ensuring great customer interactions by understanding menu pairings, specials, and customer demographics.
• Create a system to identify first-time customers and offer them a surprise at the end for a memorable experience, like a free dessert.
• For recurring customers, incentivize reviews with immediate offers like a free drink or dessert upon showing a review.
• Consider implementing a loyalty program with tangible benefits such as priority seating on weekend waits to enhance customer retention.
• Utilize an influencer event for your upcoming restaurant opening, turning influencers into brand ambassadors, while creating media content.
• The execution of these strategies requires consistent staff training, with defined scenarios and reward mechanisms to encourage desired behaviors.
• Encourage a culture where strategies are effectively implemented by aligning incentives with business goals, like a server leaderboard for most alcohol sales.
• Remember, your core product's quality is key. Changes and marketing efforts should highlight what you're already good at: delicious Thai cuisine.

Video

How To Take Action

I would suggest starting by focusing on making small changes that can yield big results. First, you should adjust your pricing tactics. Change your prices from $16 to $16.99. This simple change in perception can boost your profit margin by 30%. Also, consider weekend pricing. Adding a $2 increase on weekends when demand is high can capitalize on peak times without customers noticing a big difference.

A good way of boosting sales is by enhancing your alcohol sales. Train your staff to upsell alcohol effectively by noting what pairs well with each dish on the menu. It's also important to create a drink of the week to catch customers’ interest. Use tabletop displays to visually highlight this.

To ensure great customer experiences and repeat visits, start by recognizing first-time customers and offer them a surprise dessert. For recurring customers, encourage them to leave reviews with immediate offers, like a free drink, to boost your online review count and visibility.

Another easy action is to reorder your menu items based on their profitability. Highlight your highest-margin dishes so that they're more appealing to the customers and, in turn, boost your bottom line.

Use influencer events effectively for your restaurant's grand opening. Invite local influencers to an exclusive opening night and encourage them to share their experience with their audiences. This can generate organic traffic and create buzz around your restaurant.

Finally, consistent staff training is crucial. Reinforce these strategies through regular practice to ensure your team knows how to implement them seamlessly, which will align with your business goals and likely enhance profitability and customer satisfaction.

Quotes

"First impressions, restaurants have the highest failure rate of all businesses"

– Alex Hormozi

"On a long enough time horizon, the product of the business is the only thing that matters"

– Alex Hormozi

"Marketing just pulls up your timeline forward"

– Alex Hormozi

"But it cannot create a good business"

– Alex Hormozi

"A lot of people obsess about all the marketing and all the sales hacks"

– Alex Hormozi