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Kevin Anthony: The Elephant Bar Post-mortem

Posted: July 2, 2014 6:42 p.m.
Updated: July 2, 2014 6:42 p.m.
 

It is not just the downturn in the American economy that has fried much of the restaurant industry it is myriad forces coming home to roost. The closing of the Elephant Bar in Santa Clarita was surprising but in many ways predictable and there are lessons to be learned:

Lesson #1: Customer Service

People know what excellent customer service is. They’ve experienced it and have come to expect it. Excellent customer service cannot be trained into staff but is rooted in the culture of an organization.

An excellent customer service culture comes from the top of the organization. The Elephant Bar was founded by Chris Nancarrow and now is in the hands of a private equity group, Apax Partners. Chris Nancarrow was close to his employees—in the trenches—and his energy created a service culture that permeated his organization and grew it into the multi-state operation of today.

The restaurant service culture needs to be driven by the ownership. J.W. Marriott will step into one of his kitchens to help the cooks. Herb Kelleher the founder of Southwest Airlines passed out peanuts to his passengers. Apax is in England and too far removed and disconnected to drive the service culture.

Without leadership to drive the customer service culture, the delivery of service becomes inconsistent—check out the Yelp reviews on Elephant Bar. The reviews are the tip of the iceberg; beneath it are the many diners that keep their comments to themselves.

Lesson #2 Margins are Skinnier

Over the years, margins have been stretched. Rents at 6 to 8% are now 10 to 12%. Food costs, utilities and supplies are in a gradual creep upwards.

Employees have been asked to pick up the slack—who else can you ask? Deliver more with less—we have all heard that before but the impact is most acute on the employee asked to produce more food and deliver more service even when their table count goes up.

Lesson #3 The Diner knows value

The consumer understands price and the value it attracts and we find the diner is not so easily fooled. They know when a portion size shrinks or an entree has been substituted for a lesser quality item or the service has become spotty.

Lesson #4 People’s tastes change

The consumer taste is ever-changing. What was fun and new last month is now “old-hat.” The Cheesecake Factory restaurant chain is constantly changing their menu—two or three times a year—in all 130 locations. Elephant Bar food primarily stayed the same. Staying the same works in some restaurant markets but for the market segment the Elephant Bar pursued they needed to more aggressively embrace the need to change and “evolve’ their menu offerings.

Lesson #5 Priorities change

When the ownership of a restaurant group changes, invariably so do the priorities. When the Elephant Bar transitioned from Chris Nancarrow to Apax, the priorities of the company shifted from the casual dining experience to the bottom line performance. Restaurant operators know if you focus on the dining experience, profits follow; when you focus on the profits, the dining experience never follows.

Lesson #6 Development of Staff

When we think management, we think process and execution. Many restaurants are stuck in this old style of directing and controlling an operation, but this model works better in manufacturing—where it came from—and is no longer well-suited to the restaurant. Management is needed but must be supplemented with leadership. Corporate restaurant entities thrust management protocols on their units when the units need leadership. Leadership cannot be trained, it must be developed.

Lesson #7 Create the Experience

In the final analysis, the restaurant creates an experience for the diner. Big or small the restaurant with properly prepared food and excellent, attentive service creates a memory that stays with the diner. It is that experience of welcoming and connecting service staff with the diner that is pivotal. Success in the restaurant industry is almost impossible to predict but that it will continue to evolve is not.

Kevin Anthony is the Department Chair for the Hotel/Restaurant program at College of the Canyons.

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