Mr. Restaurant Owner: Got a second?
Ms. General Manager: Sure, what's going on?
Owner: Food and labor costs are going through the roof and my loan we got in '91 is ballooning in three months. We need to get a control on costs and need to refinance now. The restaurant financing market is horrible. What should we do?
GM: I have some ideas about controlling costs, but really don't have the time to implement them since I am really busy managing the day-to-day activities. As for refinancing, I wish I knew. That is really outside my experience.
Owner: That makes two of us! Maybe we need to bring in a
consultant.
At some point in their restaurant lives, most restaurant owners will
either retain a consultant or work with one on a project. Consultants sell time,
experience, credibility and the ability to find information. They can advise you
on a variety of issues including concept development, interior design,
development assistance, financial information systems and real estate. Their
product, or deliverable, can take the form of a written report or a hands-on
approach.
The term restaurant consultant is a broad definition encompassing a wide variety
of disciplines and areas of expertise. In our firm alone we have experts in real
estate, design, litigation, accounting and operations. While the types of
consultants can vary widely, the selection process and client/consultant
relationship are similar. Here is a primer to help you make more profitable use
of a consultant.
HOW DO YOU SELECT A CONSULTANT?
Once you have determined you need a consultant, begin the search
process. Here are the basic steps.
WHAT SHOULD THE WRITTEN PROPOSAL TELL YOU?
Keep in mind that "good proposals make good consultants" -
Make sure you are comfortable with the proposal before you sign it and return it
to the consultant. This will help mitigate future misunderstanding during the
course of the project.
HOW DO CONSULTANTS GET PAID?
There are many ways you can pay an outside consultant.
When hiring a consultant, select the fee structure which enables the consultant
to produce the best results at the lowest price. However, do not hire
consultants solely based on cost. Being "penny wise and pound foolish" will lead
you to "getting what you paid for". For any case, a consultant will figure
his/her fee based on anticipated hours necessary to complete the project and
hourly rates.
One method of paying a consultant's fee is to asked for fixed fee. Ask the
consultant to include in his proposal his estimated amount of time it will take
to complete the project in hours and his hourly rates. For example, some firms
will charge a flat fee for an operational analysis, like we at RAS do.
Another method is to be quoted a fee on a time at standard
basis, if it is unclear as to the scope and time length of the project.
Typically, out-of-pocket and travel expenses are billed separately from
professional fees and this should be indicated in the proposal. These expenses
are for such items as transportation costs, lodging and meals and report
production.
HOW TO LIMIT A CONSULTANT'S TIME
Keep in mind you are paying for the consultant's time. As a
result, try not to waste his time by withholding information necessary to
complete the project. A client who helps the consultant use his time wisely
usually ends up with a superior work product at a lower price and in less time.
Restaurant Advisory Services provides full-service consulting services to the restaurant and hospitality industries. In existence for more than six years, the firm offers a full menu of advisory services focusing on every aspect of the life cycle of restaurants and other hospitality organizations, from pre-opening and conceptual planning, to day-to-day operations, to design and brokerage.