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Learning From Failure

Hersh Ipaktchian shared a memoir from the popular illustrator and cartoonist Jules Feiffer who wrote, ?›ƒ?ª?Success is nothing to sneeze at, but failure, too, offers great possibilities.?›ƒ?ª? When asked to comment on that passage, he elaborated in the Smithsonian (Sept. 2010), ?›ƒ?ª?We have all sorts of negative notions about failure ?›ƒ?ªƒ?? and so the hidden message is don?›ƒ?ªƒ?›t risk anything. But failure is implicit in the arts, and in virtually any endeavor that leads to a satisfactory life. You try things, you fall on your face, you figure out what went wrong.?›ƒ?ª?

Hersh would agree. ?›ƒ?ª?I?›ƒ?ªƒ?›ve learned more from my failures than my successes.?›ƒ?ª? In fact, Hersh believes that successes stem from earlier stumbles.

Throughout his past and subsequent restaurants ventures, Hersh developed a business creed for potential restaurateurs (through his general philosophy can apply to almost any business). His ideas didn?›ƒ?ªƒ?›t come from books or business courses; he learned them ?›ƒ?ªƒ?? and lived them.

Among his notable life lessons are:

Pigs get eaten. Greed takes its toll and customers aren?›ƒ?ªƒ?›t stupid. As an example, Hersh refused suggestions to increase the customer ticket average by dramatically increasing the price of soft drinks and other beverages. Soft drinks are a low food-cost item and highly profitable; steep increases, he says, will only shift people into ordering water, resulting in lost profit.

The most important thing is perceived value, not price. Customers don’t necessarily want the cheapest price; they want value for their dollar. Reducing portions can create a “red flag” to customers. Instead, operators can use appropriate plating and positioning on the plate to increase the perception that the customer is getting his or her money’s worth. Combination platters can also heighten perceived value as can inexpensive add-on pricing (add a garden salad to your meal for only 99 cents.)

Poor people have poor ways. People who struggle economically usually have poor work and life habits. Employees who arrive to work on time, take their job seriously and attempt to improve will usually earn higher pay and be promoted more than those who don’t.

Clean water washes out the dirty water. While employee turnover is expensive, businesses should not retain lackluster employees. Managers should constantly review employee performance and replace underperformers or those with poor attitudes.

Any fool can give away his product. Restaurants are constantly receiving “advertising/marketing” offers to attract more business through dramatic price-cutting. (Example: “you give me a $25 gift certificate and I’ll sell it for $10. You’ll double your business.”) Hersh’s response: “If my main goal is to fill every seat in my restaurant, I can go out on the street and tell everybody they can come in and eat for free. Volume is meaningless if you don’t make money on the sale.”

All advertising is valuable, BUT…The “general public” is comprised of many segments, and no one advertising medium impacts all. A minority of people-generally older-read newspapers. The local evening TV news is viewed by only about 25% of adults. The average radio station has only an 8-12% listenership. A large percentage of people throw away home mailings without even looking at them. Hersh?›ƒ?ªƒ?›s key to choosing advertising is first establishing an advertising budget (in his case, 3% of total sales), then use it to impact the most individuals in your potential customer base. A family-oriented buffet has a much different customer base than a high-end steakhouse, whereas a sports bar attracts a different customer than a Yuppie-oriented sushi wine bar. Since most businesses are somewhat seasonal, Hersh also rejects “month-to-month” contracts, preferring to advertise steadily for a short period, then either do little advertising or at least change the medium. Also, be leery of low prices. “The cheap advertising buy may be cheap because it’s ineffective,” he says. “Like anything, you pay for what you get.”

Unless you’re the lead dog, the view never changes. Don’t be a follower. Take risks and be different. Successful businesses almost always “stand out” among the crowd.

Always have a signature item on your menu. An easy method of “standing out” is serving items not commonly found at other restaurants and market them prominently on the menu and in your advertising. From the pumpkin log pie at Don Pedro’s Mexican Restaurant to the complimentary shrimp bowl at Mullboon’s, Hersh’s restaurants have always featured signature desserts and entrees to differentiate the restaurant from competitors.

You can’t lead the customer to what he doesn’t want. A restaurant can’t be “too different;” it has to appeal to the desires of the customer. Menus should have wide appeal; for instance, unless a restaurant is high-end or ethnic cuisined, it should offer “comfort” items (hamburgers, commonly known sandwiches and seafood) along with a few signature items. Lesser-known items should be offered as daily specials before being placed on the menu. “You can be inventive,” says Hersh, “but most customers are apprehensive about spending too much for an item of they’re not familiar with. There’s nothing wrong, for instance, in offering a different preparation like salmon fish ‘n chips-but not if that’s the only seafood item on the menu. Similarly, you don’t want to only offer sweet potato fries without offering traditional fries as well. Tastes change-but they change slowly.”

Reinvent yourself-nothing – lasts forever. Few restaurants popular in the 1960s are still thriving (or even operating) today. Whether its retail clothing, automobiles or restaurants, there’s always a generational shift. “Today’s younger generation does not shop or eat at the same places their parents did,” says Hersh. “Look at the current popularity of sushi. Hardly anyone ate it 30 years ago. Who would have thought in 1975 that people would pay $5 for a coffee drink? You have to periodically look at your menu and your atmosphere to ensure you’re appealing to younger customers.” The best example, he said, is McDonald’s. “With their breakfast menu and coffee drinks, the company doesn’t live by burgers alone.”

It’s not what you do, it’s how you do it. Success stems from being the best you can be. “I don’t care if you dig ditches for a living,” said Hersh, “If you do it well, you’ll prosper.” The same goes for restaurants. Even if a restaurant aims for a small segment of the population (an ethnic restaurant or very limited menu), it can succeed if it hits all the right notes.

Consistency, consistency, consistency. “People grow accustomed to certain restaurants and how they prepare their food,” said Hersh. “Even if food is bad, if it’s consistently bad, it will have a following.”

If a fish stinks, it stinks from the head down. Don’t blame a company’s failures on employees alone. Success and failure come from the “top guy” who must demonstrate leadership and make difficult decisions. He or she also must show enthusiasm. According to Hersh, “If I have 100% enthusiasm, my general managers will have 80%-and if the managers have 80%, the employees they manage will have 50%. It’s up to the head of the organization to set the pace.”

The foregoing insights were taken from Hersh’s biography titled Appetite for Success. The same messages are core values of the Iggy’s Sports Grill experience, which is located at: 802 West 1425 North – Layton, UT 84041 – (801) 525-1515

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