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Reasons to Open a New Restaurant in a Down Economy

There will always be those naysayers who list a hundred and one reasons why you should avoid opening a business when times are tough. However, as my partner and I discovered three years ago when we decided to open our restaurant in Uptown Palm Springs, there are some definite advantages to navigating those waters when they’re rough.

Use Tough Times to Your Advantage
In a bad economy, rent prices tend to be a bit lower, which gives you more wiggle room when negotiating with landlords.
Your vendors are most likely giving you the best pricing and service they can during this time, so you build a mutual loyalty.
We decided this economic climate was the perfect time to create a niche product; a food and wine experience that no one else was offering at the time, a hip and trendy atmosphere minus the snobbery. We also made our price points affordable to create value at the same time.

Looking for the Right Staff
Hard working, quality people are often out of jobs during tough economic times, which made it that much easier for us to build a quality staff from the ground up. I looked for servers that could become superstars, not servers and bartenders that jump to every new restaurant that opens in town. I looked for out of work teachers and sales people, because they make good listeners and communicators, I once ran a Craig’s list ad in the sales category and the caption was ‘looking for individuals who can sell food and wine in a busy restaurant.’ I got 20 great candidates, which showed me that professional servers consider themselves sales people. Those are the kind of people I want working for us.

Do Your Homework and Give Back
We studied the practices of our friends who are area business owners (not our competitors) in order to keep track of our own growth in the beginning.

We made a point to have dinner at other area restaurants and looked for key things like owner participation, demeanor and knowledge of staff, and the quality and presentation of the food.
We decided to immediately get involved with several area charities. We believe that when you give, you get back.

Create Incentives to Build Repeat Business
When I was growing up in Chicago, I started to watch a company called Lettuce Entertain You, which had the first of what is now considered a loyalty program, which offered points for dollars spent. My friends and business partners would only go to one of those restaurants to redeem the points. I have always respected Rich Melman, the founder of Lettuce Entertain You Enterprises. Now more than 20 years later and with my own personal touch, I am putting into place many of his systems and promotions.

Palm Springs is a resort town that has 45,000 residents during the off-season and more than 75,000 in season. Our approach was to start local, with the philosophy that if locals support you, the tourists will be sure to follow. We started a Frequents Eaters Program, where our loyal customers gain points for dollars spent, which can be redeemed for rewards like hotel spa treatments, airline tickets, and gift certificates for local retailers. With every $250 spent, the diner gets a $25 credit voucher to use on their next visit. We started the program a year ago and now have more than 3,000 members.

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