Are your Customers Bad Mouthing You?

I was in the post office this morning when the woman next to me announced to everyone waiting that she was ripped off by a local restaurant this weekend.

I promise you she just spouted this out - out of nowhere!

Anyway she went on to tell everyone that this restaurant were acting illegally because they charged a 10% surcharge for Saturday nights and a $5 corkage fee - amounting to an extra charge of $40 on top of the menu prices.

So before we get onto the BYO / corkage thing let me say that, based on what she said and from my understanding of the law (and I'm no lawyer) she was probably correct on one count - by having a separate surcharge outside of the menu price the restaurant was breaking the law - the government made this practice illegal under the trade practices act last year click here for details on the ACCC website.  If you are still charging weekend and holiday surcharges you might want to look at this.

I did write an email to everyone about this at the time so if you are on our email list you probably aren't doing this.

Now on the corkage / BYO issue - first of all - if you are still calling the BYO fee corkage for god sake stop doing so - you are asking for an argument as wine usually comes in a screw top bottles these days.

Secondly work out how much is that extra $5 worth to you?  And how much is it costing you?

Just as an example... lets say you gross $1 million a year and "corkage" gives you an contribution of $10,000.  In this example that's only 1% of your overall gross profit.

If you think differently about this "issue" and charge just $1 per person for BYO and add 2% onto your menu prices - The $1 would be forgiven and you would only be adding 50c onto a $25 dish which would probably go unnoticed.

If you are BYO only then this should be a no brainer.  If you have a mixed license then obviously you want to deter people from BYO and the bigger charge is a deterrent BUT because it's not communicated in that way to customers, they just read "corkage" and feel ripped off.  It would be better to work on the positive angle: that by having a great wine list that you promote and educate them on, they want to try your wines.

At the bootcamp I said that the No1 mindset rule was "You are in business to make Money" make sure that you do the numbers and make it work for your bottom line - don't let ego get in the way!

Most importantly... the woman in the post office might be singing your praises after dining with you - rather than telling everyone you are a rip off artist.  Word of Mouth Advertising is very powerful - both in the positive sense as well as the negative sense.  These days with Eatability, Twitter and Facebook one bad move might mean you are bad mouthed to tens of thousands of people in one go.

There are pictures and videos from the restaurant and cafe profits bootcamp below...

Hope this has been helpful.

Have a great restaurant day.