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How scaling back affects business

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Question:

We are a 17-year-old successful business that does three meals a day: breakfast, lunch, and dinner. We are tired! We really don't want to sell, but my partner and I want a life! We have tried all different phases of management, chefs, etc., but we are very hands on! We are at the point of just doing breakfast and lunch for the rest of our career! Although we are a seasonal restaurant, we are still busy year round. How would this affect our business?

– Scott, Owner, Scojo’s, Surf City, NJ

Answer:

Congratulations! For an independent restaurant, being open daily for three services for seventeen years is impressive—and exhausting. We have previously addressed subtracting dayparts. In general, one thing to bear in mind is how moving from three services to two will fit with your overall concept. For example, breakfast and lunch work fine for a diner but poorly for a steakhouse. You should also perform the exercise of thinking of each daypart as a separate P&L to see how each service contributes to your bottom line. A key consideration for many restaurants is that your rent or mortgage is paid for 24 hours—if all three dayparts have been profitable, losing one may be a problem. Conversely, if costs are high and revenue is low at a particular time of day, it’s worth exploring cutting that service. To be sure, some regular guests will be upset by a change—but that alone isn’t reason enough to continue.

The other part of your question is how do you scale back as an independent restaurateur. For many, retirement means an abrupt end due to a medical problem—in other words, not voluntarily. If, in fact, you find that community relations or your bottom line depend on dinner service, think about restricting evenings to private parties or buyouts, brokering a deal with a young chef looking for a home, or making the difficult decision to become less hands-on than you would like to be.

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