Monday, February 6, 2012

a year in review

Another year ended, another year begun (a whole month ago, I know, but it's been a busy month, and I haven't had much time to sit and write). I like taking a few minutes to pause and reflect at times like this - to look back at what's already happened, and look ahead at what's coming. Both pictures are good ones this year. I'm excited about what we've accomplished, and possibly even more excited about the prospects for the year ahead.

Fair warning: there's a lot here, and it rambles a bit. If I wrote these sorts of reflections more often, they might be more digestible, but I don't, and this one isn't. So...enjoy! :)

In 2011, Actual Cafe found its rhythm.

Although we always had a core group of customers who get what we do and are vocal supporters of our business and our neighborhood mission, it feels like a lot of folks just sort of recently realized that there's something interesting happening here. I see a lot of new faces every day, and the number of faces that I recognize grows all the time as well. People compliment me and our crew fairly often. We get positive reviews online. Press pays attention to us. These are all great things, for which I'm incredibly grateful.

One of the most important things that I've absorbed from the Cafe is how critical it is to find ways to appreciate positive things, rather than dwelling on the negative ones. There are literally always negative things - problems with the operation, unhappy customers, dwindling bank balances, unexpected equipment failures, fires, and on and on. This is an exercise in always trying hard and sometimes failing. Fortunately, there are also always positive things to spend energy on - happy customers, growing sales, employees who care and contribute, new events, fire extinguishers, etc.

The other important lesson that I keep learning over and over is that it's impossible to please everyone, and that by accommodating one person (or group), it's often at the expense of someone else's enjoyment of the business. We have a specific point of view and aesthetic here, and make no bones about it. Folks can choose to go elsewhere if they don't enjoy ours, but on the other hand, some go out of their way to come here because they do appreciate what we do or how we do it. We have a business operation that's complicated enough that it's hard for me to convey the complexity, and every decision comes with a cost and a benefit. Moving a plant from one corner to another, while seeming like an innocuous decision, might change where people choose to sit, or where people line up to order, or how much art can be hung on the walls, or where musicians or DJs set up, or whatever. Adding a new item to the menu might require sacrificing something else from the menu (something that someone will likely miss), in order to maintain the same overall cost structure. Adding a new power outlet will almost definitely lead to a tangle of cords and laptops in that location every day, which might make those laptop users happy, but might crowd out some other use of the space, or change the energy so that when someone new walks in the door, they get a different impression of us. And these things matter.

For me, it's really difficult to remember that lesson when a customer is frustrated. Running a successful service-oriented business requires being able to say 'yes' a lot (whenever possible, I think). But sometimes 'no' is required, and that's harder. No matter how good the reason, it's hard to convey, and folks often leave having heard the 'no' really clearly, but not so much the why. And c'est la vie - we do our best, and that's all we can do. This is a more challenging problem for a couple of interrelated reasons:

1) When customers walk in the door, they expect fast and correct service. For all the impact the Slow Food movement is making, there's no getting around the fact that many customers need to eat during a short lunch break, or grab coffee on their way to work after dropping off their kids or whatever, and they don't always have time to linger. There is a point beyond which getting faster diminishes quality of product, and we won't go past that point, but we will go faster when we need to and can.

In order to provide that fast and correct service, we have to have adequate staff. Because customers elect to arrive at different times on different days, and don't call in advance, we're at the mercy of the mob, and no amount of past experience can predict just how busy today's lunch will be. We don't have built-in walk-by traffic here - most folks have to make an effort to come to us, and this means a lot of variability in demand - we frequently have week-over-week swings in daily business of 25% one way or another. It's impossible to alter staff on an hour-by-hour basis, so it's inevitable that sometimes we'll be paying people who don't have a lot to do, and sometimes we'll end up without enough people to handle the unexpected rush. Yes, it's true that we have other work that the staff can do when there's not a line out the door, but: a) most of that work needs to get done every day anyway, so if we can't get to it during the time when we normally do, we'll have to make up the time somewhere, and b) human nature dictates that when there's a lot to do, folks will hustle to get it done, and when there's less, they'll take it a bit easier (this isn't an indictment of our staff - I do the same every day: we all work as fast as we need to). As an employer of humans, it's in my best interest to have a sane but substantial amount for each crew member to do during his or her shift - understaffing will create resentment, mistakes, dangerous working conditions and turnover, overstaffing will lead to wasted margin, boredom, lower tips, poor service (which compounds the lower tips), and also turnover.

2) The first impression for a new customer is impossible to overcome. If we make a great impression the first time, then screw something up later, we'll generally get a second chance; the more good impressions we make, the more slack we get. If we screw up on the first try, it's a pretty good bet we won't ever get another. And new customers often come in at unexpected times (or atypical ones - like a special event that makes the cafe look like a very different place than it does most of the time). I often tell my crew that the new customer (the one we've never seen before) is the most important customer in the room. Our regulars know us, and they get good service (we know their names and their orders, they know our menu - it's easy); new customers have a greater need to be welcomed and guided and smiled at and thanked.

So, when someone asks for more gluten-free sweets, or laptops on the weekends, or better lighting in the dining room, or whatever, we often can't deliver those things without taking something away. And the taking of something has an expense, both in terms of dollars and in terms of customer goodwill. We've added and taken away lots over the past two years (a lot just last year), and each decision alters our image, and changes our addressable customer base. Doing this too often, or too abruptly, or without a firm sense of who we are, is just plain dangerous - we'll piss off everyone and be left with no one to love us.

And, because I'm such a vocal person in such a visible business with a mission of community and openness, I find myself much more aware of how I carry myself everywhere (not just at work) - I know that if I do something stupid or irresponsible out in public, someone who knows what I'm up to is likely to see my screw-ups. This has made me a more measured person. When I say one thing here at the cafe and do another thing out in the world, it's a problem - I hate the possibility that I might be hypocritical (although I sometimes am), and so I spend more time examining my motives and looking at opportunities to improve my actions.

It's not always possible to be entirely forthcoming about the inner workings of the business, how it's doing, what I'm planning, and all. If, when asked by a customer about the state of things, I answered (honestly), "I've been having nightmares about escalating expenses and struggling to get them under control," it wouldn't inspire confidence. And I'm really familiar with the unfocused glaze that some business owners get when things are rocky - when you ask, 'How's business?', and they sort of squirm and say 'Oh yeah, pretty good.', and try (but fail) to project confidence. I'm sure that I'm guilty of having been that guy more than once.

But the fact is that what we do here isn't easy. If it were, new businesses would be occupying every storefront, and lots of local business owners would be constantly taking long trips to the Caribbean instead of sweating in their windowless offices all damn day. Even a healthy business goes through tumult. Systems break down, employees lose their edge, customers get bored, Starbuck's moves in across the street, interest rates go up, supply costs go up, labor costs go up, and customers don't necessarily have more to spend on what you're selling. And for a new business, it's hard to know what signs (of either strength or weakness) are harbingers of trends, and which are just mysterious isolated incidents. Without a track record to look back on, it's difficult to decide when to make an adjustment, and when to just wait and see.

I think about running this business like steering a big ship. If we force it, it'll wind up wrapped around a rock somewhere (or just out of gas from too much push and pull). I have to anticipate what's coming, and give it a little goose here and there to try and get it where I want it, but I don't always know what the wind or the tide will do, or when that albatross overhead will poop.

And because we're still growing, and have been since the very beginning, the biggest problem I face on a regular basis is how to keep up with that growth. It's not always an easy problem to solve.

Here are a couple concrete examples to illustrate how these things go:

Keeping up with customers at the counter
When we opened our doors, we put in a little cash register and wrote a lot of stuff down when we were taking orders. I couldn't justify spending several thousand dollars on a restaurant point-of-sale system - we certainly didn't need one then, and I didn't think we would anytime real soon. What we did worked reasonably well - sometimes we'd make an error (write something wrong, or read it wrong, or think something got done when it didn't), but when we made those mistakes, we could recover, and generally have the customer leave happy.

But as we grew, those systems started to fail. Customers were not getting stuff quickly enough, we couldn't work through the counter line quickly enough, and we were screwing up orders often enough that we started to get the reputation for making too many mistakes and taking too long to do so.

Throwing more people at the problem didn't help - we tried getting two folks taking orders at the counter, or one taking orders and one ringing the sales, we tried adapting our system to print work tickets, we tried more training on orders and tickets - we weren't licking it. One of the biggest frustrations for me on top of all that was that the cashier working the counter was spending so much time doing things (writing stuff down, running tickets to the various stations, swiping cards, making change, etc.) that they couldn't focus on the customer in front of them - we lost the ability to look folks in the eye and make them feel welcome. And believe me, this is a big deal.

So I started researching POS systems, now able to justify spending some money on one (it stopped mattering that it would cost money - our business was suffering every day that we couldn't fix the operation).

I looked at some of the big vendors (Aloha, Micros), and decided that they were a bad fit for us - we're not a big enough operation that we need to rely on a vendor to do everything for us, the initial cost and ongoing expense of running one of those systems was just too big, and they were based on 20-year-old tech.

I then looked at some of the startups in the space (Square, Lavu, Revel, others), and found their systems lacking (their customers were frustrated, their sales people didn't impress me, and there were key features that just didn't work right). I didn't want to trade one set of limitations for another.

Eventually, I found our current vendor - Auphan Dining. They're a little Canadian company with a system that works pretty darn well, they have lots of happy customers, their system is mature but not antiquated, they allowed us to reuse all the equipment we had already bought, and we can grow with them as the business grows. So, I wrote a couple thousand dollars in checks, and spent a couple months configuring the system (building and tweaking our menu, and making all our equipment work), writing documentation for the crew, and training everyone. We cut over to the new system in October, and although the first week really sucked, and we had some intermittent problems that we just finally licked a few weeks ago, it works really well.

Moving to the new system also had a side benefit - it allowed us to move our credit card processing to a new vendor (our old system had us locked in), which saves us a few hundred bucks a month. We'll have made the cost of the system back in the first year of operation. Also, the new system makes it much easier for us to get information about our own business - pulling and customizing reports just works, and I can get data when I'm at home, or out of town, and log in and fix things from there when I need to as well.

And now, we can look customers in the eye again and listen to what they tell us, while we get their orders right. We can get folks out of line and into a seat more quickly, and get work to the people who need it faster. We've had to figure out how to work two and three people to a station (requiring us to move equipment and ingredients around so each person could get to the things they needed for their tasks), and now when we get a rush, we can turn around orders consistently in under 10 minutes, and get the orders right - our error rate is way down.

I call this a good investment. (But it sure was a pain in the ass getting done.)

Night Business
It was really clear to me from the beginning that in order to fulfill our neighborhood mission, we needed to be open after dark. We set our hours pretty aggressively when we opened (we were open till 10pm 4 nights a week, and till 8 the others), and found when we hit our first full winter that we couldn't sustain that schedule, and went to our current one - open till 10 on Friday and Saturday, and 8 the other days. I always intended this to be a temporary state - in my ideal world, we'd be here till 10 five nights a week, and maybe even later on Friday/Saturday.

We experimented a bit with some hot meals last year, thinking that we might be able to establish some dinner business, but it quickly became clear that it wasn't going to make the difference we needed, so since then, I've been focused on trying to build a more pub-like atmosphere after dark - more great local beers (including rotating seasonals) and wines, more small plates (we'll be launching a new consolidated evening menu sometime in the next couple months), and special events.

We've always wanted to do interesting events here in the evening time, and we've tried lots of different ones, with varying degrees of success. Movies used to be every Wednesday, then moved to every Friday, and now happen once a month (and will go away soon - they just don't do well enough for us). DJs and cheap beer have helped our Friday evenings, but by themselves haven't done enough, either. Live music on Saturdays and Sundays is sometimes great, and sometimes not - we're dependent on the performers to bring a crowd with them.

Rachyel, one of our senior crew, has been booking music and managing online calendar listings for a year or so, and we realized several months ago that we had gone as far as we could with the staff and expertise we had between us. So I started reaching out to other folks who could create and manage ongoing event series, and given them time slots of their own, leaving us to focus on event promotion and calendars and staffing for the event. We've picked up a lot of these in the past months: Girls Rock Camp Music Trivia, Monthly Live Drawing parties, the Actual Jazz Series (recently expanded to twice monthly), and our brand new Bicycle Bingo weekly fundraiser; we're launching some new ones right now: a monthly Ukelele series hosted by our friend Mana Maddy, a new monthly DJ spot on last Sundays, and more coming.

We also did our first outside-curated art show - Femme Cartel - in January, and it was a huge success. We'll be doing more like this one whenever we can. It was great to see all the business on the block coming together and just having a blast. It's things like the success of Femme Cartel that give me the excitement that fuels the next project (and there's always a next project...). We're finalizing details for a 'zine show in our March/April slot that has all the hallmarks of being effing awesome. (more on that soon)

Starting January, we started running Afternoon Delight on Saturday Afternoons, selling pitchers of our excellent beers for $10 each, and trying to build a crowd before the live music starts on Saturday nights. It's only been a few weeks, but it's making a difference, and we hope to build a more consistent Saturday afternoon business and better music shows as a result.

We revamped our lighting to make it more pleasant in here at night. We built some new furniture (and there's more coming) to make seating more varied and conducive to groups. I'm doing all the furniture construction myself in my garage at home, so it will take a bit of time to get through all the little pieces I have planned. Look for them a little at a time over the course of the year.

It will take some time for all this to catch on - it's a tricky thing, trying to convince people that they ought to think of us differently, while not upsetting our core business (which is doing just fine, thanks, and which I have no desire to screw up as we try new stuff). I expect that, given consistent attention and creativity, we'll get where we want to be.

If you want to help, stop by at night more often! Also, please give me (or any of our staff) feedback about what would get you in here after dark. We get a lot of our best ideas this way.

The Space Race
We're not the smallest place in town, but we're not the biggest either, and we're starting to bump up against physical limits that are getting tougher to overcome. We've done a lot of reorganization, building new shelving, keeping better track of inventory, prepping in larger quantities, but some things are worrying me. Our business is growing still, and I don't want to get in its way - when customers want to order something, I want to be able to give it to them.

The optimal way for our business to grow would be for us to constantly step up the quantities of ingredients we buy, to reduce the per-unit cost (either because we get cheaper pricing when we buy more, or because we can shop less often or get more things delivered, which saves labor cost). Unfortunately, we can't always do this because we don't have space to store more. This is especially a problem with cold storage. We've got six refrigerators and two freezers running, tucked into every spare corner, and every one of them is regularly filled to the brim.

Certain ingredients (mixed greens for instance) are delicate and also space-hungry. When we're selling lots of salads, we go through a dozen cases of mixed greens every couple days. I'd love to be able to buy 15 or 20 or 25 cases at a time, but 25 cases of mixed greens fills a whole two-door refrigerator - we just don't have the space. This is just one example, but the fact is that we're shopping for produce literally every day, and still having trouble storing it all, and we don't go through it fast enough to make daily deliveries feasible (there's a minimum order size we can't make, so the delivery charges would make it too expensive). We're taking dairy deliveries twice a week, coffee twice a week, and soon we'll need to start taking empanadas twice a week.

We've already pruned a few things from the menu that weren't selling well and took up storage space. We're prepping smaller batches of some things when we can (which, unfortunately, increases our production cost on those items - labor is a big component of the total price of everything we make). Higher production cost means lower margin, which is not the best equation for us, but the fact is that economies of scale don't always materialize where I'd want them to.

We're also constrained on work space - we can't get more people into the kitchen to make stuff, so we're considering adding overnight prep to the schedule. We don't need to go there yet, but we might soon.

I don't have all the answers to these questions - we're actively working on the problem right now, and I hope we'll have some breakthroughs soon.


Anyway - I don't want to bore you all with lots of details, but I thought it might be interesting to give a little window into how a guy like me spends his days. Frequently, I look back at the last week, or the last month, and I don't know where all my time went, but know that I was busy. Aside from paying bills, answering emails, running errands (like buying produce, covering breaks for employees, dealing with staff communication, making payroll, designing our promo materials, maintaining our online presence, and just generally overseeing the operation, projects like these are what take most of my time and energy.

We've got some fun stuff cooking right now: we're finalizing design and working through the permit process for our permanent parklet. I recently posted an updated design on our facebook wall. It's pretty awesome, I think - I had some help (pro bono, fortunately) from the RECESS group on design, and it's definitely better than I could have done myself. I'm hoping for a build in late winter / early spring, and to have the parklet in place and usable when the weather is nice enough to start thinking about sitting on it.

Also (this is a big one), I'm planning an expansion into the adjacent space on Alcatraz. Expansion will allow us to solve some of the problems above, but it will do more new and exciting things that I'm not ready to talk about quite yet. Stay tuned...

...because in 2012, we're gonna kill it.