How NOT to Run a Business

This past weekend my wife, my daughter and myself got a lesson on how not to run a business. Not that logic and common sense wouldn’t make certain things obvious, but sometimes you have to see a certified bad example play out in real time to truly appreciate what it means.

We went to a local restaurant for lunch, one that we’ve been to many times in the past. The food has always been good, the prices reasonable and the service decent – at least to us. To many people, the food is ordinary and there have been abundant complaints about slow or poor service, though we’d not experienced that – until Saturday. Also, the place is tired looking. In fact, it looks like it hasn’t had a facelift since the 1970s, but as children of that decade, my wife and I kind of like that, and look past it.

How NOT to Run a Business
How NOT to Run a Business
Anyway, this last experience was not a pleasant one, and was an excellent example of how not to run a business. We had to wait at least 35 minutes for our food to be delivered, and when we brought this to the manager’s attention, we were completely unprepared for his response. What was it? We were exaggerating!

That’s not a reaction we remotely expected, and unlike what we’ve ever experienced in the past – anywhere. Needless to say, that restaurant is now off our dining circuit.

Let’s Start With Good Business Practices

I’ve been working for myself for many years, and if it’s one thing I’ve learned it’s that we all mess up. I’ve done it many times. But that’s hardly a revelation.

What really matters is the follow through – that is, what you do to make it better. How you handle that part can mean the difference between closing a deal, keeping a customer or client, or even ending up on the wrong end of a lawsuit.

First, businesses survive on the mantra of the customer’s always right. While I certainly don’t think that’s true in all cases – I’ve seen some pretty poorly behaved customers in a number of situations – as a general rule, you give the customer the benefit of the doubt.

That might take the form of a kind apology, a reduction in the bill, a free extra or some other small gesture that says “sorry for the screw-up, but we value your business”. In most cases, I think that satisfies most customers, most of the time. After all, your customers are the financial life’s blood of your business, so it’s good business practice.

But not every business owner gets that message. And fortunately, as customers, we can “vote with our feet” by taking our business elsewhere. But some businesses don’t quite get that concept.

Our Saturday Afternoon Lunch Caper

It was early in the afternoon and we had decided to grab lunch after finishing some light Christmas shopping. We went to this restaurant where we’d been many times before. It was about 1:30 in the afternoon, and the lunch crowd had mostly passed.

Our order was simple – a hamburger, a turkey club and a meatloaf dinner – basic stuff because this is one of those places that tends to be good on simple fare, but the quality drops off drastically when a meal gets even a bit complicated.

The waitress came to our table quickly, brought us our drinks, and took our order. This all happened within minutes of our arrival, and the waitress was very pleasant. So far so good.

But then we got stung by what is perhaps the negative quality that this restaurant is best known for – slow service.

That’s hardly usual at restaurants, but it’s usually not insurmountable. But this time was different.

As I wrote at the beginning, it took at least 35 minutes for our food to be delivered. Before it was, I asked to see the manager. He didn’t come to our table until the food was finally delivered. When he approached our table he didn’t make eye contact with me. I politely told him that we waited at least 35 minutes for our meal and that we would like some compensation for the delay.

His response – before I even finished my first sentence? “I think you’re exaggerating the time.” Immediately I knew this would escalate to a conflict. Rather than acknowledging an obvious problem, he instead turned it on me as if it was my fault. Following his denial of the delay, he told me he was sorry but they don’t discount their prices.

My daughter is a server in another restaurant, and joined the conflict. She told the manager that she wanted to see the order ticket. The manager and waitress looked at each other, as if they’d been poked with cattle prods. The waitress left and came back quickly with the ticket and handed it to my daughter. It showed a delay of 27 minutes.

Now based on our tracking of the time, it was clear that the order had also been turned in as much as 10 minutes late. But even if it wasn’t, 27 minutes is a long time to wait for standard menu items in a mostly empty restaurant. And it’s certainly long enough that you would give the patron the benefit of the doubt.

Perhaps embarrassed, the manager offered the excuse that it took longer to cook specialty meals. When I told him we ordered standard menu items, his demeanor changed, and he told us that he didn’t need people like us in his restaurant.

People like us? You mean paying customers? That kind of people?

Our Response

It was obvious that we weren’t getting anywhere with this individual. After he stormed away from our table, I told my wife and daughter to eat their meals and then we’d leave and never come back.

Though instinct may instruct you to get up and leave when you’re mistreated, I didn’t want to take the chance that this guy was baiting us to take a perfectly justified “dine-and-ditch” strategy, and simply get up and leave. If you’re not familiar with the term, people have been arrested for leaving a restaurant without paying the bill, a.k.a., dine-and-ditch.

The anger of this guy made me think that he might be pushing us in that direction, and we weren’t going to take the bait. You can never know what a person is thinking, especially a neurotic one. The last thing I wanted to give this guy was a chance to sic the cops on us.

We finished our meal, then decided to tip the waitress $10 on a $47 bill. It wasn’t her fault, other than perhaps submitting the order late, but hey, things like that happen and you have to let them go. As well, we figured that if the manager talks to paying customers the way he did to us, it must be even worse for the employees.

Despite the fact that the manager had no problem making a scene in front of other customers, we were firm in our speech, but didn’t raise our voices, and didn’t resort to profanities. We’re Bible believing Christians and don’t want to get drawn into the behaviors like that of the manager. But I have to concede that this is one of those times when it was very difficult to be a Christian.

Before we left, I walked over to the cash register where the manager was standing. Again, he was refusing to make eye contact with me. Before I reached the counter I called out his name, intent that he wasn’t going to ignore me. He looked at me as if shocked that I knew his name.

Me: “You could fix this problem for $10, but instead you’ve got dissatisfied customers who will never come back”.

Him: “I’m happy that you’re never coming back.”

And that was the end of our lesson in Business 101 from a cranky restaurant manager.

Did he “win”. I don’t think so, not in the end. We’ll get to the math on that in a minute.

“If They’ve Done it to You, They’ve Done it to Others”

That was actually something a coworker told me some years back, and it generally rings true. If they’ll mistreat you, they’ve mistreated others, and they’ll do it again. Reviews of this restaurant on the web confirmed this to be the case.

One was of a young couple with a child who had come in on a Saturday morning when the place was slow, but had to wait an hour for their food. When she complained to the manager – who not coincidentally was the same guy – he similarly launched a verbal assault on her. She reported that he was shaking his finger in her face and telling them not to come back.

In another review a woman reported a similar exchange with a female manager at the restaurant. Again, more abrasive talk and instructions not to come back. This is significant because it means that the manager we dealt with isn’t just a “bad apple”. This kind of behavior must be standard operating procedure.

They’ve lost our business, and doubtlessly the business of those other patrons. They’ve probably lost more from people who saw our exchange and read reviews on the web, not to mention the business they’ll lose from word-of-mouth traffic.

The mystery is that the manager and the establishment don’t realize – or care – that their behavior costs them more in the long-term than they “win” on these one-on-one customer skirmishes.

The Cost of this Bozo’s Behavior to the Business

An attorney friend in Georgia told me one day over lunch to “never get into a deal where you’ll make a $1,000, but it will cost you $100,000 to get out of it if it goes wrong.” That was how he generally approached his business dealings, but I thought it to be brilliant advice.

It applies to this restaurant and this manager, but I’m sure it’s lost on them. By cutting our bill a few dollars or offering a free dessert or something similar, we would have left as satisfied customers, and would return again and again. But he chose to “win” the battle – at a cost of losing the war.

Let’s do the math. He exchanged at most $10 for several hundred dollars in lost future revenues. Let’s say my family goes into that restaurant 10 times a year, spending an average of $35. We represent a $350 revenue stream. Again, for $10 or a free dessert, he could have preserved that cash flow.

Now multiply that by people who will read our reviews on the web, and the people we’ll tell about this episode, and the eventual cost will probably be over $1,000 per year. All to win an argument and save a few dollars. Please keep this in mind if you’re either in business (and that includes commissioned sales jobs) or if you’re contemplating doing so.

As a business person myself, I’m keenly aware that it’s very difficult to win customers and clients, but very easy to lose them. This is why the saying “the customer’s always right” has become something of a rule in business.

If this guy worked for me I’d put him on probation the first time it happened, then fire his butt if it happened a second time. But as we found out, this isn’t his first time. And you can bet there are plenty of others he mistreated who didn’t do a review anywhere. They just stopped showing up.

Which brings up an important business mystery…

“Most Businesses Survive in Spite of Themselves”

This was the conclusion of a good friend of mine, and I think a valid one. Many businesses survive despite poor service, high prices and lousy products and services. Some have arrogant management, and many also similarly mistreat their employees. You’ve probably worked for a few such companies. How do they survive?

Another friend has the theory that if 100 people start businesses, some of them will make it and often for reasons that defy logic. It could be timing, deep pockets, or dumb luck.

That’s the part that’s a mystery. I don’t know if it’s so much that they survive as much as they survive a lot longer than they should. I’ve seen it enough to know that it’s true. But I’ve also seen the opposite – good businesses that don’t survive. That’s equally mysterious.

In the case of this restaurant, I think they survive in part because they do offer a good value for the money. It’s certainly not elegant, but it works for very casual dining. It’s also considered to be something of a local icon. That helps to explain why it hasn’t been renovated, probably since the 1970s.

As long as people continue to come in, the owners see no reason to invest fresh capital in the business. In point of fact, this place is riding on it’s past reputation. But that may also explain the management attitude – the concern may not be on customer service, but on cost containment. That makes sense in a business that isn’t growing and where the owners don’t want to invest more money.

This is obviously not a way to do business. If you’re a customer you should certainly avoid a place that will overcharge you, mistreat you, or provide unsatisfactory service. If you’re a business owner, you should have a clear understanding that customers almost always have a choice. They can vote with their feet and go to a competitor. If you’re not winning your customer’s business, you’re losing it. And it’s a lot harder to win it than it is to lose it.

Have you had experiences with businesses that probably shouldn’t be in business, but still are? Have you ever worked for one? (I’ve worked for a few, but that’s a story for a different day.)

( Photo by frontriver )

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