Competition | October 2014 | By Daniel P. Smith

Seasoned Professionals

How limited-service restaurant operations address the swings of a seasonal business.
Quick service restaurant brands adjust operation to busy traffic seasons.
The original Hillbilly Hot Dogs unit in Lesage, West Virginia, sees a double-digit revenue decline in the winter months due to its off-the-beaten-path location. Hillbilly Hot Dog / Sean M. Udy

Along the Ohio River Road in Lesage, West Virginia, sits Hillbilly Hot Dogs, a destination stop for locals and tourists alike.

When winter hits, however, Hillbilly’s popular—and wildly distinctive—weenie stand sees a sharp, double-digit decline in revenue, says Sharie Knight, who opened the self-deprecating eatery with her husband, Sonny, in 1999. The sales drop is tough on the business, demanding ownership make some shrewd, strategic decisions to ensure the restaurant meets its annual financial targets.

“You really have to store your nuts,” Knight says.

While all restaurants tend to ebb and flow throughout the year, some seasonal shifts deliver wider fluctuations than others. From harsh winters and the college academic calendar to sports seasons and tourism spikes, quick serves with a seasonal slant face sensitivity to both profits and losses.

“Seasonal operations have to be on their game or the restaurant can quickly become a no-win business,” says Ray Esposito of LP Innovations, a Massachusetts-based loss prevention firm.

While the basics remain the same around the calendar year—providing tasty food and quick, friendly service—Esposito says seasonal locations require extra flexibility to address the drastic swings.

“Seasonal businesses have to constantly flex their behavior to match what is particularly critical for the current season,” he says. “If they don’t, the business will never reach its potential.”

Tourists come and tourists go

A Myrtle Beach, South Carolina, landmark since 1937, Peaches Corner has seen the ups and downs of seasonal business for longer than most of its customers have been alive. While Myrtle Beach has fewer than 30,000 permanent residents, according to the Myrtle Beach Area Chamber of Commerce, the city and its surrounding area welcomes about 15.2 million tourists each year, the vast majority of them visiting from June through August.

In summer’s three-month run, Peaches captures more than two-thirds of its annual revenue, with six to seven employees working each of the restaurant’s two shifts. Come winter, Peaches general manager Briggs Dickerson says, weekday sales might be 5–10 percent of what they are during an active summer day, and one manager runs the entire 55-seat operation.

During the down season in such heavy tourist locales, many shops reduce their hours or even shut their doors, content to cut their losses. In Nantucket, Massachusetts, Nathan Coe closes his Nantucket Pasty Co. from October through March and turns attention to off-island opportunities, such as retail and wholesale accounts.

“That’s our way of countering the drop-off,” Coe says.

For much of its history, Peaches followed a similar format, closing at October’s end and reopening in March. Eunice Burroughs, Peaches’ late matriarch, used to tell Dickerson he had three months to make money. “‘Come winter,’ she told me, ‘you could lay down in the middle of Ocean Boulevard and not get hit by a car,’” Dickerson says.

To that end, Dickerson has worked to fully maximize the high season’s potential. He teamed with other local businesses to form the Oceanfront Merchants Association (oma) to entice tourists to visit and stay in Myrtle Beach rather than fleeing to adjacent communities, such as North Myrtle Beach or Surfside Beach. The OMA’s “Hot Summer Nights” campaign includes a Monday night kids’ carnival, Wednesday fireworks, and an oceanfront concert series.

“This draws people to the downtown area so we can all capitalize on the summer influx,” Dickerson says. “Strike when the iron is hot, right?”

But Dickerson has reprioritized the offseason, placing Peaches on a year-round calendar to keep valued staff involved and capitalize on some offseason opportunities, such as holiday traffic and spring break. The eatery woos locals with hot dog and burger specials and an increased social media presence, reminding them that the town belongs to them, not the tourists, in the offseason.

“We don’t get rich, but it puts a few extra dollars in our pocket,” Dickerson says of the offseason. “We have to play our cards right, but the rewards are worth the risks.”

Dickerson tries to consistently think big picture. Given the cyclical nature of his business, he says, he monitors the budget, staffing, and purchasing on an ongoing basis, not just during winter’s freeze.

“Sound business management is a year-round thing, not just when the sales and traffic are down,” Dickerson says.

Class is in session

In Bloomington, Indiana, the 82,000-resident town that hosts Indiana University (IU) and its 42,000 students, the Bloomington Bagel Company is an institution. During the school year, the Bloomington Bagel Company’s three area locations—all of which are located within a mile of the IU campus—are rocking. The stores enjoy steady streams of customers and daily deliveries to the university’s Greek houses and campus buildings.

Come June and July, however, summertime silence replaces the school year’s surge. CEO Dawn Keough says revenue drops about 30 percent across the Bloomington Bagel system.

Disconcerting as the decline can be, Bloomington Bagel leadership chooses to take the downtime in stride, viewing the summer season as an opportunity to regroup, refocus, and recharge.

“It’s valuable for us to get a break and breath of fresh air, too, and I think the work we actually accomplish in the summer drives our success,” Keough says.

Though Bloomington Bagel cuts its labor needs in half during the summer, the company keeps its in-town employees involved. Management cross-trains staff and filters them to annual business tasks, such as cleaning or organizing.

Some of the company’s employees also enjoy summer internships in Bloomington Bagel’s operations or marketing departments, a relationship that grants the employees important real-world experience and provides Bloomington Bagel leaders fresh, often unfiltered perspective.

“We really want to focus on maximizing the potential of our staff and taking the time to prepare for the influx we will see when school returns,” Keough says.

Bloomington Bagel also uses the summer to re-engage with local residents. The company hosts facility tours for schools and camps and connects with summer shows at the IU Auditorium, frequently dishing out promotional “wooden nickels” that entitle guests to a free plain bagel or $1 off their next visit.

“The idea is to maximize our exposure in the community at a time when the students aren’t around,” Keough says.

At the McAlister’s Deli location just off the University of Alabama’s campus in Tuscaloosa, area director Jerry Jones says, finding opportunities that are less tied to the academic year are critical for a store that, like Bloomington Bagel, sees its revenue drop about 30 percent in the summer months.


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