Mass Appeal

What's Wrong

The area both consultants explored was profitability. "[Deahl's] $50,000 profit represents about 4.7 percent profitability," says Kharasch. "It's possible with the current numbers and operations to double [that figure]."

Unfortunately, the company faces three cash-flow constraints. First, rent eats up 16 to 17 percent of profits. That's a big cut of the take, but nothing can be done about the high cost of commercial space except move, and that would cost customer loyalty. Luckily, the other problems have workable solutions.

The second obstacle is HeartWise's operating hours: weekdays 6 a.m. to 5 p.m. At Guinn's suggestion that she try to capture dinner takeout business, Deahl says she tried staying open an hour later, but it wasn't cost-effective. Now she and her team are exploring the possibility of prepackaged meals.

Third, the restaurant is at capacity in terms of the number of customers it can efficiently serve. But that doesn't mean it's at capacity in terms of how many sales it can make. Kharasch felt cashiers weren't upselling enough and confusing customer traffic patterns might be costing Deahl potential return customers. "You had a great chocolate cupcake but nobody offered it, and we were out of line by the time I saw it," he comments, "but if you could increase each order 25 cents a day, it would add $9,000 profit annually."

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This article was originally published in the July 2001 print edition of Entrepreneur with the headline: Mass Appeal.

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