If you’ve never seen an episode of Kitchen Nightmares, starring iconic chef Gordon Ramsay, you’re missing out. The program’s self described premise is quite straightforward: “Ramsay steps…into some of the country’s most unsanitary and unsuccessful restaurants to help them turn their businesses around or close their doors forever.” It’s hard to avoid thinking about how this business would make a suitable surrogate for the restaurants Ramsay visits…
Although most of the issues Ramsay deals with in the program don’t translate to orchestra business, every now and then a few chestnuts of extraordinary value pop up. In an episode produced and recorded in the UK* entitled Momma Cherri’s Soul Food Shack and More, Ramsay sits down with the owner/head chef Momma Cherri and reviews her financial situation.
He starts the conversation off by pointing out that her prices are prohibitively high based on the menu and compared to local competition. Her reply was that her creditors insisted that she increase revenue by raising prices to solve her financial condition. The following exchange ensued:
Ramsay: That’s always the bank manager’s solution, put your prices up.
Momma Cherri: It was literally down to the bank manager.
Ramsay: Well he’s an ass-hole. It’s killing the business.
As a result, Ramsay helps Momma Cherri redirect her efforts by focusing on the business’ core purpose: first, get people in the door then serve good food to keep them coming back. The outcome was a solution that does exactly that by launching a simple but effective marketing campaign and setting a new price point for reapportioned core menu items. The result is substantially improved revenue performance.
If this doesn’t sound familiar, it should. On one hand, we’re seeing a number of groups being pressured by lenders, donors, etc. to control expenses and increase revenue in order to qualify for more favorable terms and/or funding. But that may not only be a less than ideal solution, it could be downright counter-productive.
Think of the growing debate between prevailing viewpoints on the best way to deal with the current economic downturn. One side is the Kaiser camp, which promotes the merits of exciting programming effectively marketed and on the other side are those suggesting that success has more to do with relevance than finances.
The 6/27/2010 edition of the New York Times published an article by Kate Taylor that does an excellent job at highlighting these increasingly diverse points of view.
In my professional point of view, I think both sides have worthwhile points to explore but ultimately, all of the relevance issues circle back to quality and promotion. There simply isn’t any way to avoid basic business principles of creating demand. The results not only impact earned revenue but serve as the foundation for contributed and unearned income support efforts.
Yesterday’s post examined the pros and cons of engaging an expansive retooling process during a period of limited resources and economic downturn. In short, it’s an undeniably high risk endeavor better suited for periods of economic stability and excess resources. Hunkering down and focusing on core principles of bold, quality productions while marketing aggressively and efficiently will help groups manage their debt. And when times improve, we can then revisit the relevancy debate anew.
* The US and UK programs are independently produced and in order to watch the latter, you need to have access to BBC America or order the DVD from Amazon.com
10 thoughts on “Orchestra Nightmares”
…One side is the Kaiser camp, which promotes the merits of exciting programming effectively marketed and on the other side are those suggesting that success has more to do with relevance than finances.
That’s how Russell Taylor (and the Times) portrayed it, but I don’t understand the distinction. Isn’t a group that’s selling lots of tickets to audiences who want to come back relevant by definition?
That’s my point as well; the relevancy issues all circle back to the other unless you want to take attendance entirely out of the benchmarking system. I’d love to know more about what Russell means beyond what was published in the NYT.
How true! Exciting, moving concerts, decently promoted and marketed, and keep the overhead low…
That’s all the “relevance” you need!
Let me get this straight — the restaurant was struggling to bring in customers, and the bank manager advised the owner to CHARGE MORE for the same food?
I mean, wow. Someone needs to revisit their Econ 101. Pretty sure the demand curve slopes downward. (Or is soul food a luxury good in England?)
That’s how the show made it look but I have to say I’m not all that surprised. A number of lenders have been squeezing nonprofit performing arts groups by pressuring them to adopt less than advisable economic practices. It puts managers in a Catch-22 that unfortunately leads all too often to labor tensions and increased institutional stress.
If nothing else, it was satisfying to see a successful professional like Chef Ramsay demonstrate why so it pays to focus on core principles and push back against beancounting strategic planning.
To be fair, the textbook supply-demand chart is a very simple representation of an extremely complex network of factors. And it assumes “all other things being equal,” which of course they never are. I can see how a small business owner, or even a non-profit administrator, could make a tactical decision based on one part of the equation, and miss the more fundamental error of strategy. But this is where an outside financial professional, whose judgment is unclouded by the assumptions made within the company, is supposed to notice basic things like “If demand is too low, prices should be lowered, not raised.” I’d say that, all other things being equal, this bank manager is teetering on the verge of malpractice.
I think you’re right on target with regard to the dynamic variables involved and as for the malpractice issue, that implies the bank manager has any tangible accountability and in many cases, the likelihood for that seems to be less than more.
I am a survivor of the SSO Titanic and now 6 years later – working on a labor of love. Our organization is now heading into the 2 full season with…1 full time/1 part time and 5 full time volunteers. You CAN produce a high quality product with a sold out house on a ‘half a shoestring’ budget. It’s tenacity, gorilla marketing and harnassing the power of people – your chorus, your volunteers, your media friends…and NEVER compromising the product to cut costs – just like on Kitchen Nightmares. You don’t buy frozen food and pass it off as homemade; people aren’t stupid. They may come once, but never again..and they have many many friends.
Here at the Minnesota Orchestra we’ve seen rising ticket prices along with ‘facility maintenance fees” or “ticket servicing fees”added to each ticket price, yet it’s been a long time since we’ve had a sold out subscription series. The Saint Paul CO has had some success with lowering ticket prices and seeing an increase in attendance-it seems counterintuitive to keep your prices high while demand, for whatever additional reasons, stagnates. If we want to be seen as a relevant form of art we need to make it accessible financially, not by dumbing down our programming.
Musicians love to play to a full house- whenever I’ve broached the issue of our ticket prices being too high I’ve been told by our management that lowering the prices wouldn’t in higher ticket sales; anyone out there have any info or insight on that subject?
That info would be nice to have, I’ve written about that very initiative but the folks from SPCO haven’t decided to share any details about sales figures as of yet. Hopefully, that will change sooner than later.