I love the restaurant business!
I can’t think of another business that is such a dynamic mixture of working with people, creating a product and hands on management. The feedback from your efforts is nearly instantaneous and the pace of activity is non-stop fly by!
My philosophy of the restaurant business is very simple.
First - Take care of your team. Unless you are running a food cart, you will need a team to help you run your restaurant. Take care of them, train them, coach them, pay them, praise them and celebrate them.
Second - Take care of your guests. Every interaction must give your guests a reason to come back. The competition is way too strong and the marketing is way too expensive, so it is a sin to waste a single opportunity to dazzle your guests every minute of their visit.
Third - Take the money to the bank. As the saying goes, if it isn’t fun and it isn’t profitable, what the heck are you doing here? If it is fun but it isn’t profitable, it’s a hobby. If it is profitable, it will support you and it will be much more fun!
This blog is about the third part, take the money in the bank.
Almost every person that gets into the restaurant business is a “people” person and is gregarious enough to take care of their guests and to manage team members. And if they are following a dream to a have a certain concept with favorite menu items, we are not going to be able to change their mind.
Taking the money to the bank is an entirely different manner. The bookkeeping and accounting for a restaurant is tedious at best and overwhelming at the worst. Far too many operators quickly discover that as long as they write a few checks every week, the guests keep coming, so they can have the fun without the tedium of keeping track of the financial aspects of their restaurant.
Unfortunately, this is the prime reason that 90% plus of restaurants fail in the first year. If you don’t know what it costs you to operate and you don’t keep track of the money that you are spending, you will lose everything. And it happens over and over again, year after year. Sadly, the operator doesn’t believe that it is preventable.
We certainly know of restaurants that will have challenges to be successful, either from odd concept choice, lack of guests or poor menu choices, but if a smart operator understands exactly how revenue they need to keep their restaurant alive, they can formulate a plan to make the restaurant profitable. And still have fun!
That is the purpose of the information presented in this blog. We talk about the tools and knowledge that have guided success in the restaurant business, both for us and the thousands of operators that we have worked with over the years. The topics we present and the tools we discuss will work, they are tested and refined, often over years of real life use. They are proven drivers of success, in all different types of concepts.
We are not accountants, nor are we attorneys, so don’t expect dense subject matter or deep theories. We hope that you are already using an accountant to help you comply with regulatory agencies and banking convents. We also hope that you have an attorney for legal matters, from the simple contract review to the complex lawsuits.
If you are smart, your accountant will be producing key financial documents, at least quarterly. If you are the ambitious sort, you may even have setup an accounting software package, to help you manage some of your restaurant’s financial matters. If you have taken these basic steps, congratulations, you are getting a handle on what it takes to be successful.
If not, stick around, because we will be helping you!
What we will present and coach is how to use the every day numbers that come out of restaurant operations to manage, build and monitor the fiscal health of your restaurant. The things that we do, the tools that we use, are relatively simple to use. Our experience shows that the average operator will have less than 10% of their workday to devote to fiscal administration. We have designed our tools to give you calculations very quickly, once they are setup.
If you are an excellent time manager you might be able to get more administrative time over the course of your work week. As soon as you are able, you should plan and set up your work week so that you can devote the time necessary to build the profits of your restaurant. It will rarely be a time without interruption, but with discipline you should be able to get several hours a week. We have lots of hints and tips to help you get the valuable time set aside.
Some of the tools that we discuss require you to invest some time to establish information for your tracking and calculations, but once you have invested the time to get things set up, maintenance is usually pretty simple. The first time that you set up the inventory form, it will take you a while. But once it is set up, it is very quick to enter the numbers and calculate your food cost. It is definitely worth it to invest the time in setup of your inventory control and food cost sheet, because the pay off is to quickly calculate your total food cost of sales for the accounting period.
Other tools are a lot simpler to set up and monitor. You just harvest the numbers from your POS system or your invoices and you can quickly calculate the baseline number that your should be a part of your tracking.
So if you are interested in running a profitable restaurant, you are in the right place. There may not be a lot of AHA! moments but there will be some solid information on things that you can do to make sure that your restaurant is profitable.
Thanks for visiting Restaurant Ownership By The Numbers.
