A colleague, (someone who has thrown their hat into the restaurant ring), recently wrote that he had purchased an existing restaurant with a gross profit of about $800.00 a day. Assuming the restaurant had been poorly managed before, they have no records to prove it, and he wanted a few tips to implement over the following time frames: 1 – 3 months, 3 – 6 months, 6 – 9 months, and 9 – 12 months. The new owner has little restaurant management experience.
The first rule to follow, albeit late: Don’t overpay for a restaurant without any records. Even the worst case scenario allows for an owner to keep track of “covers” from one day to the next. It’s part of a standard requirement in the business. And although these records would not equal financials, at least a potential buyer would establish a feel for traffic which can be computed to dollars if a menu is handy.
In this case, either the owner was working out of his pocket or the place was struggling so badly records would only prove to be a further depressant.
When I bought my first real restaurant – any eatery with more than 30 seats-the owner didn’t have any records, bills, or bank statements. I basically bought the restaurant for the price of a few liens that were being placed on the space within the following week and paid a minimal amount for the equipment, which aside from the hood system, had seen better times.
Rapidly I learned that there is no slow process to learning hospitality. It is a game of fast forward and once you are on the field there are no time-outs. The game never stops. every owner needs to quickly learn the art of percentages. Picture a pie and begin to cut up the pieces. If there is nothing but crumbs and a possible piece of stale crust left when the day is completed, get back to the percentage board and rework the pieces of the pie.
The business works strictly on these percentages. The shining star of the industry is that these percentages are readily available- as industry standards. A little research online and you will find all the information you need as to what the percentages the perfect restaurant operates on.
Use these as a benchmark and adhere to them as closely as possible.
Until a new owner has the opportunity to learn the feel and flow of the business and become instinctive as to how busy or slow the restaurant will be, the numbers and inventory need to be run at least three times each week. This will paint a quick picture as to food cost.
The other cost factor that will turn a great evening into a rotten day is payroll. More restaurants fail due to high food and payroll costs than any other reasons. It’s easy to keep a full dining room staff on the clock waiting for the next rush, yet often that rush doesn’t materialize.Aany possibility of profits dwindled because Sara, Muffy, Janie, and Bri were all kept on the clock because Tom, the manager, felt badly about sending them home early.
Unfortunately, there is no perfect schedule for running a restaurant, quarterly. An owner must hit the ground running, pay constant attention to those working for him and never take an eye of the ball.
A new owner needs to pay close attention to payroll, food costs, perishables, liquor costs, stealing, menu acceptance, clean bathrooms, dirty windows, utility bills, linen costs, and at the same time learn the importance of product rotation. Owner’s need learn how to cook, even if it to only cover your butt in a moment of confrontation with the chef. They need to learn how to wash dishes, clean bathrooms, unplug toilets, drains and espresso machines. Knowledge of what makes a hood work is also helpful. Many a Friday night an owner will be on the roof fixing the belt, greasing the fan or jury rigging the motor so smoke doesn’t fill the kitchen. Learning how to nap while standing is a benefit. Figuring out how to pay the vegetable vendor with the chicken man’s money, the liquor company with the fish man’s cash and the landlord with payroll while not having anything hit the fan is also a professional requirement. Education on the enjoyment of stress and the relief one feels after a busy weekend is also helpful. Remember that the cash in the till belongs to somebody else.
And finally, the definition success in the restaurant business isn’t based on covers, reviews, popularity, lines out the door or the fantasy of “rolling out” the concept. It’s based on whether the owner can cash his paycheck after all the bills are paid.