Now is probably a very bad time to tell you this, but restaurant profits are seldom realized in the first few years of business. Or ever, for that matter. But you know that. Surely you didn´t go into the restaurant business to get rich. We have all heard the story about how to make a little money in the restaurant business- start out with a lot. The facts of the business prove that it is one of the most difficult endeavors to ever make profitable. But, it can happen. One of the first hurdles to overcome is taking the fact that you are not making money personally. Or, that you are failing. Both of these thoughts are untrue and should be erased from you psyche immediately. The business is complex enough without bringing personal feelings into the equation.
Because the business is such a personal daily encounter, and everyone you see thinks that you are the reason for the restaurants success or failure, good meal or bad, we naturally become so attached to the flow of the business that we tend to bear all the responsibility for the good and more importantly the bad. Don´t do this. It impedes progress and profits.
Let´s really look at what needs to be done to make a profit. All costs must be in line. Food, liquor, and labor costs, along with fluctuating operating costs, utilities, garbage pick-up, unemployment costs and workmen´s compensation costs must never go above their designated percentages.
Employees must never waste one morsel of food, liquor, dishwashing soap or other products that can disappear in the night.
Advertising must be continually effective. An advertising campaign can never fail.
The weather must always be perfect. It can never rain. Never be too hot to eat out or too cold to eat out.
And, if all of these global phenomena are in line, then your customer base can never watch TV otherwise American Idol, the World Series, Lost and the final episode of West Wing should all be your competition.
The awful news – none of the above occur regularly or at the same time. And, it doesn´t make you a bad operator or owner, or manager if someone goes outside the guidelines of expected professionalism. However, all of these things have to do with a profit.
And, one of the greatest deterrents to profit making is a staff that isn´t aware of how difficult running the business is. Appeal to them to stop kicking the oven door when they close it with their foot. Let them know that eventually the five hundred dollars needed to replace it will come out of the "profits." Explain the difficulties and the ramifications to other customers when one customer has a bad experience and tells their friends. Train them in the art of restaurant ownership. Two things will happen- they will either really appreciate your sharing of knowledge as they are listening to the commencement speech from the law school they have chosen, or, they will hate themselves for not listening to you as they are trying to figure out why they are not making a profit at "Jim´s Place."
Running a restaurant is very similar to plugging a dike. As one hole stops leaking, another one springs a leak. The job of a smart owner is to make sure that once a leak springs, it doesn´t reoccur too quickly. If you can stop the leaking, one hole at a time, eventually you will see a profit. And, you can possibly cash those checks in the drawer. However, don´t ever expect the leaks to stop. They are part of the business of building restaurants and dikes.