The Dos and Don’ts of Restaurant Managing

How is Your Restaurant Managed?

So what makes a good business a great business? It’s having a sound concept managed well. Few restaurants have both pieces of the puzzle but the ones who do are highly successful.

I have worked in three types of managed restaurants throughout my career:

  1. High Quality Management
  2. Satisfactory Management
  3. Poor management

Scenario#1: High Quality Management

The first type of restaurant I ever worked at was a very well managed fine dining restaurant. This 65-seat fine dining restaurant achieved one of the highest sales volumes per seat in the industry including a 6% staff turnover rate compared to the average industry of over 250%. How did the owner do it? He was committed in placing a smile on every customer and staff member everyday. The people loved him including the food, service and the atmosphere and that’s why people continued to return. He interacted with his customers at every table ensuring their expectation was met, he treated his suppliers with sincerity and most of all he respected and cared for his staff.

Today, he no longer is a restaurant owner and has pursued his second longtime dream of coaching CEO’s and other executives in achieving their goals to becoming great employers. Up to this day I look back at the opportunity given to me. I was only 18 at the time while the rest of the staff was 28-45. Age didn’t matter. From being a customer at the restaurant, I became a waiter. I was crossed trained in every position of his restaurant which provided valuable experience up to now. I was fortunate to work and learn from one of the very best who I consider to be one of my close friends and mentors.

Scenario #2: Satisfactory Management

The second scenario type of restaurant was a highly successful concept but with problems in upper level management. Within the company’s chain of command too many positions with no hands on experience created havoc for restaurant managers. What may have seem to be a quick fix solution of terminating the weak, deemed more difficult as the chain was controlled by an inexperienced investment firm. The pressure to achieve higher profits was a constant agony for managers. Similar to any other restaurant owner, they wanted higher revenues and lower costs, but at what cost? Labor and food costs were significantly reduced to the point where both quality of food and service were reduced. Supplier relationships were destroyed and ended. New suppliers were signed based on price versus quality. Weekly food costs were achieved, but then targets were reset for the following week. If we achieved a 29% food cost, our goal was 28.5% the following week and so on. How could any restaurant continue to operate within those parameters? In the eyes of our corporate controllers and investors, this was an easy call. We did as we were told, to cut back on inventory and if it meant closing parts of the restaurant early, that was okay. The only aspect of the business the owners could understand was when profits were up or down.

Today, the chain somehow continues to do well, but how long will this type of management practice continue is questionable. For any restaurant, we want the very best of both worlds; high revenues and low costs. These goals are attainable, but it requires great restaurant management skills and owners who will provide the necessary support. Sadly, this corporate restaurant didn’t understand that for any business you need to spend money to make money.

Scenario #3: Great concept, Poor Management

The third type of scenario I have worked at was actually a great concept but with such poor upper management that it failed. This 120-seat Japanese restaurant was a unique concept offering a twist to traditional Japanese. The menu was large enough allowing anyone who was hesitant in trying sushi a chance to explore. We had rave reviews and a number request to franchise within in the United States and overseas. Again, the owners, a group of inexperienced investors was money driven and did not have any of the “know how” skills of the restaurant business. There were over 20 investors involved with each one having a different view. They all agreed on only one thing – excellent food! It was surprising how we could remain open for over one year. During the week, it was so quiet, except the usual Fridays and Saturdays. If only we made half of what we did on a Saturday throughout the week, then maybe the restaurant would still be open today.

The investors relied heavily on the managers to run the business, but when change or improvements had to be done, they were denied. What the owners could not grasp was the concept of a new startup. They expected profits within the first few months and with that mind set, anger was building among the investors. Pay checks began to bounce, rent was behind, lawsuits arose and finally bankruptcy. The owners were blind sighted to knowing that their actions and decisions caused the restaurant chain to fail. Entire meal comps were given left, right and centre to each investor, their friends and families who came to dine. Worst off, not a single penny was left for the servers who had to serve them. How this restaurant was managed on a corporate level is everything that a restaurant should not do or repeat. The concept was great but it was poorly executed. Sometimes I wonder where the company would be today if the owners were real restaurant owners.

Learn from Experience

Regardless of success or failure, take each working opportunity as a learning experience. Use what is presented to you as what you can do and what you will avoid for your own future restaurant. The greatest mistake you can do is having regrets. Remember, the best gain in knowledge is to learn from the best and the worst.

Stay tuned for my next posting about Common Restaurant Start up Mistakes.

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