I was speaking to a group of young entrepreneurs the other day.  We were discussing the difference between national chains and owner operators as it relates to average P&L performances.  We began talking about the various reasons and causes for the big differences between their respective performances.  But, there was one underlying issue that seemed to come up over and over again.  The issue was the difference between casual versus deliberate management.

In the world of small business management, life is very fast and full.  We are inundated  with worries to distract and occupy our time and attention.  It becomes very easy to get into the habit of allowing ourselves to be in a mode of constantly scanning for the “bottom line” so that we can make a decision and move on. Unfortunately we allow it to dominate the way we set up our operation’s systems and routines.  It becomes easy to trivialize the various disciplined management principles because we are “too busy”.  Soon we begin to be cavalierly managing the very business we said we had such a passion for.  Unfortunately this “quick down and dirty”, cavalier rush to the “bottom line” approach causes us to omit such systems and procedures as liquor cost, food cost, training systems, purchasing & receiving systems and controls, just to name a few.

Might I suggest the following, The key to real, effective management and leadership is that we must do everything as if it were on purpose. Or, in other words, the management and leadership decisions and actions must be done with deliberate forethought.  We manage in a world of razor thin margins with very little room for error or misjudgments.  The very nature of our industry is very unforgiving.  So as we move forward in this new year setting goals and targets for ourselves let us remember that that real success is not achieved casually but rather with deliberate and purposeful judgements and actions.

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Several months ago I wrote on the pressure for change in our industry.  Recently I have had the opportunity to be involved in critical strategic planning where change was an imperative.  I have been pondering this the few days and decided that it was more then relevant to revisit this discussion so I hope everyone will bear with me! So here goes…..

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Recently I had the opportunity to talk with a group of young aspiring culinarians on the subject of customer service.  As the conversation usually does it migrated towards the debate over whether the customer is “always right”.  The conversation got quite “spirited”.  Finally I couldn’t take it any longer and I had to intervene.  Allow me to share with you my thoughts…..

The customer may in fact NOT be always right, but the customer IS ALWAYS the customer.  I’m sure there are many who are not quite sure how to react to this assertion, but let me explain.  First it is my concerted opinion that no matter who’s name is at the top of the paycheck or who in fact signs the paycheck the real boss, the one we all work for is the person that walks into our business buys our products and services pays for them and maybe even leaves some extra money behind as a reward for our hard working staff.  We work solely and only for the customer.  They are the purpose for our business’s existence.

Does this mean that the guests’ understanding of Culinary Arts is accurate?  Even remotely?  Absolutely not! Does that matter in the least?  Absolutely not!  You see, it is this simple, you can run out into the dining room with “On Cooking”, or “The New Professional Chef”, or any one of the myriad of books on the Culinary Arts and demonstrate the error of their understanding but in the end this is one of those situations that even when you win, you loose.  So you embarrass the guest and prove your point.  So what?  Now you have a guest that is embarrassed and you may even get them to concede the point.  But, in the end, the guest STILL doesn’t have what they want and therefore by definition is unsatisfied.  Except that now the guest is embarrassed, unhappy and still unsatisfied–assuming of course that they are still seated in the dining room after this kind of event.

There are two things to always remember, 1) Perception.  Like it or not peoples perception is their reality–no matter what!  We manage peoples perceptions at best.  How people will or will not perceive things must always be part of our calculation in everything we do.  Yes I know, we still need to be honest, and do business with integrity but all that said, we still manage people’s perceptions in everything we do in the Hospitality Industry.  That is just a fact of life in the Hospitality Industry.  2) Without the guest, we don’t get paid!!!  No matter how you slice and dice it, this is a universal truth of the restaurant industry.  We have to have the guest.  No matter how difficult, or eccentric, or temperamental or irritating, or needy or yes even no matter how wrong they are without them we don’t get paid.  Our ability to manage their perceptions, personalities, temperaments, eccentricities, attitudes, etc will determine in large part our longevity in this industry provided we can do so profitably.  This is the holy grail of the Hospitality Industry. Yes!  It is hard.  Yes!  it is taxing  Yes! It is trying.  If it were easy everyone would do it.  What makes success in this industry so GREAT is just that.  The hard of it makes it so great.  If it were easy everyone would do it.  And if you look around the industry at the success rates, openings versus closings, it becomes pretty obvious both the “hard” and “great” of it.

So in the end, we end up back where we started.  Is the guest always right?  Probably not but the guest IS always the guest and without the guest we don’t get paid and their is no reason for our existence–like it or not!  Welcome to the Hospitality Industry.

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In today’s difficult and challenging times, slick facilities and trendy foods are simply not enough for long term viability in the restaurant business. There must be a real foundation in operations. Clean restaurants, consistent food & liquor cost, well managed labor costs are not accidents, nor are they achieved because the manager is a nice guy. Such achievements are only realized through consistency of operations.

Consistency in operations including employee development only comes through the development, implementation and consistent usage of effective systems. If you really want consistently great operations you must learn what I call “The rule of sameness”. One of the most frustrating conversations I remember continually having with restaurant managers would go something like this:

Me: “good morning. How are you doing today?”

Manager: “Uh…ok, and you?”

Me: “That sounded awfully tentative?”

Manager: “Well, it’s been a tough week.”

Me: “Really? Well, lets start with food cost, what was your food cost for the week?”

Manager: “Uh…..35%???”

Me: “35%???, why?… You have been making such great progress on food cost, what happened?”

Manager: “Well,….I’m not sure, that is what is so frustrating!”

Me: “Have you been doing the key item inventories everyday?”

Manager: “No, not really.”

Me: “Well have you continued to do the pre-portioning we decided on?”

Manager: “It’s been kind of hit and miss I guess”

Me: “Ok, well you have at least made sure that a manager received and inspected all food                                      deliveries when the hit the back door right?????”

Manager: “Well were just so busy, we try to get most of them but……”

Me: “I’m not sure I understand, we mutually agreed on all of these systems and they were                                      working….so, why did you stop?”

Manager: “Well food cost was so good that I wanted to give the management team a break.”

Me: “Did it ever occur to you that the reason food cost was so good was because of all these systems and that by stopping them you caused your food cost to go up???????”

Manager: “Do you really think so………?”

This exchange may seem made up for effect but the fact is I remember having this conversation on a pretty regular basis with general managers all over the country.

The point of this article is not to actually give a list of systems to solve what ever ails your restaurant or P&L. If you really want to begin to see permanent change in your restaurant operations you first have to understand “The rule of sameness.” The rule of sameness is that once you find a set of systems, operating priorities, etc that bring real results, then you need to be permanently committed to enforcing their consistent use everyday for as long as you operate your restaurant.

Now this is usually where I get the speech about how there is more then one way to skin a cat or some other such cliché declaring that there is not necessarily only one right way to control restaurant/P&L results. I agree. There are a lot of different approaches, but once you find those that work for you, you must be committed to them forever—or as long as you are in the restaurant business which ever comes first. It is my experience that restaurant/P&L results are the results of our behavior. Therefore, once you find the behaviors, which bring the results you are looking for, you must never change those behaviors or you will change the results.

Many times I get involved with restaurants where they actually they have really cool manuals, rules, systems, computers, POS systems, but they don’t use them and then they are frustrated that they have spent all this money acquiring them and they still have an under performing restaurant. I used to joke with managers that I didn’t care if they had to take inventory in their underwear in order to get an accurate food cost, but if that’s what it took, then I expected them to always take inventory in their underwear.

Think of all the systems and tools we either have, wish we had, or paid to have:

• Employee training manuals
• Operations manuals
• Plate Presentation manuals (food & drink)
• Recipe manuals (kitchen & bar)
• Inventory systems
• Ordering systems
• Cleaning/Sidework charts
• Budgeting tools
• Employee development programs—hourly & management
• POS systems

to name a few. However, unless we are truly committed to actually developing daily routines around them then they are useless and we deserve to have our restaurants under performing.

The rule of “sameness” is requisite if we are going to truly be successful. Remember, “The rule of “sameness” is, that to get real results, first one must find a way of achieving the stated results. Once that has been accomplished, then, one must create a system that replicates what was done in the first place to get those results. Once a system is then developed following that system over and over again yields the same results over and over again.

If your approach to managing your operations is fluid and moving you will end up with inconsistent, “hit or miss”, or fluid and moving results.

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Over the course of the last several weeks, I’ve had the opportunity to speak to a variety of groups; from culinary students, to industry professionals, to culinary and restaurant management educators.  As we have talked about the industry, the economy, what the future might hold there are a couple of recurring themes that end up coming up and being talked about.  However, there is one lesson we must learn and as industry leaders we must be active in trying to prevent it from happening again.  The issue I refer to is that of the infinite Me Too tendency in restaurant concept development and positioning.

As we sit hear talking today the current estimation by industry analysts is that the sit-down full service part of our industry is so over built that at least 8% of all existing sit-down full service restaurants must close in order to bring the laws of supply and demand back into equilibrium.  That equals 12,000 sit-down restaurants.  I know that many have heard me quote this analysis from Goldman Sachs (Steve Kron) before but I think that it is so dramatic it not only bears repeating but it behooves us to look at how we got to this point and how we avoid getting hear again in the future once we go through the pain of the market purging itself from the excessively built restaurants.

I know that what I’m about to say is going to make some feel uncomfortable.  Believe me I understand.  I spent a good bit of my career in both the national chain world and the national chain franchise world.  So really I do understand.  But, here goes… we live in a world where for some unknown reason it seems as though every body with money wants to be in the restaurant business.  And, they have never worked a day in their lives in anything that remotely resembles foodservice.  What do they do?  they look around at what is open and say, “I can do that!” “this isn’t so hard!” “look at the people, they must be making money hand over fist!”  They then proceed to replicate what ever is already being done.  The old entrepreneurial adage about building a better mouse trap implies that you have found a better, more effective, way to catch mice!  Put in other words we have a point of differentiation.  We have a new and unique way of doing things.

Now here is where I make people feel uncomfortable again, saying that your better than everyone else doing the exact same thing is not by definition a true point of differentiation.  Everyone says that.  If you take that approach you end up with a whole bunch of mid-level casual dine restaurants serving roughly the same menu with employees in the same uniforms all saying that they’re the best. That gets us to the glut of sit-down restaurants that has surpassed the laws of supply and demand so much that 8% (12,000 units) of the segment needs to close up just to get to even.  Oh by the way did I mention the additional pressure of no job growth?  The Federal Reserve’s Jobs Report estimated that we are headed for 5 years of NO net jobs increase.  The economy is not going to magically grow our way out of this.  These pressures are real.

The good news is that existing operations have a unique opportunity to reposition and rebrand themselves to create and embrace significant points of differentiation.  For example, the idea of nutritional values disclosure is NOT going away, one could not only disclose but could also really take that into account in their approach to food, menu items as well as the ingredients used.  We have a very real significant number of consumers who have very real diet restrictions like soy and gluten–you don’t have to go crazy with entire vegan organic menus to address this very real and growing consumer group.  There is always the opportunity we have in just being far more creative with our menus and service styles then just doing what the other 20 guys are doing.  How about really taking the whole idea of web 2.0/social networking/facebook/twitter/myspace, etc by storm to truly redefine the whole idea of customer relationship marketing/data base marketing and create very real personal relationships with our customers. I mean really use the fact that we are mostly small businesses, independent operators to an enormous advantage over the giant national chains that could only dream of every restaurant manager doing something like this.

The sky is not falling just VERY cloudy.  Einstein once said that the true measure of insanity is doing the same thing over and over again expecting different results.  Let us all be industry leaders and really use our creativity to lead and guide our way through these very difficult economic/business times!  We don’t have to be Me Too’s (sheep) we are agressive and creative that is why we are able to do what we do!

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A couple of weeks ago I had the opportunity to teach at the Summer Institute of the National Restaurant Association’s Education Foundation.  During a Q&A period a “spirited” discussion began about issues like the influence of the modern cell phone with still and video camera included and how embarrassing situations can occur and end up on youtube, and Twitter and Facebook and how they have been known to destroy restaurant operations due to unexpected realtime publicity of specials getting to untold amounts of people who then storm the restaurant and/or bar.  Then there was the discussion of the so call new social media and its impact on potential restaurant reputations due to postings, blogs, discussion threads all trashing a restaurant dining experience.

Then, the other day I was driving along listening to a consumer advocacy talk radio show (ok, yeah I was VERY bored), and was taken back when he sited a new report card on the restaurant industry listing healthiest and least healthy restaurant chains.  The list of worst included Applebee’s, IHop, Outback, Macaroni Grill, and Chili’s but the real shocker was the Healthiest list was topped off by Chick Filet, Subway, McDonalds, Taco Bell, and Wendy’s to name a few.  I don’t know about you but I was having a tough time reconciling all of this in my own mind so I went back to the office and did a search for the article.  Then I read the scoring criterion which included the restaurants offering healthy options on the menu, full disclosure of the nutritional values, reduction if not complete elimination of Transfats, excessive use of salt, fats, and grease.

I suppose by now your wondering what all this has to do with each-other.  Well consider this, the public, the consumer, our BOSS if you will decides to become sold and convinced of certain ideas, attitudes or what we might write off as trends but they are their priorities.  The last real big one was the smoking ban.  They are issues that are just not going to go away!  whether we like it or not does not really matter.  But one thing is for sure we will not be able to hide from them for ever.  The core of what we do is managing perceptions–remembering that people’s perceptions are their realities.  No matter how much we may fight these things its like throwing ourselves against a brick wall.  Eventually the brick wall is going to win.  How people perceive us and our willingness to take their priorities seriously ultimately drives the consumer attitude towards us or in other word—our reputation.

It doesn’t really matter if the priority is information like the daily specials, or nutritional values, or a health inspection score or if it is all about healthier options on the menu or healthier cooking methods.  To the extent we help the consumer fill their perceived needs we will win the fight over the consumer dollar.  And be advised todays younger consumers are relentless if not ruthless in persuing what they want through realtime, far reaching if not even endless communication through what we now refer to as the “social media”.  With the touch of a few keystrokes hundreds if not thousands of people can and will know exactly what we are doing right now–good or bad.

A long time a go I worked for Mike Jenkins who used to say “if your going to get run out of town, jump out in front and make a parade out of it”.  So the real question is, do we continue to ignore these coming issues that are relentlessly marching toward us or are we going to run up put our arms around them embrace them and use them to our advantage???  They are not going away!!!

Sun Tzu said in “The Art of War”, that battles are won or lost by the preparation of the battlefield before the fight ever begins.  Planning, preparation, forethought.  The real question is, are we running from or running to the future?

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Several years back I read a book by Stephen R. Covey entitled The 8th Habit”.  In that book he talks a lot about finding your “voice”.  In the process of that discussion he laid out 4 imperatives that I have found both profound and yet obvious.  I had all but forgotten about them until this morning as I was reviewing notes and journal entries while working on an outline for an e-book.  As I read them I was once again touched and and yet sorry that I had allowed them to become just a part of shuffled papers.  I thought I would share them with you.  I hope that you all find them equally moving and motivating.  

So Here goes:

For the Body–Assume you’ve had a heart attack; now live accordingly

For the Mind–Assume the “half-life” of your profession is 2 years; now prepare accordingly

For the Heart–Assume everything you say about another, they can hear; now speak accordingly

For the Spirit–Assume you have a one-on-one visit with your Creator every quarter; now live accordingly 

Like I said, I hope you all find use and motivation in Steven Covey’s words!

Good Luck in all we endeavor to do!

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The Jobs report came out today informing us that the nation’s unemployment rate went up to 8.5%–the highest since 1983.  We have an entire generation in the workforce that has never seen an unemployment rate higher then 5% (what economists call full employment).  Steven Kron at Goldman Sachs estimates that casual dining is so overbuilt that in the current economic conditions 12,000 sit-down restaurant units need to close to correct the glut and bring the law of supply & demand back in to equilibrium.  And, the Chicago restaurant consulting group Technomic estimates that in 2009 the QSR segment will see a sales drop of 2.6% and full service sit-down restaurants will see a sales drop of 6%.  If true, it will be the worst sales year for our industry since the firm started tracking performance in 1972.

So what now?  How do we navigate through all of this mess.  May I suggest we consider this to actually be HUGE opportunity.  We need to ensure that every guest walks out happier then when they walk in due to the excellent food and service they received while dining with us.  Now is actually a GREAT time to really upgrade  our food and drink quality as well as our attention to service.  There is a glut of unemployed talent out there.  For the first time in years we actually have a stack of applications to review.  If we can hire someone who is better then our worst employee and we then let that employee go we automatically have a better staff.  When was the last time we actually read through and reviewed all aspects of our service cycle. Now seems like an excellent time for us re-read, review, retrain and follow through on ALL the details of the service cycle.  Remember there are really only 3 reasons an employee fails to do their job—a) they don’t know how (this is a training issue which can be corrected easily), b) they can’t (we made a bad hire and/or promotion nows the time to correct that) c) they don’t want to (time for an upgrade, this is an easy call).  Remember there is a glut of unemployed talent (8.5% unemployment and rising) and we have a unique opportunity to really improve our staff and by extension our operations weather its in the execution in the kitchen or the delivery of the service cycle out front.

Remember we do not want to be on of the 12,000 needed restaurant closures that Steven Kron wrote about to bring equilibrium to the supply and demand for restaurants and restaurant seats.  We want to be the ones that survived this very darwinian economic environment.

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