The Secret of Success

You've got to love "the numbers". If you don't - make an oath to yourself that you will begin to learn all about them! It's the difference between success and failure. Or maybe better stated, the difference between success and huge success. How can you grow to more than one restaurant, if you can't manage by the numbers. It's very hard if not impossible. Here is why:

Evidentally You cannot be in more places than one at once. So you need to have a method of measuring performance and identify issues quickly. From afar. You can begin develop the method while you're still operating just one or two places:

Revenue Increases, revenue decreases, unusual comps, voids, lower than usual ticket averages and other "KPI's" (key performance indicators) give it away.

What are numbers to look for in reports, generated by Point Of Sale and other 'systems’? Today many restaurants work with POS Systems, which can send relevant reports at a set time to an i-phone or android phone automatically. Lately, since the cloud days, they use real-time tools that allow you to see KPI's instantly, not as reports, but in a neat browser app that runs on your phone. If you want to see whether the guest count matches the number of people in the restaurant, you can check that out on your smart phone as well via IP-video feed...

Quality of information is critical for quality decisions. Typically a place with more success has better management. Management with a higher focus on analyzing data, learning from it and then taking action to change things around. If a business is more successful than others of the kind, management has typically found a small number of KPI that work well.

Target, the #2 discount chain in the nation, for example tracks the time the customer spends in the check out lane and the average revenue. Most hotels monitor religiously the average rate, average occupancy and RevPAR (revenue per available room).

Some people are obsessed with just way too many things to monitor. You want to monitor just a few things, the real KEY metrics. They are about what you can ask you staff to focus on - and would you grow that value, be it an expense reduction or a revenue increase - you'd make more money.

The management process: analyze (information), strategize, execute and analyze… the very successful ones understand how to extract relevant information, digest and act upon it. Realize the value of good reports. Do you have good, meaningful reports for your restaurant? Did you spend time to design the Revenue Centers, associate items with Categories and Departments and do you use a Chart of Accounts in keeping with the Uniform System of Accounts for Restaurants.

Meaningful also means: timely. What is the oldest reporting day, when you get them? More than 30 days? Not good! Who can remember 30 days ago?

Another area that is vital to monitor: what does an owner or a GM know about “guests”? Many think they know. "I am on the floor, I see them and greet them." But what sells and what doesn’t sell? When does it sell?

I once met the General Manager of a hotel who could tell plus/minus a few quarts how many quarts of ice cream he would sell by each degree of outside temperature change. He had discovered a co-relation between the sale of items and the outside temperature. Soon he began to search for similar values to help him forecast his staffing and prepping for future days of business. He understood the value of managing by numbers…

I admit, this is maybe an extreme example. It reveals though, why it is useful, to keep a record of weather and temperature on every day of business. Well, what are some more mundane, more basic reports each restaurant owner should study frequently:

Well, of course the daily and weekly sales report. Maybe an idea - instead of using just a daily sales report to compare same days of business, like series of Mondays or similar month in previous years: begin to convert to a 4-week, 13 period reporting cycle. This makes weekly reports completely comparable.

One of my convictions: I believe that numbers are more meaningful, if they are not absolutes but comparatives. The regional manager, who compares 15 stores, identical in size and menu mix, may have more meaningful information, than the single operator. That's why in Europe EOE Groups (* literally translated: exchange of experience) are so successful. People exchange their numbers, coded by a CPA so nobody knows, who's store they are looking at, but they can see payroll of a fellow Mexican restaurant for example; or food cost of another BBQ place.

Last but not least: if you would like to implement "Management by the Numbers" at your restaurant, please call me or shoot me a mail. We have certified consultants on staff, to help hotels and restaurants get the maximum benefit from their reports. This article will begin a series of better information posts on this blog. Please share your experience and opinion with others. Thank You!