Lean & Mean: Run Your Restaurant For Explosive Growth
Every restaurant faces the same problem: Waste. This waste can come in many different forms, including labor waste, food waste, and utilities waste. However, it doesn't have to be this way. As a restaurant owner or operator, you can strategically rethink how your restaurant operates. If done well, you can begin cutting down on the waste and increasing your profits.
To address this issue experts in the industry came together for a panel discussion hosted by Consolidated Concepts at the Restaurant Leadership Conference in Phoenix. In the Lean & Mean: Run your Restaurant for Explosive Growth panel, restaurant professionals opened up about restaurant culture, building an infrastructure, and so much more.
The Factors Of High Chain Unit Growth
Jason Morgan discussed the importance of developing an ownership culture. Morgan is the Managing Partner at Hargett Hunter and currently serves as the CEO of ChopShop and Bellagreen. He has spent his career helping companies in various industries to strategically grow, holding executive positions at entertainment companies, a gaming technology organization, a private equity-backed start-up, and prior to joining Hargett Hunter, as the CFO of Zoe's Kitchen. In this role, over the course of his seven-year tenure, he helped the company to expand from 20 stores with a revenue of $18 million to 150 stores with a revenue of $223 million. Under his direction, Zoe's Kitchen had a top IPO in the restaurant sector in 2014. Morgan has an in-depth understanding of how to get buy-in from within the organization, creating an ownership culture that allows franchises to have explosive growth.
During the discussion, Morgan pointed out that owners and operators can create an ownership culture by incentivizing high-performers in the business with equity. Once they have received this equity, this will only further incentivize them to dedicate themselves to the growth and success of the restaurant. It helps to develop a culture that is 100% loyal to the restaurant and its future.
During the panel discussion, Michael Haith concentrated on creating a strong infrastructure. Haith is currently the CEO of Teriyaki Madness. He is also serving as a chairman-mentor for several other brands, including Raintree Franchise Sales Agency, Doc Popcorn, Franchise Sherpas, and Maui Wowi Hawaiian. Over the last 26 years, Haith has been a franchisee, franchisor, and franchise supplier and investor. He has turned franchises around, grown them to significant levels, and sold them for impressive profits. He has developed franchises from the very beginning, developing all of their systems and processes from scratch. His knowledge of the industry is both broad and deep, especially when it comes to developing a strong infrastructure.
The idea behind Haith's point of creating a strong infrastructure was that it provides a solid base for the business to grow out of. When job descriptions are clear, when the vision is widely understood, and when processes and systems are integrated with care and consideration the business will have difficulty not succeeding.
JJ Pledger spoke about employing a 'culture guru' that assists in the opening of each new location. During this process, they concentrate on instilling the right mentality and organizational culture in each employee. For nearly eight years, Pledger has served as the Chief Bean Counter at Twisted Root Burger Co. and its sisters companies, Tacos & Avocados and Truck Yard. Before being elevated to CBC, Pledger served at the company for three years, starting at its inception. During this time, Pledger played a significant role in helping the company grow from a single location to 22 storefronts. More specifically, he has overseen investor relations, treasury, information systems, and financial reporting. Pledger has witnessed first-hand how essential it is to grow a restaurant's units by creating a shared vision.
During the discussion, pledger wanted to get across the point that having a single person in the organization who is dedicated solely to helping new locations prosper is non-negotiable. It will ensure that no one and nothing is forgotten or slips through the cracks. It will help operations run more smoothly. It will keep all employees on the same page. It will build up a culture that the company has purposefully crafted.
Implement A Process
Whether you are expanding from a single-unit franchise or further expanding a multi-unit franchise, if you want to maximize profits you will need to manage costs. The best way to accomplish this is by implementing a process and doing so in the early stages of expansion.
Three great options for an early process include:
- CTUIT:This restaurant management software helps owners and operators accomplish four important tasks. The first is using business intelligence to manage the restaurant. This is done through features such as a manager log, payroll integration, and fraud prevention. The second task is raising profits and sales. This is accomplished through a dashboard of restaurant activity, benchmarking, forecasting, and much more. The third is lowering food and beverage costs, which is enabled through features such as food and recipe costing, accounts payable, and streamlining inventory. Finally, the fourth task accomplished through CTUIT is enhancing labor to optimize service. CTUIT users can do this through the use of labor compliance features, labor scheduling, and payroll validation.
- Compeat:This restaurant management software is an end-to-end solution that provides owners and operators with everything they need in one place. They can oversee the hiring process, current labor metrics and information, scheduling, all aspects associated with payroll and accounting, an overview and the specifics of inventory, the logbook, and deeper insights and data.
- Consolidated Concepts:This firm offers cost reduction solutions. The solutions are not pre-packaged but designed specifically for each individual restaurant. A team of specialists works together to provide a comprehensive plan that will markedly reduce costs. The solutions that they offer include customized supply chain assessment and alterations, produce management that enhances everything from traceability to quality and safety, assistance with negotiating distribution agreements, and procurement optimization.
- Strategize Around The Important Considerations
Growth might be a decision that you make for your restaurant. However, this decision comes with several factors that need to be taken into consideration. You should never dive into a growth strategy that is designed without proper due diligence. The following provides several of the elements that you need to take a look at from all angles in order to create a strategic growth plan that leads you to success:
Prepare The Operations Team
Your operations team is the group of individuals that will power your company through the opening of new units. They are the ones that will enable success. Because of this, you need to ensure that they are prepared to move into a new market. This means providing them with the best tools that will equip them with the data and insight needed. It also means having regular discussions and open communication so that everyone is on the same page and clear on the end goals.
Method For Labor Market Support
The labor personnel that you have in your restaurants, arguably plays one of the biggest roles in your success. Therefore, you need to have both a micro and macro view of what labor looks likes—especially in new markets. This is why you need a platform that provides you with a single location for all employee data, calculates labor costs, provides labor reports, tracks employee movement and experience in the restaurant, offers tip polling and allocation, and allows for multi-store support.
New Market Support Of Your Average Unit Volume
The end goal of adding new units is not just to have more units, it is to make more profits. Therefore, you can't just open up a new unit in a new market without planning for the future. You need to get an accurate estimation of when the store will pay off. More specifically, you need to know when the unit will reach the average unit volume that has been set by the rest of your units. You also need to plan out what needs to be done in order to achieve this goal.
Control Of Supply, Labor, Occupancy, And Construction
Control is sometimes seen as micromanagement. This is not the case. When you are opening a new unit, you must have control and complete oversight. You need to know every detail from your suppliers, about your labor, in regards to the restaurant occupancy, and with respect to any construction that is occuring. You need to know timelines, deadlines, and what is running late or going to be finished early. A unit in a new market is fragile and all of these aspects must be under control in order for success to be realized.
Have Appropriate Sales Projections
As Mathew Focht said in the panel discussion:
You have to discount your sales projections when you enter a new market. It will take time to educate the new market on your product and get your new stores to your current unit levels.
In other words, you can't expect a new unit in a new market to meet your average unit volume overnight. It can take months to see a comparable volume in a new unit. And it's not that the new market does not like your product, it's simply that they don't know about it or whether they should spend money on it. You need to have a strong marketing campaign in order convince a new market to buy-in and, in the mean time, you need to have realistic expectations about how the unit will perform.
As you grow and expand your restaurant, you need to ensure that your profits are keeping up. The best way to do that is to run a lean and mean restaurant with the right tools and strategies.