Episode Transcript
[00:00:00] Speaker A: I cannot believe I get to say this sentence out loud, but this is episode 500 of the Restaurant Strategy Podcast. If you don't know me, my name is Chip Close. I am your host. I founded this show about seven years ago with one simple goal in mind. The mission was to help independent restaurant owners build more profitable restaurants. And it's apropos because today's episode is all about the six constraints that I think hold people back. So if you as a restaurant owner are not making what you want to make, if your business is not where you want it to be, if your life is not yet what you want it to be, then I believe you are suffering from one of these six constraints. We're going to tackle all six of them in order, very methodically, with fixes, with cures, with actions that you can put into place to turn things around. All of that on this, the 500th episode of Restaurant Strategy.
There's an old saying that goes something like this. You'll only find three kinds of people in the world. Those who see, those who will never see, and those who can see when shown. This is Restaurant Strategy, a podcast with answers for anyone who's looking.
Hey, everyone, thanks for tuning in. Again, my name is Chip Close. I am your host. You are listening to episode 500 of the Restaurant Strategy Podcast. We do this show, we do now, two episodes every single week. Operations on Monday, marketing on Thursday. Today is a little bit different. It's more of a mindset conversation, but it goes hand in hand with everything, I believe, everything that I want this community to really be talking about. It's about the things that are holding you back. It's about where we want to go so that we can figure out how to get past the things that are holding you back. If you don't know me, I wrote a book. It's called the Restaurant Marketing Mindset. I give keynotes and workshops and talks all over the world. I run a group coaching program called the P3 mastermind. If any of that's interesting, you can find those links in the show notes. Most notably, the P3 mastermind, that's the group. That's the way that I work with the most amount of people every single week. It's an incredible community and the program works specifically focused on profitability. I'll talk more about that in a little bit, but that link is in the show notes. You can also go to restaurantstrategypodcast.com schedule and grab grab time on the calendar if you want to learn more about the program. That's a chance for us to hop on a call together, ask each other questions, see if it's a good fit. On today's episode, very, very important. We're going to talk about the six constraints that I think are holding people back. Don't go anywhere. After a word from our sponsors, we're going to get into it.
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[00:03:03] Speaker B: Yeah, as the father of two children, I can't leave the house for less than $30 an hour. My wife has celiac. So when we're going to make a dining decision, I live and die by that menu. I'm in there researching what's available. What can my wife eat? What can we share? What do I get to eat off of her pleat?
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Okay, so again, I said this at the top. Restaurant owners, if you are not making what you want to make from your business, if your business is not where you thought it would be, if your life is not where you want it to be, then you are simply being held back by one of these six constraints. There are things, and I think they're, they're blocks in our mind that hold us back from having a very successful business that supports and provides for our lives and supports our families and all of that.
Now I want to go through these six constraints because they're the things I see over and over and over again. Without any further ado. Number one, you struggle to properly manage your expenses. So expense management is one of the most important things because we have to be able to control the controllables. One of the first things we do in the P3 mastermind is show you a way to set proper budgets and set accountability for managing cost of goods sold and labor. They represent the two biggest line items on our monthly P and L. They are the things that can cut massive profitability, that can just rob us of points every single month.
So how do you keep. How do you keep track of your spending? How do you cap your spending so that your cost of goods don't run away from you? And how do you cap your scheduling so that labor doesn't run away from you? The reality is that we bring product in, we do something to that product, we turn around and resell it. That's what a restaurant does. And we bring people in to help us accomplish those tasks.
So those two things represent the two biggest chunks of our budget, right? So it's roughly 55 to 60% of our of revenue every single month. It represents a really meaningful number. And if you don't have a plan to manage that, you're absolutely screwed. You're flying by the seat of your pants with a wing and a prayer just trying to hope.
So constraint number one is that you struggle to properly manage those key expenses, specifically prime costs. Now, if you've never heard that cogs plus labor equals prime cost, the first constraint is that I see this all the time. Restaurateurs don't have a system for managing this. For what it's worth. Again, it's the very first thing we do in the P3 mastermind. You don't have to join me. You don't have to do what I show you to do. But you do need to do something. You need a way to hold people accountable to provide oversight for the spending when it comes to your ordering and your scheduling. That's the first constraint, and it's a big one.
Number two, the second constraint that I see people have all the time is that they are forever chasing higher and higher revenues. If you've been following this show for any meaningful amount of time, you know that the thing I always seem to say is something I believe wholeheartedly is revenue does not necessarily cure all sins. It's really easy to say, well, more revenue, more revenue, more revenue. Because then rent comes down as a percentage of revenue. Then our labor comes down as A percentage of revenue, then our linen costs, our cleaning costs, all of that. And I think it's B.S. i think what happens is that sometimes by chasing higher and higher and higher revenues, it keeps us from actually putting the controls, the safeguards in place for managing our core expenses.
Again, prime cost, cogs and labor.
So the first constraint is that if you don't have a way to properly manage it, you're screwed. And I think a lot of people don't have that in place. I think the second constraint is that you are consistently chasing higher and higher revenues, which means when market forces, when. When a down economy forces people to hang on to their money, they spend less, they go out less. And so then what do you do? How do you manage when revenues are down 10 or 15% if you didn't have a plan for it? You got totally screwed in 24. And I can just about guarantee you're getting screwed again in 25, because revenues were down in 24. It's an election year. Revenues are always down. And then revenues have come down again this year compared to last year and almost across the board.
And again, I look at hundreds of P Ls every single month. So it's not one or two restaurants that I'm close to, it's hundreds of restaurants that I see.
The thing that I see with a lot of P3 members is they come to me and say, you know, revenue is down. I heard this a lot in like February and March as people were closing their books for 2024. So earlier this year they said, oh, I was closing my books on 24. We were down about 12%. But it was our most profitable year ever.
Revenues are down, but it was our most profitable year ever because they had a system to target profit from the very beginning. Every time they went into a period, they knew what they were trying to make that period.
So if the only way that you can make money is by making more and more revenue to make your expenses make sense, then I think that's problem. I think that's the second constraint that a lot of restauranteurs are stuck with. The third constraint is you have no time left. You spend all your time working in the business and none left to work on the business. It's a cliche. We hear it all the time. It's a cliche for a reason, because it continues to be true.
If you don't manage your time, then there's going to be no time left because everybody else will manage your time. I always say that we need to ask more of our Businesses. So our business is really good at telling us what it needs from us. Are we just as good, or can we be just as good at telling our business what we need from it? And by that, I mean the business is going to say, oh, somebody called in sick. I really need you to come in and work the line. Oh, the. The pipe burst. I really need you to come in, fix it, and call the plumber. Oh, this happened. Oh, that happened. Oh, that. It's telling you all the things that it needs you to do for it. The business is saying, this is what I need you to do for me.
And are you just as good at telling the business what you need from it?
Are you as good as managing your time as your business is at managing your time? The thing is, your business doesn't care where you spend your time, but your family, your friends, your kids.
I assume you yourself care very much where you spend your time.
Even if you tell me, hey, all I want to do, All I've ever wanted is to own a restaurant, and I love this place, and this is the only place I want to be, then that's fine.
But I want to help you build a restaurant that doesn't need you so that you get to redefine your role within the restaurant.
Because maybe the restaurant doesn't need you on the line. Maybe the restaurant doesn't need you at the past. Maybe the restaurant doesn't need you at the front door. Maybe you get to take a shower, put on a jacket, and come in and walk through the dining room. Just shake hands, kiss babies.
Maybe you get to actually enjoy your restaurant better if you get to define the way you relate to your restaurant.
So if you're making no money and working all the time, that's a problem. That's a constraint not just on your business. It is a constraint on your business, but also on your life.
I'll pause here and say, our lives are mercifully short.
We're on this planet a couple. A couple dozen years.
That's it.
If you're not spending it the way that you want to spend it, I think you're missing the entire point of life.
I feel really strongly about that. I use that to sort of guide my life. And I do, I impose that, or I influence the people that I work with. Certainly the members of the P3 mastermind, the other clients I get to work with.
Those are the first three constraints. Number one, you struggle to properly manage your core expenses, cogs and labor. Number two, you're forever chasing higher and higher revenues with the belief that higher revenues will fix all the other problems below on the P and L. You're wrong. Number three, you have no time left. No time for you, your family, your friends or anything else meaningful. And your business is suffering because you don't get to do the meaningful tasks. Those are getting pushed off the back burner because you're too busy putting out fires. That brings us to number four. Number four, you don't have the right team around you, right? You say this all the time. My team sucks. To which I would respond, why would you hire a team if they suck? Why wouldn't you train them to be better? And why, why, oh why are you keeping them around if they continue to suck?
It's not a reflection on your team, it's a reflection on you and the poor leadership.
So if you don't have the right team around you, you get to fix that. You're the one who hired them, you're the one who trained them, you're the one who continues to pay them a paycheck every week. You are the problem. Which is good news because you also get to be the solution.
I mean this as a shot of tough love.
When your team sucks, it is a reflection on leadership and it goes all the way up. Buck has to stop somewhere. It stops with you.
So it's fine. If you don't have the right team around you, then cool, I would agree with you. Then take the steps needed to slowly replace that team and surround yourself with a very passionate, capable, trustworthy team.
Number five, the fifth constraint, right? You lack the knowledge required to go to the next level. Man, I see this all the time. It's so much. And I didn't see this. I gotta say, when I, when I started the P3 mastermind, I didn't see this.
So I was talking to my coach. My coach put me in touch with somebody who was gonna help me launch a group coaching program. And I said, I don't see it, I don't think it's gonna work.
Explain it to me. And this person said, well, you get all these people in the same room together and they sort of help each other get through their problems. I said, that sounds horrible. I don't think restaurant owners are going to get together two hours every week and bitch to each other about their problems. And man, I could not have been more wrong. Number one, restaurant owners do value community, being able to connect with other like minded individuals, people who are going through the same stuff. And number two, I was wrong. Because it is not a bunch of restaurant Owners getting together and bitching about their problems. It's about them bringing problems and asking for solutions.
If you don't know something, you need to go somewhere where you can learn.
You have to continually level up to stay curious, ask people to explain the things that you don't know. And if you don't have those people around you, if you don't have that room to go into, you need to find those people and you need to find that room so unabashedly, I will say that's what the P3 mastermind is.
It's a room with no ego, where people have the humility to show up and ask questions and ask for help.
Now, you don't have to work with me. You can work with any number of people. You can certainly put that group together in your own town.
But you need a group of peers who can also be mentors, who can teach you the things that you don't know.
If one of the constraints you have is that you lack the knowledge required to go to the next level, you need to seek that knowledge out. You need to put yourself into rooms where people have that knowledge. Meaning you got a business, you got two locations, three locations, you want to go to five. You want to figure out how to franchise, you got to figure out how to do that expansion. If you want to sell your restaurant, you don't know how to go about doing it. You need to bring an expert in and pick their brain.
If you want to just open your first restaurant, man, I would go find somebody who's opened a couple of restaurants. I'd ask a couple different people who opened a couple different restaurants and ask them their advice, ask them to guide you, to mentor you.
Whatever it is you need to know to go to the next level, you need to go seek that out. I constantly, constantly seek out coaches and consultants. I have my mastermind group. I go on retreats all the time because I don't know. I certainly don't know everything I'm figuring out as I go along.
And my role within the restaurant industry is different now than my role as a restaurant coach, than an online entrepreneur by digital marketer. There's all this stuff that I need to learn that I don't know.
So I go seek that out constantly. And I would strongly urge you to do the same. You don't know it all. You learned it from some guy, you learned it from some guy, learned it from some guy, and you don't even know if that's the best advice out there, the best way to do it.
But when you put yourself in a room and you can learn from a lot of different people, man your world.
So that's the fifth constraint I see that people are simply held back by a lack of knowledge. The sixth one. And man, this is the one that really matters. I could have made this number one. I made it number six. So we could really end with an exclamation point.
The constraint I see people having all the time is that they lack the proper vision for both their business and their life.
And if that hits you like a gut punch now, I want you to pull over, I want you to close your eyes and I want to think through this. I want you to put your knife down. If you're doing prep work in the kitchen, if you're doing the bank, you're doing payroll, you're listening to this while you're doing something else. I want you to set it aside, go outside, go for a walk, pull the car over, whatever. Because I need you to understand something really, really clear. I started this a second ago and I'm going to complete it.
Life is short.
We are given what, 60, 70, 80 years if we're lucky on this planet.
And you guys have already burned through half of that. I have probably burned through more than half of the time that I'm being given on this planet.
If that doesn't land, let it land.
I think one of the biggest things that holds people back is they lack vision for their business and they lack vision for their life.
I'm a list maker. It's something I learned from a mentor of mine a very long time ago.
And it bled into my self improvement.
The things I wanted to say, the goals I wanted to set, things I wanted to accomplish in my life.
Commit to paper, what you want, and then build a business, build a life that looks like that.
If you put down in your life, I want this, I want this, I want this, I want this. And you put a dollar amount, what it would cost, what it would take to get there. And then you go back to your business and you say, so now I know what my life to look like. That's going to help you shape a vision for your business. Because your business has to make your life come true.
What do you want your life to look at? What do you want it to be? What do you want to happen?
You go over to your business and you say, this is what I want from my life. It's your job to help me get that.
If you're a restaurateur, then you are an entrepreneur. You are A builder, you're a maker, you're a creator. You put something out into the world that did not exist before, and that is incredible. The world needs builders, needs makers, needs creators. I am a builder, you are a builder. But if you are building something that doesn't get you to where you want to go, then why bother building it?
Why build a bridge if it's going over the wrong river?
You got to figure out which river you want to cross and then build a bridge that actually gets you across the river you want to cross.
It's number six, but I think it's the most important.
I think the biggest constraint that holds people back is that they lock. They lack proper vision for their life, and therefore they lack vision for their business.
You have to understand what you want your life to be like, what you want it to look like, what you want it to feel like. And then you need to tell your business what you need from it.
That creates the vision for how your business needs to operate and how you need to operate within your business in order to provide you with the life that you want.
Because 60, 70, 80 years on this planet, maybe, if we're lucky, and all you guys know how old you are and you can do the math only so many times around.
I'm not saying that to upset you, to make you whatever. I'm just saying it's the way it is.
Our world is amazing. There's so many incredible things to experience in it.
I'm going to guess and say your family's incredible. You got really good friends, you got really things you can do, really cool things you can do. Look at, see, go do it.
The only way you can do it is if you understand that that's what you want, write it down, commit it to paper, and then go build a business that gets you the life you want.
If you're going to build something, why not build it exactly the way you want it?
I think this is an important conversation to have at any stage. I think it was perfect for the 500th episode.
Again, the Restaurant Strategy podcast is now 500 episodes old. I built it with one simple mission in mind. To help independent restaurant owners get more out of their businesses and get more out of their lives to make more money and free up the time so that they can go live life.
Every single week, I put out two episodes that help you do that.
I run a group coaching program called the P3 Mastermind, where I get to work hand in hand with people to help them do that.
I give talks on that. I write books on that.
You find me on social media everywhere.
Everything I do is focused on that one thing. Because what you do is too hard and what you do is too important to not make money doing it.
There are a lot of things that make our business difficult, but I like difficult. I like challenges.
These are the six constraints that are keeping you from having the business that you want and the life you want.
Again, I want to remind you that I work hand in hand very closely with the members of the P3 mastermind. We grew it from 10 members in one group now to nearly 150 members spread across four different groups. We've put over 350 people through the group. It's the best way I know to bring the community together to leverage my limited time to impact the largest number of people.
It is the thing that I have found that works best and makes the biggest changes in people's lives.
This is a full throated recommendation for the P3 mastermind.
It is by far the coolest thing I've ever gotten to do, the most gratifying work I've ever done.
And I'm forever humbled by the people who agree to work with me there and continue to be in it years and years and years after they first joined.
If you want to have a conversation about that, then go find the link in the show notes. It's restaurantstrategypodcast.com schedule. You'll grab some time on the calendar. You'll chat with me or someone from my team.
I'll ask you some questions so I have a better understanding of what's going on and what you want to accomplish. You're going to ask questions of me so you learn more about me and the program I run and the community we've put together.
And let's see if you're a good fit. If you're a good fit, we'll talk about next steps. If you're not a good fit, hopefully I can give you some action items so I can get you on the path or I can point you in a direction of another resource, another tool, another group, another consultant who can help you in ways that I may not be able to.
Again, the P3 mastermind is where we accomplish so much of this and we have hundreds and hundreds and hundreds of members who have come through and their lives are forever changed because of it. I appreciate you guys making this show part of your routine. 500 episodes. If you haven't listened to them all, man, go back and start listening at episode one. It's a really good show. I love going back to revisit old episodes. I appreciate you being here. Thank you very much. And I will see you next time.
