Episode Transcript
[00:00:00] Most restaurant owners that I talk to, whether it's at trade shows or conferences or on sales calls that I'm taking. For people who are Interested in the P3 mastermind, most restaurant owners out there talk about profit like it's luck, right? Well, we had a good month. Wow, that's great. Or, man, look at what happened. Or on the other side. Well, I, I mean, I don't know what happened. The, the numbers just didn't work out, or I guess the margins just aren't there.
[00:00:26] As if. Profit is something that happens to you. Good luck, bad luck, flip a coin. But here's the truth. Profit is not luck. It is not timing. Profit is not personality. Profit is a skill. And like any skill, that skill can be learned. It can be practiced, it can be improved. Profit is something you target at the beginning of the period and you do a series of things. You have systems in place that make profit happen. Profit is the most important thing in your business because it allows you to survive and thrive and help your community and provide jobs and feed people and all of that. Profit is the most important piece of your business. And I promise you, it is a skill. It is not luck. That's what we're going to talk about on today's episode of Restaurant Strategy.
[00:01:09] 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 foreign.
[00:01:41] Thanks for tuning in. My name is Chip Close. I am your host here of the Restaurant Strategy podcast. In addition to putting out two new episodes every week, I run the P3 Mastermind. I write books, I give talks. There's so many, so much that we do to help this industry. But guess what? We've put together and we are getting ready to launch a 12 week restaurant opening boot camp. It's entirely virtual. We are capping this at 20 people. So if you are getting ready to open a restaurant anytime in the next 24 months, whether this is your first restaurant or your 10th restaurant, this is something that I want to chat with you about. It's 12 two hour sessions every Thursday starting on July 9th. So 12 Thursdays in a row, two hours. This will save you tens of thousands of dollars or hundreds of thousands of dollars in mistakes that we see so many owners and operators make. The best way to get started to see if you're a good fit is to go to restaurantstrategypodcast.com opening bootcamp there you can review all of the details about this boot camp. You can inquire there. So your name, email, phone number, tell us a little bit about the property you're getting ready to open. We only have 20 slots and we want to make sure these are going to the people who are really going to get the most.
[00:02:56] This program, if it goes well, it's not going to be the last time we run it, but this is the first and we are capping it at 20restantstrategypodcast.com Opening Bootcamp. As always, you can also find that link in the show notes.
[00:03:12] Now, do you know what the cost is on your third best selling entree? With Margin Edge, you could know that food cost percentage instantly. See, Margin Edge is a complete restaurant management software that I recommend to all of the P3 members, anyone looking to improve their profitability.
[00:03:28] With Margin Edge, you just snap pictures of your invoices as they come in and you get real time data for every area of your business. You can see plate costs in real time. You get a daily P and L, your inventory count sheets are automatically updated. I'm telling you, it saves you a ton of time and it lets you make really informed decisions. I have a client, Gather Brewing. They're down outside of San Antonio. They just opened a second location in Boise. They started using Margin Edge at their first location and within 30 days their food costs went from 38% to 20%. 28%. I don't have to tell you what that means for the profitability of the restaurant. There's a reason I recommend this software. Margin Edge is perfect for so many of you out there. I recommend it because I know it works. You're interested in learning more or if you want to see how Gather brewing went from 38% to 28% food costs, head over to Marginedge.com chip. You watch a really cool video that they shot down at the brewery. Again, margin edge.com chip and yes, that link is in the show notes.
[00:04:30] Now, most owners, most owners that I've come across, we're never trained to think in terms of profit, right? So let's start with, let's start with the empathy side of things, right? I think most owners were trained to first and foremost cook better, serve better, work harder, care more, take care of your employees, take care of your guests. All of that is great. So we work as hard as we possibly can to make the best possible food, the best possible experience, provide the best hospitality, create great jobs, a great environment for people to work In a great environment for people to sit and celebrate and enjoy with their friends and family. Right? So from an, from an empathetic perspective, that's what owners are taught, or at least that's what so many owners focus on.
[00:05:17] Very few, unfortunately, were trained to see, think in systems or design for margin or make trade offs intentionally or say no, strategically. So what happens then is that hospitality comes naturally, but profit feels somehow mysterious. Not because it is, but simply because no one ever taught you how to see it. If that all sounds familiar, I'm here to tell you that that's how I was trained. I was taught all the steps of service. I was taught all these little flourishes we could do, you know, to create great hospitality. I was taught how to wow guests, how to create great food group great experiences. And it took me a very long time before I worked under mentors who really talked to me and taught me the business side of things. There's nothing wrong with understanding the business side of things because our business, right, is an infinite game. It's not like two teams playing each other and seeing who will win. The whole idea is to keep playing the game. The way you keep playing the game is by being profitable, creating value for your people, for your guests, for your community, for yourselves. So it may feel mysterious, but I promise you, it is not. It just seems mysterious because never. No one ever taught you how to see it. No one ever taught you how to make it happen.
[00:06:31] See, profit is actually the result of thousands of small decisions. Profit isn't just one big move. That's why it's not about, you know, sprinkling fairy dust or finding some silver bullet. It's your menu choices. It's discipline when it comes to scheduling, it's consistency when it comes to portion, it's confidence with your pricing, it's waste tolerance, it's standards enforcement.
[00:06:56] Each decision may seem small, but together they compound. I know you know this, I know all of those things compound to make a great restaurant. But I'm telling you, all of those things compound to make a profitable one. Unprofitable restaurants don't make just one terrible decision. They make hundreds of slightly soft ones. Things are just off. Things are not as tight as they need to be. That's why on a ship, there's a guy or a team of people who walk around literally just tightening screws on the boat, just wiping things down. They're always swabbing the deck, they're always washing things down because the salt air will penetrate into the boat. It's how rust Happens. That's how you know, mildew happens on the wood. So they tighten the screws, they wash it all down over and over and over. It's not like we wash it once a week. We wash it every day. The same thing is true with you. All those decisions compound to make a great restaurant, but all of those decisions also compound to make a profitable one.
[00:07:53] Now, all of that means that you already knew how. Know how to do so much of this. And if there are things that you don't know how to do, well, then it's just new skills or new systems to put in place. But I promise you, you're probably 95% of the way there. Here's the deal. Hard work does not create profit. What creates profit is clarity. And see, this is the lie that most owners internalize. Well, if I just work harder, if I put in more hours, well, nobody knows how to do it as well as me, and nobody does it as well as I do. So I'm just gonna. I'm just gonna step in and do it, and I cover that shift, and I'll just jump behind the line and I'll just. And I'll just. And I'll just. You see, hard work keeps restaurants open, but it does not guarantee profit. We've talked about this. Busy is a trap. Busy is not the same as profitable. See, profit comes from focus. It comes from discipline. It comes from consistency, consistency through repetition. And it comes also from having boundaries.
[00:08:51] And guess what? Those are also great leadership traits. Not effort metrics, but great skills. Great traits that great leaders have.
[00:09:01] The problem is that so many of us have never learned from great leaders. I can certainly attest to the fact that I worked with a lot of people who were not great leaders. And I worked with a couple people, and I'm very outspoken about that. Just a handful, two in particular. Two mentors that I worked with for 10 years and eight years that were exceptional leaders. And I learned so much from those two individuals. So if you don't have somebody like that to look to, to point to, then I understand.
[00:09:27] Then I understand where you're at. That's why you come here. If there's anything I've learned is that I don't know it all know. No one knows it all. That I turn on this microphone twice a week to share what I've been privileged enough to learn.
[00:09:40] Sharing, passing it on.
[00:09:42] Here's something that we almost never talk about. Profitable restaurants. The. Really, the best restaurants think differently about almost everything.
[00:09:52] They ask different questions. They lead with curiosity. So it's not about, well, how do we sell more, but what are we subsidizing by not charging more? It's not, well, how do we cut costs? But thinking what actually is unnecessary, not why is this so hard? But rather what are we tolerating that we should no longer tolerate? See, that mindset shifts. Shifting all of those will change everything.
[00:10:21] Profit, many ways, is emotional way before it's mathematical. And this is subtle but absolutely critical. Profit requires you to say no. It requires that you hold standards, that you enforce pricing, that you, yes, sometimes remove favorites, that, yes, sometimes you will disappoint people, both your employees and your guests. It's understanding where your North Star is and being very clear on what needs to happen in order to keep going in the right direction. And I'll be the first one to say many times, many days, that's uncomfortable. So many owners avoid having really profitable, successful restaurants, not because they don't understand the numbers, but because they end up spending all their time trying to avoid discomfort.
[00:11:06] If any of this is resonating, if any of this is going to your gut, then good, then I appreciate you making this part of your week. And I hope, and I hope this pushes you to make the change that I think you and I both know you need.
[00:11:19] Here we go. Systems are the thing that turn profit into a habit. It makes it systematic, consistent, automatic. See profit.
[00:11:29] Profitable. Restaurants don't rely on willpower. They just simply rely on systems. Regular reviews, predictable decisions, clear thresholds, defined responsibilities, defined responses.
[00:11:42] And see habits be heroics. We talked about the heroes, right? Nobody needs you to be a hero. And I don't need you to have a staff of heroes. I certainly don't need your restaurant to lean on one hero, whether that's you or somebody else. Habits, systems that everyone can easily follow. And do they beat out heroes every single time.
[00:12:02] At the end of the day, profit is a signal, not a moral judgment. And this matters. It's really, really important.
[00:12:09] Low profit doesn't mean you're bad, just like high profit doesn't mean you're greedy. Profit is feedback. It tells you when and whether the system is actually working. Ignoring it doesn't make you noble. I think it makes you blind.
[00:12:25] We could say money, you know, money doesn't cure all sins. Money isn't everything.
[00:12:29] I agree with that. But usually the people that are saying that are the people that have never had it or the people who have never had to worry about the bottom line is money. Profit, surplus, extra allows you an incredible amount of freedom. It allows you comfort it allows you to take care of those around you. It allows you to level up, to create more for your community, to provide better jobs. At the end of the day, if you want to just take all that profit and distribute it evenly among your staff, fine.
[00:13:01] I'm guessing you'll find quite a bit of loyalty amongst your staff if you do that. I'm not telling you to do that. Not telling you not to do that. I'm telling you profit isn't a bad thing. It's not a dirty word. You can do whatever you want with profit. And I promise you that the more successful you are, the more you're going to be able to help your employees, your guests, your community. You'll be able to give more to charity. You'll be able to say yes a lot more than you are currently able to.
[00:13:27] Again, all of this profit is feedback. And ignoring it doesn't make you noble. I believe it simply makes you blind.
[00:13:36] There's a paradigm shift that I, that I. That I hope you'll take. Here, right here it is. Profit is not the reward for passion. It is the reward for skillful leadership. And again, I talked about the skillful leadership. Nobody's a born leader. People learn it. It's a skill. How do you listen? How do you get better at asking great questions? How do you see opportunities where other people only see risks?
[00:14:03] Skills can be learned. That kind of thinking can be learned. Meaning profit is a skill that can be learned.
[00:14:11] So here's what I want you to do, right? The whole point of this is to stay actionable. At the end of every episode, I want you to ask yourself, what uncomfortable decision have I been avoiding that would improve profit?
[00:14:24] When you identify that, I want you to see that that's just a skill gap. What uncomfortable decision have I been avoiding that would improve profit? There's something you can do that would immediately increase the profitability of your restaurant. I'm guessing that most of you listening probably already have your finger on something. If you don't, fine, give some thought to it. Look at your operation. Look at your ordering, look at your menu, look at your staffing, look at your hours of operation, look at the product you bring in. There are a million different things you can look at.
[00:14:54] But I'm guessing that there are some uncomfortable decisions, some difficult decisions that you have just been avoiding, and that's going to increase your profitability. It's going to make you a more successful restaurant.
[00:15:05] Again, I'll end the way I began. Profitable restaurants aren't lucky. They are trained. They are Systematic, they are habitual. There are routines put in place and training beats talent every single time.
[00:15:21] As always, I want to thank you guys for taking time out of your week and being here. One final reminder before I let you go. We're doing a 12 week restaurant opening boot camp. So the P3 mastermind, the signature coaching program I run, is really for established restaurants that struggle with profitability. Restaurants that are looking to dial in profits and then grow, right? Grow from one to three locations, three to 10 locations. That's what the mastermind is all about. And we can help there. But I know there are people who could use our help, our expertise. Expertise before you're ready there. So if you are opening a restaurant sometime in the next 24 months, this is something I would urge you to consider. You can save yourself tens of thousands of dollars or even hundreds of thousands of dollars in mistakes made by listening to a couple of experts walk you through every area. Right? So from lease negotiation to permitting to building a critical path, to working out your menu to hiring, staffing, training, publicity, press, everything you need to get through that all important open process. It's 12 two hour sessions that start July 9th. We are capping this at 20 people. If this sounds interesting at all, go to restaurantstrategypodcast.com opening bootcamp. You can learn more about it there. And you can see a button says inquire now. Click there. Just fill out the form, answer some questions so we can better understand about the restaurant you're looking to open and we'll set up a conversation from there. Again, I appreciate you guys being here. If you're opening a place in the next 24 months, consider the restaurant opening boot camp. That link is in the show notes. Appreciate you guys and I will see you next time.
