Who is killing the restaurant industry?
Chapter seven: Investigating the suspects – The Owner
By Michael Said
In 2009 an inspector from the department of labour arrived at my restaurant “Reel ‘n Rustic” in George. Having been forced to make the arduous journey from all the way across the park he was already aggravated and aggressive as he stepped in the door.
“I am here to investigate reports of gross abuse in your labour practices” he said. “We believe you not only mistreat, but grossly underpay your management.”
“Oh,” I said “that is very strange because there are only two managers here. One of them works a maximum of 30 hours a week, gets alternate weekends off, earns R15,000 a month excluding benefits like staff meals, medical aid and pension, he gets 21 days sick leave and 18 days paid leave a year. Not to mention that he seldom works beyond 10pm and when he does is entitled to arrive late the next morning.”
“And the other manager?” he asked.
“Well,” I replied “he is mentally handicapped, works about 90 hours a week, opens and closes the store every day, he bears all the responsibility, has absolutely no authority, no medical aid and may not take a day off even if he is ill, and he certainly is not allowed any annual leave and on a good month he takes home a few thousand rand.”
“Aha!” he shouted “That’s the guy I want to talk to!”
“Well that would be ME!” I said.
If this wasn’t so sad and so true, I am sure it would be funny!
Antony Bourdain, in his iconic book ‘Kitchen Confidential’ said it best: “To want to own a restaurant can be a strange and terrible affliction. What causes such a destructive urge in so many otherwise sensible people? Why would anyone who has worked hard, saved money and often been successful in other fields, want to pump their hard-earned cash down a hole that, statistically at least, will almost surely prove dry? Why venture into an industry with enormous fixed expenses (rent, electricity, gas, water, linen, maintenance, insurance, license fees, trash removal etc) with a notoriously transient and unstable workforce and highly perishable inventory of assets? The chances of ever seeing a return on your investment are about one in five. What insidious spongiform bacteria so riddles the brain of men and women that they stand there on the tracks, watching the lights of the oncoming locomotive, knowing full well it will eventually run them over? After all these years in the business I still don’t know!”
Yet despite all this, otherwise sane people continue to pump both their lives and their life savings into both tested and untried ventures. Seasoned professionals seem unable to extricate themselves from an industry that demands and takes so much from you. The words of one Benjamin Conrad Filmalter still ring in my head. It was some 20 years back that he called all his (then) young managers from the various restaurants together for a meeting in his Juta Street offices and addressed us with these words “You had all better have a dream, you had all better know exactly why you are in this business and more importantly what you want to get out of it, because this business will take your youth, your family, your health and if you do not watch out it will drain your life!”
Not exactly inspiring words for a twenty something manager to hear, but probably exactly what we all needed to hear from a man who had talked the talk and walked the walk. For those who have suffered the highs and lows of owning a restaurant, there can seem no tougher job, in fact, John F Kennedy said (and I paraphrase) “No single [sic] project in this period will be more impressive to mankind, or more important [sic]; and none will be so difficult or expensive to accomplish.” He was of course only referring to putting a man on the moon, while I am discussing the near impossible task of balancing commerce, art and passion into something that vaguely resembles a successful restaurant.
There is no magic formula for success and there is no school, university or degree that qualifies you for the position. Owning a restaurant is ‘On-The-Job’ training at its toughest. However, and here is where my head starts to spin, there are tried and tested methods, customs, norms and clear and definable examples of what works and what doesn’t, yet many owners still believe they can buck the trend and show all those seasoned pros how they should have been doing it.
So let’s break it down, let’s explore what is required to deliver on the commerce, art and passion.
Firstly “It’s a business, stupid!” No other industry takes raw material and turns it into finished goods faster that a restaurant. Then, to complicate matters, our clientele, who clearly know more about the industry than we do, get to taste and test that self-same product in front of us… no going home first, no cooling-off period! To complicate matters even further all this is going down at one of your tables where the three dangerous ingredients of alcohol, cash and ego also put in an appearance.
Throw into the mix a transient workforce who, on the whole are not particularly well paid, and who have direct access on various levels to cash, alcohol and your stock and the picture that emerges is a powder keg waiting to be lit. You are working an 80 hour week juggling staff, placating customers, delaying creditors, fighting competitors, desperately trying to keep your marriage or your personal life intact and you still have absolutely no idea how or how much money you are making, and all the while you’re thinking “This is not what I signed up for!”
Undertrained, overmatched, outgunned and alone… This may be the appropriate time to remind you about the Golden Rule of Restaurant Ownership, “Don’t get high on your own supply!” If you are going to take up drinking, make sure you are paying retail prices for the booze, or this is going to be a long slide down.
So what are the basic errors that are being made?
1. Owners failing to behave like owners
There are two sides to this problem. First let us address absentee ownership. Yes, I know it works occasionally, but that is the (ever-diminishing) exception, not the rule. “Be there” is the best advice I can offer. It is one thing to slowly hand over duties as you need to free up your time to concentrate on expansion or other opportunities, but to do so from day dot is abdication to delegation and spells disaster.
The other side of the spectrum is owners behaving like chefs, cleaners, bussers and waiters (not to mention the HR department, the plumber, the tech support and the reservations clerk). Get to work on your business and not just in your business. If you don’t, twenty years from now you will either be in a lunatic asylum or you will still be locking the doors and cleaning the floors. I think the asylum may be the better option...
2. Concentrating too much on what you like
The fact that you and your wife have a unique way of cooking Brussels Sprouts that you are sure will revolutionise the restaurant industry, is besides the point. Nobody goes out to eat Brussels Sprouts, get it? Fish where the fish are. Sell people what they like, where they like it, when they like it and they will beat a path to your door. You may be thinking “Shouldn’t I ask the public what they want?” Yeah right! Henry Ford said, “If I had asked the public what they wanted they would have told me faster horses”.
3. A lack of vision and purpose
We have all seen the motivational poster that says “If you don’t know where you are going, you will never get there!”, and the reason that poster is a best seller, is because it’s true. Stop planning for the end of the month and start looking to the end of the year, the end of your lease and the end of the decade. Now start putting plans in place for the future and not just for this month’s rent payment.
4. A lack of training of staff
“But what if I train them and they leave?” What if you don’t train them and they decide to stay? Invest in your people, invest in their wellbeing and upliftment. Even if you lose a few the rest will pay you back big time. Help up-skill your staff and see the returns reflected on your bottom line. Take it from Disney “Your front line equals your bottom line”. Show a little faith and place a little more trust in your team and most often they will behave as you predicted they would. What do you predict from your staff?
5. Having too much / too little faith in their staff
While this seems to fly in the face of the delegation/abdication comment, what is needed is the correct balance, and balance means implementing the checks necessary to ensure that everything is being done (...but this is actually starting to sound like hard work and if hard work is what you were after you would never have given up your job at the bank).
6. Not understanding the value of a customer
Yes, I have heard the story. They want extra this and extra that and they are all trying to con you. Would it perhaps be better if they didn’t come? All of them? Try and calculate the lifetime value of a customer before you rush to pass judgment. We have all had customers we could certainly do without and the sooner you see the back of them the better, but don’t generalise and don’t be in too much of a hurry to send customers away.
The list goes on and on... Eating and drinking from your own supply, too many freebies for friends, no contracts for staff, pursuing relationships with staff members, no stock control, no accounting systems, not monitoring basic expenses, not paying suppliers, poor relationships with suppliers, not paying VAT, not sticking to the franchise agreement, no clear understanding of the industry, a lack of support for industry bodies (like RASA), and the biggest killer of all, a basic lack of understanding of your customers and what they want from you.
Owners are currently killing their own industry and they are killing it fast! However, if we act now it is not too late to stop the rot and prepare for the seven years of feast that so often follow the famine, just make sure you are ready. Don’t make the same mistakes again, knowing this industry you will find a whole bunch of new ones to make this time round.
Next time we begin to discuss some of the remedies that may deliver us from this mess but in the meanwhile, as always, your comments are greatly appreciated and I look forward to hearing from you.□
Brand Strategy
Email: info@mikesaid.co.za
Phone: +27 82 449 7367
Web: www.brandstrategy.co.za
Twitter: mike_said_what
By Michael Said
In 2009 an inspector from the department of labour arrived at my restaurant “Reel ‘n Rustic” in George. Having been forced to make the arduous journey from all the way across the park he was already aggravated and aggressive as he stepped in the door.
“I am here to investigate reports of gross abuse in your labour practices” he said. “We believe you not only mistreat, but grossly underpay your management.”
“Oh,” I said “that is very strange because there are only two managers here. One of them works a maximum of 30 hours a week, gets alternate weekends off, earns R15,000 a month excluding benefits like staff meals, medical aid and pension, he gets 21 days sick leave and 18 days paid leave a year. Not to mention that he seldom works beyond 10pm and when he does is entitled to arrive late the next morning.”
“And the other manager?” he asked.
“Well,” I replied “he is mentally handicapped, works about 90 hours a week, opens and closes the store every day, he bears all the responsibility, has absolutely no authority, no medical aid and may not take a day off even if he is ill, and he certainly is not allowed any annual leave and on a good month he takes home a few thousand rand.”
“Aha!” he shouted “That’s the guy I want to talk to!”
“Well that would be ME!” I said.
If this wasn’t so sad and so true, I am sure it would be funny!
Antony Bourdain, in his iconic book ‘Kitchen Confidential’ said it best: “To want to own a restaurant can be a strange and terrible affliction. What causes such a destructive urge in so many otherwise sensible people? Why would anyone who has worked hard, saved money and often been successful in other fields, want to pump their hard-earned cash down a hole that, statistically at least, will almost surely prove dry? Why venture into an industry with enormous fixed expenses (rent, electricity, gas, water, linen, maintenance, insurance, license fees, trash removal etc) with a notoriously transient and unstable workforce and highly perishable inventory of assets? The chances of ever seeing a return on your investment are about one in five. What insidious spongiform bacteria so riddles the brain of men and women that they stand there on the tracks, watching the lights of the oncoming locomotive, knowing full well it will eventually run them over? After all these years in the business I still don’t know!”
Yet despite all this, otherwise sane people continue to pump both their lives and their life savings into both tested and untried ventures. Seasoned professionals seem unable to extricate themselves from an industry that demands and takes so much from you. The words of one Benjamin Conrad Filmalter still ring in my head. It was some 20 years back that he called all his (then) young managers from the various restaurants together for a meeting in his Juta Street offices and addressed us with these words “You had all better have a dream, you had all better know exactly why you are in this business and more importantly what you want to get out of it, because this business will take your youth, your family, your health and if you do not watch out it will drain your life!”
Not exactly inspiring words for a twenty something manager to hear, but probably exactly what we all needed to hear from a man who had talked the talk and walked the walk. For those who have suffered the highs and lows of owning a restaurant, there can seem no tougher job, in fact, John F Kennedy said (and I paraphrase) “No single [sic] project in this period will be more impressive to mankind, or more important [sic]; and none will be so difficult or expensive to accomplish.” He was of course only referring to putting a man on the moon, while I am discussing the near impossible task of balancing commerce, art and passion into something that vaguely resembles a successful restaurant.
There is no magic formula for success and there is no school, university or degree that qualifies you for the position. Owning a restaurant is ‘On-The-Job’ training at its toughest. However, and here is where my head starts to spin, there are tried and tested methods, customs, norms and clear and definable examples of what works and what doesn’t, yet many owners still believe they can buck the trend and show all those seasoned pros how they should have been doing it.
So let’s break it down, let’s explore what is required to deliver on the commerce, art and passion.
Firstly “It’s a business, stupid!” No other industry takes raw material and turns it into finished goods faster that a restaurant. Then, to complicate matters, our clientele, who clearly know more about the industry than we do, get to taste and test that self-same product in front of us… no going home first, no cooling-off period! To complicate matters even further all this is going down at one of your tables where the three dangerous ingredients of alcohol, cash and ego also put in an appearance.
Throw into the mix a transient workforce who, on the whole are not particularly well paid, and who have direct access on various levels to cash, alcohol and your stock and the picture that emerges is a powder keg waiting to be lit. You are working an 80 hour week juggling staff, placating customers, delaying creditors, fighting competitors, desperately trying to keep your marriage or your personal life intact and you still have absolutely no idea how or how much money you are making, and all the while you’re thinking “This is not what I signed up for!”
Undertrained, overmatched, outgunned and alone… This may be the appropriate time to remind you about the Golden Rule of Restaurant Ownership, “Don’t get high on your own supply!” If you are going to take up drinking, make sure you are paying retail prices for the booze, or this is going to be a long slide down.
So what are the basic errors that are being made?
1. Owners failing to behave like owners
There are two sides to this problem. First let us address absentee ownership. Yes, I know it works occasionally, but that is the (ever-diminishing) exception, not the rule. “Be there” is the best advice I can offer. It is one thing to slowly hand over duties as you need to free up your time to concentrate on expansion or other opportunities, but to do so from day dot is abdication to delegation and spells disaster.
The other side of the spectrum is owners behaving like chefs, cleaners, bussers and waiters (not to mention the HR department, the plumber, the tech support and the reservations clerk). Get to work on your business and not just in your business. If you don’t, twenty years from now you will either be in a lunatic asylum or you will still be locking the doors and cleaning the floors. I think the asylum may be the better option...
2. Concentrating too much on what you like
The fact that you and your wife have a unique way of cooking Brussels Sprouts that you are sure will revolutionise the restaurant industry, is besides the point. Nobody goes out to eat Brussels Sprouts, get it? Fish where the fish are. Sell people what they like, where they like it, when they like it and they will beat a path to your door. You may be thinking “Shouldn’t I ask the public what they want?” Yeah right! Henry Ford said, “If I had asked the public what they wanted they would have told me faster horses”.
3. A lack of vision and purpose
We have all seen the motivational poster that says “If you don’t know where you are going, you will never get there!”, and the reason that poster is a best seller, is because it’s true. Stop planning for the end of the month and start looking to the end of the year, the end of your lease and the end of the decade. Now start putting plans in place for the future and not just for this month’s rent payment.
4. A lack of training of staff
“But what if I train them and they leave?” What if you don’t train them and they decide to stay? Invest in your people, invest in their wellbeing and upliftment. Even if you lose a few the rest will pay you back big time. Help up-skill your staff and see the returns reflected on your bottom line. Take it from Disney “Your front line equals your bottom line”. Show a little faith and place a little more trust in your team and most often they will behave as you predicted they would. What do you predict from your staff?
5. Having too much / too little faith in their staff
While this seems to fly in the face of the delegation/abdication comment, what is needed is the correct balance, and balance means implementing the checks necessary to ensure that everything is being done (...but this is actually starting to sound like hard work and if hard work is what you were after you would never have given up your job at the bank).
6. Not understanding the value of a customer
Yes, I have heard the story. They want extra this and extra that and they are all trying to con you. Would it perhaps be better if they didn’t come? All of them? Try and calculate the lifetime value of a customer before you rush to pass judgment. We have all had customers we could certainly do without and the sooner you see the back of them the better, but don’t generalise and don’t be in too much of a hurry to send customers away.
The list goes on and on... Eating and drinking from your own supply, too many freebies for friends, no contracts for staff, pursuing relationships with staff members, no stock control, no accounting systems, not monitoring basic expenses, not paying suppliers, poor relationships with suppliers, not paying VAT, not sticking to the franchise agreement, no clear understanding of the industry, a lack of support for industry bodies (like RASA), and the biggest killer of all, a basic lack of understanding of your customers and what they want from you.
Owners are currently killing their own industry and they are killing it fast! However, if we act now it is not too late to stop the rot and prepare for the seven years of feast that so often follow the famine, just make sure you are ready. Don’t make the same mistakes again, knowing this industry you will find a whole bunch of new ones to make this time round.
Next time we begin to discuss some of the remedies that may deliver us from this mess but in the meanwhile, as always, your comments are greatly appreciated and I look forward to hearing from you.□
Brand Strategy
Email: info@mikesaid.co.za
Phone: +27 82 449 7367
Web: www.brandstrategy.co.za
Twitter: mike_said_what
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