Restaurant Consulting NYC | You and Me and Restaurant Makes Three | 4Q Consulting, LLC

You and Me and Restaurant Makes Three

Husband and Wife Restaurant Owners

As discussed in The Family Owned Restaurant, family business are the bedrock of the U.S. economy. Family businesses often start with a husband and wife team trying to make a better life for their families.  In many cases, the marriages and the businesses become so intertwined that it becomes hard to tell where one ends and the other begins.  Starting and running a successful restaurant can be more demanding than having a baby, and often couples do not survive the birth of a restaurant.  

In order to ensure both the restaurant and your marriage survive, here are four important items to keep in mind when opening or running a restaurant with your spouse:

Treat the business like a business, not an extension of the home.  Draw a distinction and leave work in the business. If both husband and wife are to be partners in the restaurant, having a written partnership agreement is recommended – especially if you plan on having additional business partners. By the time you realize you need an agreement, due to a dispute, it is often too late.  You should have a written agreement that includes: the division of ownership; an outline of the amount of, and stipulations for, taking salaries; and how to handle any profits or losses.

Don't assume that the role in the personal relationship translates to the roles in a work relationship. Just as you want to define the partnership agreement, it is advised that couples decide in advance the work roles within the business – which spouse is going to do what.  For example, the person who balances your personal checkbook at home might not be the best one to reconcile purchase orders and inventory.  And, when defining job roles, if there’s something neither is good at, delegate it to someone else!

Couples we work with find that the key to their success as both a married couple and business partners is to continually communicate their roles and how they can help each other in those roles.  In that regard:  

Standard operating procedures (SOP’S) should be agreed upon, set and followed. Understanding the task expectations of each role and adhering to the agreed upon SOP’S that meet them, removes the possibility of misunderstandings with couple business owners.  Even the small tasks matter: agreeing upon how receipts are filed and the books are balanced; when cash is taken to the bank and who does it; who orders food and beverages and what levels of inventory you plan to keep; and who handles staff scheduling and how are changes to the schedule made are all examples of key items to agree upon in advance.

Support each other and be unified.  Present a united front to your employees at all times.  As basic as it sounds, do not bicker, fight or have large disagreements in front of your staff.  Like another other business partner relationships, you will have disagreements on how to run the business. Remain professional at all times and take those arguments off-site or behind closed doors.

Even though you are spending a lot of time together in the restaurant, you still need to make time for each other.  Find a way to have a night together away from the restaurant – even if you end up discussing restaurant business, being in a different environment changes the conversation.  And most importantly, try not to go to bed angry.  Fighting couples don’t work well together and can have a huge impact on how the business functions.

Remember why you decided to open a restaurant in the first place.  You want to plan ahead to be as successful as possible, while ensuring that demands of the restaurant don’t pull apart your marriage!

Don’t know where to begin?  Do you know how to put policies and procedures in place to be as successful as possible?  www.4qconsult.com can develop customized operational guidelines to meet your needs. 


All original content copyright Noelle E. Ifshin, 2015-2016. 

Noelle E. Ifshin
President
4Q Consulting, LLC 
244 5th Avenue, Suite 1430, NY, NY 10001  
(212) 340-1137

Restaurant Consulting NYC | The Family Owned Restaurant | 4Q Consulting, LLC

The Family Owned Restaurant

Family businesses are the bedrock of the U.S. economy.  “Family owned businesses contribute 57% of the U.S. GDP, employ 63% of the U.S. workforce (FEUSA, 2011), and are responsible for 78% of all new U.S. job creation. (Astrachan & Shanker, 2003).” * Business schools have entire courses dedicated to examining the dynamics of family businesses.   According to Rocki-Lee DeWitt, Professor of Management at the University of Vermont’s School of Business Administration:

                   “When family and business are ingredients in a restaurant 
                    business, be ready for some tasty treats and momentous
                    flops. The family must ask themselves ‘What would this 
                    business look like, and how would it run, if my family wasn't 
                    involved in the business?’'"

Psychologically, families tend to be driven by a deep concern for both the well-being of individual family members and the family legacy.  When a family works together, normal family goals may come into conflict with the economic goals of the business.  

With proper planning, many of these challenges and conflicts can be avoided.  Here are four “must-haves” if you are considering owning or currently running a family-owned restaurant:

Have a Written Partnership Agreement – Many families assume they do not need to formalize their partnerships with family members.  By the time they realize they need an agreement, due to a dispute, it is often too late.  You must have a written agreement that should include: the division on ownership; an outline of the amount of, and stipulations for, taking salaries; and how to handle any profits or losses.  Additionally, and possibly most importantly, family partnerships must have defined job roles – who is going to do what?  Just as a corporation would have specific written job descriptions and job roles for executives, so should a family-run restaurant.  Do not assume how the responsibilities and work load will be divided up. If you are formally registering your company as an LLC, a Corporation or a Partnership, some of these factors will impact how you structure your business.

Have Written Standardized Procedures and Strict Internal Controls – The challenge of any family owned business is how not to run it as the family unit.  Standard operating procedures (SOP’s) should be followed by all employees, whether or not they are family members.  Having written manuals outlining SOP’s for all procedures in the restaurant, ensures that all employees are held to the same standard. For example, the owners or family members should not be doing their personal grocery shopping intertwined with the restaurant’s food ordering.

Furthermore, if a family member has always been great with money, you still need internal cash controls in place.  Ensure that your policies and procedures are just as stringent as they would be if an outsider was doing the work, and have your cash and internal controls reviewed by your CPA.

Have a Higher Level of Professionalism – Just as family members must be held to standardized procedures, at minimum, in their duties, they must be held to a level of professionalism to keep personal matters out of the business.  Family members typically have insight into each other's personality and thought process that non-related business partners wouldn't have, making crossing the professional line into personal terrain tempting.  While lashing out at a co-worker would not be acceptable in most corporate positions, it's easier to lose your cool when there's a personal relationship involved.  I hear from many of my clients in family-owned restaurants “you say things to your relatives that you wouldn't say to anyone else, or you would land in court".  Leave your emotions at the door and remember your family members are your co-workers when you're at the office.

Have a Succession Plan – A comprehensive written succession plan is crucial for all businesses, especially family-owned restaurants, to avoid disputes and misunderstandings.  First and foremost, have a plan should one of the partners or family executives decide to leave the business: how will their role be covered and how will ownership be re-allocated?  Consider including estate planning in your partnership agreement for an older partner to protect the family and restaurant from estate taxes and probate costs.  Further, don’t assume younger generations will want to come into the business or that they will know how to run it when they do; start grooming your successor several years before you plan to retire.  Lastly, if no family member wants to run the business and you don't want to bring in an outsider, start to put together a detailed plan, sooner rather than later, to sell or merge.

Whether a restaurant is family-owned and operated, it is still a business and must be set up properly with clear, well-defined goals and objectives and be operated with the same standardized procedures as any other business.

Don’t know where to begin?  4Q Consulting can develop customized business and operational guidelines to help you start and run your business.  Email us today for a free business consultation at www.4qconsult.com.

Footnote:
* University of Vermont School of Business Administration, Family Business Facts             http://www.uvm.edu/business/vfbi/?Page=facts.html

All original content copyright Noelle E. Ifshin, 2012-2013.