Restaurant Consulting NYC | The Financial Health of Your Restaurant | 4Q Consulting, LLC

The Financial Health of Your Restaurant

Is your restaurant in need of a financial check-up?  Many restaurant owners we work with are not aware of the financial health of their own restaurants, or know they are in trouble but cannot explain why.  Having great food and service is not enough to be a good business and many restaurants struggle financially.  As a restaurant owner, assessing the health of your business is an essential part of your responsibility and can often be overwhelming.

Conducting regular financial check-ups of your restaurant does not need to be difficult and can be broken down in to smaller steps. In order to give your restaurant a financial check-up, you need to do the following:

Keep Clean Books - Studies find that restaurants that incorporate accounting best practices are more likely to be profitable than those that do not.  Keeping an organized accounting system is the only way to have a clear idea of how cash is flowing through your business. The key elements are to know 1) where in the business your revenue is coming from 2) where you are spending your money, 3) how much you are spending, and 4) how much you need to earn to make a profit. It doesn’t matter whether you use high tech software, a bookkeeper or an old fashion ledger book, you need some kind of system for timely recording of revenue and expenditure to allow you to make business decisions and plan for the future. 

Compile A Monthly P&L – As we discussed in, Does Your Restaurant Compile a Monthly P&L Statement?, a profit and loss statement, or P&L, is a basic financial statement that serves as a report card for your business.  A crucial part to creating a useful P&L statement is monitoring your food and beverage inventory; this step will allow you to spot food waste in handling and storage, possible theft and proper ordering levels and frequency. Tracking fixed and variable costs, such as payroll, operating expenses and occupancy costs can highlight wasted resources and where you can tighten your belt.

Know Your Prime Costs Inside and Out – Prime costs are the total of food, beverage and all payroll expenses including taxes and benefits, and are the most important numbers a restaurant owner should know.  Once you’ve compiled your P&L, prime costs should be what you examine first, as they offer the most accurate depiction of your restaurant’s health, showing how well your business is managed day-to-day.  Frequent review of food, beverage and labor costs holds your chefs and managers accountable for their work.

Adjust to Changes in Your Business Cycle - Since prime costs are variable, they can and should be adjusted when your restaurant experiences changes in business levels, as we illustrated in The Dog Days of Summer: How to Manage During a Downturn in Business. Planning for or being acutely aware of a fall-off in business, enables you to scale back labor schedules properly, rotate out vacations among the staff and utilize staff that has been cross-trained – increasing productivity per work hour.  Making changes to your menu can also impact food, beverage and labor costs by offering a smaller menu, consolidating the number of items on your menu and decreasing the number of steps of production.

Just like an annual physical with your doctor can lead to healthy changes in lifestyle, keeping your finger on the financial pulse of your restaurant can highlight areas of weakness. With this information you can make appropriate and timely changes to have a financially healthy restaurant. 

Email us today for a free business consultation at www.4qconsult.com.  We help restaurants be profitable, from start-ups to existing restaurants looking for a fresh set of eyes.  4Q Consulting, LLC can develop customized plans and operational guidelines to survive a slow period of business!

All original content copyright Noelle E. Ifshin, 2016-2017. 
Noelle E. Ifshin
President
4Q Consulting, LLC 
noelle@4qconsult.com  
www.4qconsult.com 
244 5th Avenue, Suite 1430, NY, NY 10001  
(212) 340-1137

Restaurant Consulting NYC | The Dog Days of Summer How to Manage During a Downturn in Business | 4Q Consulting, LLC

The Dog Days of Summer

How to Manage During a Downturn in Business

Summer in the NY Metro Region is often a slow period for area restaurants – as the temperature and humidity rise while kids are out of school, customers escape the heat to take vacations and many leave for weekends.  Being able to nimbly anticipate these slow weeks and make changes to your operation will allow you to survive the dog days of summer without taking a financial hit.

As we discussed in our last blog, The Value of A Good Business Plan, a restaurant is a living breathing entity that requires constant reevaluation. Now restaurateurs must understand the value of being flexible when the thermostat rises and business levels fall off as people escape the heat.

Here are four key things to help manage your restaurant in a short downturn:

Adjust Your Cash Flow Management – Many restaurants fail not because they are unprofitable, but because they ultimately become insolvent. The single most important step for survival of your restaurant when business slows is to rigorously manage your cash. Calculate what your cash flow needs will be based on both your estimated fixed and variable expenses.  Know what your break-even point is, as sometimes a viable cash management strategy is to close the business for the slowest portion of the slower season.  And lastly, adjust the way you operate to further reduce your variable expenses.

Adjust Your Variable Expenses – Variable expenses are those expenses that change based on your level of business – the largest controllable categories being food and labor costs.  From Where Oh Where Has My Margin Gone?, we know that labor is a restaurant’s largest variable expense and is only becoming more costly.  Planning for this fall-off in business is key in being able to scale back schedules in advance, rotate out vacations among the staff and utilize staff that has been cross-trained – increasing productivity per work hour.   If you have staff standing around staring at the walls, you have too much staff on hand.  Lowering total payroll also lowers payroll taxes and payroll processing fees.  Other controllable variable expenses can include paper goods, any merchandise, some utilities and maintenance.

Adjust Your Menu Offerings – Changing your menu can also impact food, beverage and labor costs. Consider replacing some menu offerings with less expensive items using seasonal and local ingredients. Consider lightening your menu to offer more salads and refreshing cold options.  You don’t want potential customers not to consider coming to your restaurant on a hot, sticky day because your menu is too heavy.  Furthermore, less labor-intensive preparations allow you to work with less staff.  Guests, by nature, tend to eat less and lighter fare when the thermostat rises.  Cooking with what is locally in season is always less costly than using out-of-season imported items.  

Adjust Your Purchasing and Inventory Management – When items are not flying out of your walk-in or your stock room, you should look at what you are buying and how you are buying it.  Intelligently reducing the overall number of offerings on your menu can increase your product cross-utilization allowing you to carry a smaller inventory – both in number of inventory items and quantity of each item you stock.  Analyze what is selling, at the best profit margin, and either remove the non-selling items or find creative ways to reinvent them.  By sitting on non-moving inventory, especially alcoholic beverages, you are just tying up your cash flow.

Being aware and flexible about managing your business in the Dog Days of Summer can help keep your bottom line from melting away.

Email us today for a free business consultation at www.4qconsult.com.  We help restaurants be profitable, from Start-ups to existing restaurants looking for a fresh set of eyes.  4Q Consulting, LLC can develop customized plans and operational guidelines to survive a slow period of business!

All original content copyright Noelle E. Ifshin, 2016-2017. 

Noelle E. Ifshin, President, 4Q Consulting, LLC 

noelle@4qconsult.com  

www.4qconsult.com 

244 5th Avenue, Suite 1430, NY, NY 10001  

(212) 340-1137

Restaurant Consulting NYC | Are You Being Penny Wise and Pound Foolish? How to Consider Managing Your Restaurant’s Big Purchases | 4Q Consulting, LLC

Are You Being Penny Wise and Pound Foolish?

How to Consider Managing Your Restaurant’s Big Purchases

If you are putting off upgrading your aging restaurant equipment or are not investing in equipment that makes you the most productive, you could be harming your business while trying to save money.  As discussed in our last blog, Where Oh Where Have My Margins Gone, the current financial challenges in the restaurant business are on the rise with increasing labor regulations, higher wages and market pressures. Many restaurateurs are thinking that with rising costs there is no way they could possibly spend for new, expensive equipment, technology or software.

Before “cutting off your nose to spite your face”, analyze how you can monetize a capital investment by growing your sales, cutting your costs and delivering a consistent, quality product.

The purchase price might be a big number, but if you use the 4Q Approach, it shouldn’t be that scary:

Quantify Your Purchase.  To quantify this big spend, you need to fully understand your business and the economies of the purchase.  If you are buying a rotisserie for your restaurant, do you buy the small manual unit or the larger capacity, automated unit?  To answer this, you need to calculate how many more chickens you need to sell to recoup the cost of the larger unit.  If you can increase output – to sell more, and create a more consistent (better) product with little added labor - the increase in cost from one unit to another is easy to overcome.  Additionally, you can profit by the flexibility a larger unit affords, offering a wider range of rotisserie menu items.

Qualify Your Purchase.  Very often restaurants put off installing new or upgraded equipment due to sticker shock.  Upgraded equipment can often lower your ever-increasing variable costs, optimize work flow, or offer up solutions to operational challenges. This can lead to improved product quality and, in turn, repeat business. More efficient equipment can possibly replace part or all of your labor cost by lowering the number of man hours needed to monitor product produced on old, inefficient equipment.  Think about an older rotisserie that most be continuously monitored to prevent burnt or unevenly cooked chickens – in this example both your labor and food costs can be impacted.  Additionally, modern equipment can lower energy costs and replace the cost of constantly repairing older units.  

Quantitative Analysis of Your Purchase.  Most large equipment or software expenditures can be financed in some way, so you don't have to lay out a large chunk of money all at once.  When investing in your business, don’t go part way: buy the equipment you need to improve efficiency, and grow your business.  When you decide to buy a new car, to replace the Junker that is constantly in for repairs, you buy the entire car - you wouldn’t buy the tires one month, the engine the following month and the chassis the third month.  Instead, you would finance your large expenditure to make the price palatable.  You must analyze the impact buying new equipment has on your restaurant operations.  What you can potentially save in your cash flow, by being more efficient, can be used to finance your new purchase. Sometimes, new equipment “pays for itself”.

Query about Your Purchase – Before making a large capital expenditure is it always a good idea to speak to your accountant or financial adviser.  Make sure you understand the depreciation and tax benefit implications of a capital investment in advance.    Additionally, there are often state rebates and incentives for installing new, more energy efficient kitchen equipment that can help offset the purchase price.

Making smart, planned decisions on your large capital expenditures can often help you grow, and streamline your business for the long term.  

Don’t know where to begin?  Do you know how to 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, 2016-2017. 

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

Restaurant Consulting NYC | Where Oh Where Has My Margin Gone? The Changing Labor Environment and How It Affects Restaurants | 4Q Consulting, LLC

Where Oh Where Has My Margin Gone?

The Changing Labor Environment and How It Affects Restaurants 

People outside the restaurant industry are often surprised by how small restaurant profit margins actually are.  To say margins are razor-thin would be an understatement, as the average profit margin of a restaurant is 3-5% of total revenue.  Labor expenses are a restaurant’s largest expense and the external forces on labor are keeping many restaurateurs up at night.  

Labor-related issues will be the biggest challenges facing the restaurant industry in 2016 and beyond. Restaurants will need to rethink their business models to handle the changes that are coming.  Here are four items that we are advising our clients to watch carefully:

Tightening of the Job Market - Finding top talent is becoming increasingly difficult for restaurant operators.  With the improved economy, the growth of the restaurant industry and the continued low labor participation rate, finding quality staff is challenging.  According to federal data, the restaurant industry alone added 40,000 jobs, or 16% of all workers to the US economy in February 2016.  With increased competition for talent, the cost of recruiting and hiring new employees has become more and more expensive. Moving forward, employee retention will be a cost saving imperative and restaurants must work to slow the revolving door of employee turnover. Conversely, working short staffed has its own costs associated with overtime pay, poor product quality and customer service.

Higher Minimum Wages – Minimum wage increases disproportionately affect restaurants as the food service industry employs close to half of all the people in minimum wage jobs.  It is therefore no wonder that operators are worried about where the minimum wage issue is going.  Many states and municipalities – such as California, Seattle and most recently New York City and New York State – have passed accelerated, higher minimum wage laws that are forcing operators to rethink their labor and compensation models. 

New Regulations Governing Hourly Employees – Paid sick leave, spread-of-hours rules and healthcare insurance are additional changes to the landscape that operators must prepare for now and in the near future.  Ensure that you are fully versed in all the laws and regulations that affect your restaurant, so you can plan for any economic impact of these in advance.  If you need help in understanding these very important rules, get it. Not planning can put your restaurant at risk for a lawsuit.

Changes to the Federal Overtime Laws – The U.S. Department of Labor is working towards changes in defining who is an “exempt” vs. “non-exempt” employee. This will have a major impact throughout the restaurant industry.  Traditionally, salaried employees - such as restaurant and bar managers, chefs and sous chefs - perform manual tasks throughout their day while managing their staff.  New regulations may re-categorize these positions as “non-exempt” based on the job functions and entitle them to overtime pay if their salaries are below a certain amount.  Should this happen, operators will be required to rewrite their manager job functions and descriptions due to the potential economic impact of these changes.

With these big labor challenges, it will be crucial for operators to become more and more efficient to preserve their bottom lines – especially for smaller mom & pop operators.  As discussed in Between the Lines - Operational Challenges That Can Make or Break Your Restaurant:

         “Restaurant success depends on many things, but it can all boil down to 
          one question:  Where does the money go? Having a handle on your 
          operations is a key to answering this question. Have processes and 
          procedures to reduce economic drains, train your staff to follow them and 
          hold them accountable.” 

Not adapting and hiding your head in the sand will lead to poor management and poor fiscal controls – which can make those margins evaporate faster than a sauté pan of boiling water. 

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, 2016-2017. 
Noelle E. Ifshin, President, 4Q Consulting, LLC 
noelle@4qconsult.com  www.4qconsult.com 
244 5th Avenue, Suite 1430, NY, NY 10001  
(212) 340-1137

Restaurant Consulting NYC | Restaurant Industry Changes to Face in 2016 | 4Q Consulting, LLC

Restaurant Industry Changes to Face in 2016

As we ring in 2016, there are some big changes facing the restaurant industry.
Restaurants must prepare to face these changes in the year ahead to mitigate disruption to business operations, reduce costs and maximize customer satisfaction. 

There is good news on the horizon, as industry analysts point to a strong outlook for restaurants relative to the US economy for 2016.  The bad news is the restaurant business isn’t getting any easier.  Restaurants, which already operate on razor-thin margins, now face rising wages and commodity costs, increasing government regulations, and additional security and safety concerns.  

Operators should focus on the following four items to move their business forward in 2016:

The Pressure of Rising Wages, High Employee Turnover and the Reduction in the Labor Force will require operators to think strategically about their HR in relation to their overall operation.   The economic shift from the customer to the employer to cover a living wage – increasing minimum wages and a move away from a tipping model – compels operators to reduce employee turnover and hold on to their best employees.  We have discussed the cost of turnover before, but now more than ever restaurants cannot be a revolving door of hourly staff.  The cost to onboard a new employee is too high and constant turnover can make it hard to maintain your desired level of product and service quality.  Additionally, as the economy continues to recover, there are, and will continue to be, fewer qualified, skilled candidates to fill critical positions.

Technology can and should be leveraged in all aspects of your restaurant from enhancing the customer experience, to managing products and staff, and even monitoring food and beverage storage and usage.  The right investment in technology can help you be more flexible and nimble, which in turn allows you to manage what impacts your bottom line in a timely fashion.  The right technology can enable you to change menus sooner to combat rising costs, launch and track promotions, and ensure that your reservation interface is in-line with what your customers want.  Operationally, new technologies can improve scheduling to reduce labor costs, and increase table turnover to increase sales. Administratively, new technologies can help small businesses with their bookkeeping, payroll and sales tax processing.  Lastly, you must stay compliant in all Federal, State and local technology regulations that keep your customers’ personal and payment information safe from data breeches – which can be a costly mistake.

Caring For and Knowing Your Customer is crucial for your restaurant’s survival. According to a recent report by Morgan Stanley, Millennial’s’ dining habits are drastically different their parents’. Millennial’s eat out more often, view “Healthy” foods differently (they don’t count calories as previous generations), demand food from ethical sources, do not want traditional “Fast Food” and prefer Fast Casual Concepts. Millennial spending habits are expected to peak in the next 3-5 years to become one of the largest growing restaurant demographics in the United States.  You must know who your customer is to be able to provide them what they want, to reach them in your marketing and keep them engaged.

In light of what we discussed above - the challenges in the changing labor market, maintaining razor thin margins, trying to keep up with technology – Consistency must become your central goal.  As we discussed in Consistency Is King, “Customers should not have to spin the roulette wheel each time they visit your restaurant; they should experience the same quality of food and service every time.” When things go wrong, the first instinct is to completely change your operation.  However, as discussed in Restaurants Know Thyself, staying the course and perfecting your operations will dampen down the volatility of the challenges faced.

Modification and flexibility are critical for restaurants to survive in this day and age. However, adapting to the times does not necessarily mean an overhaul of your entire concept.  An overreaction to big changes can often be an over correction! 

Don’t know where to begin?  Do you know how to adapt to industry changes in a timely manner so you can be as profitable 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 

Restaurant Consulting NYC | Seven Deadly Restaurant Sins | 4Q Consulting, LLC

Seven Deadly Restaurant Sins

Owning and running a successful, profitable restaurant is never easy.  When you break down restaurant business concepts into their lowest common denominator, you are left with the “3 P’s” - Product, People, and Process.  What is served, who serves it and how it is served should tell the customer the story of who you are and what your brand is.

The Seven Deadly Restaurant Sins are behaviors that get in the way or prevent you from properly executing the “3 P’s”.  The sins, if ingrained in your restaurant, can become barriers to change, growth and success.  

Think of the sins as “land mines” which must be avoided in order to be successful:

Greed – Greed can often get you into trouble as a business operator.  In a free market economy an operator wants to be as profitable as possible.  However, operators must also financially take care of their employees by offering them a fair wage, and their customers by providing excellent customer service and a product at a price the market will bear.  We have all read about famous restauranteurs who are sued for various reasons:  violating wage and hour laws; not distributing tips properly; underpaying illegal immigrant staff; price gouging tourists; adding gratuities to checks subjectively.  The cost of this greed, in the form of PR headaches, legal fees and loss of business is almost always greater than the few extra dollars you can collect. 

Gluttony – Gluttony is nearly synonymous with greed and is defined as “one given habitually to greedy and voracious [behaviors]; withholding from the needy”.  In business, gluttony can be very destructive; it is not knowing when enough is enough and profiting to the detriment of others.  Your business is a citizen of the community in which is exists; it is important to have a program that gives back to the community or to your employees. In larger companies, these types of programs can help attract top employee talent.  For small businesses, an out-reach program does not have to be expensive - simple, easy and workable are often best.  Try donating leftover food to community kitchens, or left over raw scraps to a company that makes mulch for a community garden; volunteer time for a local cause; sponsor the local little league team.  Involve your employees and get ideas from them about what is important them.  You will be seen as a good corporate citizen, which will pay you back in positive PR.

Pride – Pride is a double edged sword in the restaurant business.  Pride in your product and staff can be very useful to help you stand out in a crowded field, however pride can also act as a hindrance to improving your business.   Pride can prevent you from being able to: recognize when you are on the wrong track; change course in time to prevent a financial downfall; react to factors in the economy – such as rising food and commodity prices.  If you always look with a critical eye, you will always find ways to improve.

Sloth – Sloth is defined in Merriam-Webster’s dictionary as “reluctance to work or make an effort; laziness”.  Laziness in any business is the kiss of death, but especially in the restaurant industry.  Once laziness sets in, standards start to slip, corners get cut and consistency of product and service becomes non-existent.  The antidote to sloth is vigilance of even the smallest details.  It’s the little things you decide to ignore that add up, causing your standards to decline.  As we discussed in Consistency is King, “Customers should not have to spin the roulette wheel each time they visit your restaurant; they should experience the same quality of food and service every time.”

Wrath – Wrath is great anger that expresses itself in a desire to punish someone. Operators who yell, belittle and antagonize employees or customers won’t be open very long.  In today’s world where anything can be posted on line and go ‘viral’ overnight, an operator must be the utmost professional and lead by example at all times.  Once you have a reputation as being wrathful towards your employees, it will be very hard to recruit and keep top talent.  Customers will avoid restaurants where the owner or manager has a reputation for yelling at guests.  Your restaurant wouldn’t exist if not for the employees and customers, who should be treated as the valuable components of your business that they are.  If something is wrong with your business, look at yourself first.  The old proverb rings true here – “A fish rots from the head”.

Envy – Envy is a feeling of discontent or covetousness with regard to another's advantages, successes, and or possessions. The sin of envy in a restaurant is to covet other restaurants, to worry about what others are doing and not to focus on running your own business.  It makes you take your eye off the ball in your own operation, which in turn, can cause your downfall.  Owners must focus on making their restaurants the best they can be, whatever they are – if you own a hot dog stand, make it the best hot dog stand you can without being distracted by what the owner of a five star restaurant across the street is doing (or wearing, or driving).  With focus, you will be much more successful.

Lust – Lust in business is often seen in conjunction with envy.  To lust is to crave or desire something, often what others have.  It can be a lust for power, money, or material objects and, like envy, can lead to unscrupulous behaviors.  Lust can lead to not reporting all your cash income, taking kickbacks from vendors, ordering personal items through the business, and not being honest with your partners and investors about the business’s finances. Besides some of these actions being illegal, these behaviors drain resources and break the trust of those who count on you, putting obstacles in the way of building the business to the level of success it could achieve.

What all these sins have in common is that falling prey to them is shortsighted and they get in the way of flawlessly executing the “3 P’s” - People, Product and Process.  The restaurant business is not brain surgery!  At a basic level, restaurants should be able to provide an excellent product at a fair price through superior customer service.  Avoiding the Seven Deadly Restaurant Sins puts you on the path to building a sustainable, profitable, long-term business.

Don’t know where to begin?  Ask yourself, do you have the proper procedures and operational guidelines in place to help you be as successful as possible?  4Q Consulting can develop customized operational guidelines and training programs to meet your needs. Email us today for a free business consultation at www.4qconsult.com.


All original content copyright Noelle E. Ifshin, 2015.
Noelle E. Ifshin, President
4Q Consulting, LLC
244 5th Avenue, Suite 1430, NY, NY 10001  
www.4qconsult.com

Restaurant Consulting NYC | Between the Lines - Operational Challenges That Can Make or Break Your Restaurant | 4Q Consulting, LLC

Between the Lines - Operational Challenges 

That Can Make or Break Your Restaurant

Today’s restaurants face many challenges: intense competition; rising cost of goods and real estate; and the slow U.S. economy - just to name a few. Restaurants average profit rates of 3-5% of sales* - thin margins by any measure. However, poor management can make those margins evaporate faster than a sauté pan of boiling water. It is no wonder that 60% of all restaurants fail within the first three years **

As a restaurant owner, you oversee all areas of your business.  These can be separated into three basics: Finance, Sales and Marketing, and Operations. Yet with only so many hours in a day, many owners neglect the breadth of their responsibilities, and only watch their revenue.  Sales and marketing is important in getting customers into your restaurant, and we covered this at length in Attracting Customers.  However, it is what happens within your operation, between top-line sales and bottom-line profits, which makes or breaks your business.

Here are the 4 biggest challenges that can make or break your restaurant:

Poor Financial Controls – Owners often watch their sales daily, while not watching their costs and expenses as diligently.  Common sense points out that if your profit margin is zero it will always be zero, regardless of sales level, unless you change something. Restaurants should measure costs in relation to sales on a weekly basis, as discussed in both Why a Weekly Food and Beverage Inventory is Crucial to your Small Business and Does your Restaurant Compile a Weekly P&L Statement.  Reviewing weekly statements allows you to spot problems and make operational adjustments much sooner than waiting until the full P&L at month’s end: improper product ordering and handling, waste, cash management and employee theft can be significant drains on your business, every day.  

As revealed in How Much of your Profits are Being Eaten by Employee Theft, many employees steal because they can get away with it, and few restaurants have the right controls in place to prevent it. Further, Measure by Measure and 4 Simple Ways Your Restaurant Employees Can Help You Be More Profitable showed how not controlling spoilage, waste and improper portioning can decimate your small margins. 

Poor Staff Training – As we stated in our Blog:  A Well Trained Staff is Your Secret Weapon, “People run your business and your business is only as good as your people. An effective training program is an owner’s key tool to ensure consistency in product and customer service, which is a basic tenet of running a restaurant.”  This is true for all staff, at all levels.  

With a properly trained staff you have less waste in your restaurant.  A short list of why this is includes: Training mangers on proper inventory and ordering avoids excess product; stewards on proper product storage and handling avoids spoilage; cooks and bartenders on proper recipe execution and production levels maintains portion controls; and servers on proper use of the POS system minimizes incorrect orders, misfires and voids.

Poor Quality Control – Quality Control is all about consistency. In our experience, consistency is best achieved by adhering to standard operating procedures that are codified in writing. As outlined in 4 Reasons Why Your Restaurant Needs an Employee Handbook, recipe books, job-specific handbooks, and training manuals standardize tasks and clearly communicate to employees your expectations and the standard to which they will be held. These procedures should cover, in detail, every process in your establishment, from purchasing guidelines to how to deal with an unhappy customer. As boring and unsexy as it sounds, excellence comes from consistency, which can only come from diligence and attention to detail. If customers know what to expect every time they walk in your door, they will keep coming back.

Poor Leadership – Whether it is you, as the owner, or an outside hire running your restaurant, there is a big difference between being a manager and being a leader. As discussed at length in Follow the Leader, “In order to lead rather than just manage, which is vital in today’s diverse, fast-paced world, one must be able to be more than a day-to-day task master. While a manager deals with the technical dimension in an organization or the job content, a leader marshals resources, human and otherwise, for the best possible results.”  Leaders communicate vision, build relationships and trust, train, coach and mentor, and encourage change and risk-taking.

Often, managers who come up through the ranks are not properly trained as managers and make common mistakes.  In the Top 4 Mistakes Managers Make in Managing People, we discuss how “Managers are the front line representation of your business and must effectively work with a diverse group of people. They must live and breathe your company core values and practices.”

Restaurant success depends on many things, but it can all boil down to one question: Where does the money go? Having a handle on your operations is a key to answering this question. Have processes and procedures to reduce economic drains, train your staff to follow them, hold them accountable and have trustworthy leaders in your organization. Additionally, you must be vigilant that your standards are upheld, and make changes as needed. It doesn’t hurt to get an outside, objective opinion from time to time as a gut check whether it is a consultant or mystery shopper

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.

All original content copyright Noelle E. Ifshin, 2014-2015.