Commentary: Share the wealth

July 31, 2011
Commentary: Share the wealth

As every operator knows, the restaurant business is a penny business. We work on relatively thin margins and don't have the luxury of harboring a casual attitude when it comes to controlling costs. Recipes and portioning must be meticulously controlled and monitored; labor must be managed down to the quarter hour, ensuring optimum productivity whenever an employee is on the clock. Waste in all areas, food, paper, utilities, operating supplies -- the list is endless --must be controlled and minimized.

You have to look for efficiencies in every facet of the business if you are going to optimize the cash flow of your business. Some owners will spend hours laboring over their financial statements, interpreting and analyzing, trying to figure out where there is room for improvement. This is sometimes a lonely examination, with consultation limited to the management team of the restaurant. The hourly team members are seldom brought into the discussion and analysis. Some operators look at their employees as part of the problem, as opposed to part of the solution: The employees are the ones creating losses as opposed to generating savings.

The fact is, most of the keys for improving restaurant profitability rest in the hands of the hourly employees in your restaurant. And if they are going to be allies in your battle to bring dollars to the bottom line, they must be informed. Keeping them in the dark only serves to lessen their desire to control costs on your behalf. In fact, if they have a false impression of the profitability of your restaurant (i.e. they believe you are generating more profit than you really are) they are less likely to take the care that is needed to optimize profit, and are more likely to partake in their own self-designed profit sharing program.

This summer, I am traveling through 18 cities with members of my Firehouse Subs HQ Team. We are conducting interactive crew rallies with thousands of hourly employees. One of the items on our agenda is a contest where we pit two crewmembers against each other in an attempt to guess what the typical costs are for operating a Firehouse Subs restaurant. The audience learns as the expense categories are revealed, and ultimately, the winner is the employee who at the end of the exercise guesses the closest to the average profit of a Firehouse. It is a real education for our franchisees as well, as they routinely see their hourly employees coming up with profits that run as high as 40 cents or more on the dollar.

When an employee believes that their employer is being enriched to the tune of 40 cents on the dollar, it is hard gain their commitment to bettering the profitability of the restaurant. Once your employees understand the real margins involved in your operation, they have a much better appreciation for why you focus on the things we do in the restaurant, and there is a much greater chance that they become collaborators in your attempt to make the most of every dollar that is handed to them by the customer.

So, share the knowledge about the wealth of your restaurant. In the end, it will enrich everyone on your team.

Topics: Loss Prevention, Operations Management, Staffing & Training

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