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How to achieve operations excellence
By Hugh Johnston
February 17, 2012

 

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How to achieve operations excellence at your restaurant or foodservice operationThe difference between a great operator and a poor one is often the difference between great returns and none.  

Time and time again we see cases where changing an operator can earn or cost a restaurant a quarter of its sales volume. (Yes, the impact is that dramatic.) So what separates the great ones from the rest and what can you do to “up your own game” to become one of the best? 

The best operators are guest focused. They do everything they can to meet and exceed their customers’ expectations. They are impeccable at the “table stakes” in restaurants: clean restaurants, great service and great food at a good price. 

Focus on guests

In short, great operators get more guests and the operator that gets the most guests enjoys the lowest total cost per guest.  

Tips from some of the best on how to drive volume through operating excellence include:

  • Sweat the details. Get the “moments of truth” with your customers right every time and they will reward you by coming back.
  • Know your regulars. Treat them like the most valuable guests you have (because they are).
  • Run your restaurant more effectively at peak times to get and sustain higher sales per hour than your competitors.
 
Keep things moving

Operators that serve more guests have fresher and better tasting food. Nothing sits for long in a busy kitchen. Great operators engineer their menus to move more volume. They think “why do anything you are not good at?”  

When you offer mediocre value you can’t expect customers to be happy about it. Seems like common sense, but, sadly, it is not so common. Great operators know they make money when their guests return over and over again; bringing guests back is easy when you are good at everything you do. 

Tips from some of the best on food costs include:
 
  • You don’t bank a percentage of sales, you bank dollars. You need to know the difference between appetizers and entrées, steak and pasta and what they do to your guest counts and cost bars.
  • You can reduce food costs and waste by selling more of everything you make. If you want to know what your guests don’t like, check your garbage.
  • Remember the seasons. You can have a generous hand when you portion in-season items – but be careful who’s handling out-of-season ones to keep your yields in line.
Control labour costs

No cost is more sensitive to guest counts than labour. Great operators have great labour costs because they serve more guests. That said, there are many things that make a labour cost model work well. 

Who you hire and who you retain is the biggest labour concern of all. People who have the hospitality gene make you money; those who do not “have it” may be better off “promoted to guest.”

Tips from some of the best on great labour operations include:
  • When people are not working out, send them on their way. Clean the place out if you have to.  Engaged employees lead to happy guests, increased sales and lower turnover.
  • Put your Aces in their Places. You make most of your money when you are busy and that is when you need your best people on the floor, behind the counter, at the window, and on the line.
  • Use smart scheduling to make sure you have the right people on when you need them and manage your labour hours by 15 minute increments.
Raise operating standards

Operators who take care of their restaurants take care of their guests. Operators who scrimp on maintenance and cleanliness eventually kill their guest counts. They create a “doom loop” where eventually even inadequate operating standards become too expensive to maintain.

Tips from some of the best on how to lower operating costs include:
  • Keep the place in great shape. Don’t “run to failure” waiting for your equipment to break or your leaseholds and menus to start looking shabby before you invest.
  • Get your hours of operation right. Serve your guests when they want to be served and close up shop when they don’t.
  • Add a new channel of business to leverage your existing space. Examples include take-out, drive through, catering, or even acting as a commissary for a satellite location.
Keep your finger on the pulse

Two sayings in retail restaurants are great because they are true: “Retail is detail” and “the restaurant business is relentless repetition.” Great operators get a huge sense of satisfaction when they master their craft. They truly enjoy doing the same thing over and over again, and doing it very well. Paying attention to the details matters. 

Tips on keeping your finger on the pulse of the business include:
  • Relax when the restaurant is busy. When things start to slow down things go wrong; this is the time when the best operators are on their toes.
  • Use “in-the-moment” key performance indicators (KPIs) to tell you how things are going, such as: line-up length, open menus, open tops, table turns, seat covers, guests served per minute, chit times, and feedback from speaking directly with your guests.
  • Manage the tenths of one percent on your profit-and-loss records. Make sure everything makes it into the books and keep track of your sales and costs. When they get out of line; you will know.
Get your capital and financing right

Most operators, franchisees and independents in particular, need to make sure there is money in the bank. You need cash to buy food, make payroll and pay the rent. Restaurants without adequate invested funds end up scrimping on the very things needed to make them successful.

Tips from some of the best on financing include:
  • Keep your working capital in the bank. You sell your food in ten days and pay your bills in thirty.  Keep that money in the bank and do not spend it. It is your cushion.
  • Make sure you have a great banker that “gets your business.” When you do, be impeccable with your word to keep your  great banker confident in the risk they take on you.
  • Keep your assets in great shape. Milking a restaurant is a road to going out of business. When you milk your restaurant you are really milking your guests, and guests don’t like to be milked.

Operations excellence is one of the top three profit drivers in the restaurant business. At the end of the day, you can make lots of money on great operations. How much can you make? As much as you can make on 1) developing your value proposition to your guests or 2) from picking a good location.  

Find out what you can do to become a better operator. Try things that are “new to you” that others do every day as tried and true ways to operations excellence. You will make more money.

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About the author:



Hugh Johnston, CA, CMC is a strategy consultant working with chain restaurant and foodservice leaders to unlock greater value in their business. For more information contact Hugh at 416-662-5670 or visit
hughjohnston.com
 
 


 
 
 
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