Food & Beverage is Like Clockwork
To the untrained eye, food and beverage operations may appear to be relatively straightforward. Although each process or aspect of the operation is easily identified, to be successful you need to know how the processes and systems work together. The misconception about the complexity of operations may very well explain the low success rate.
Only a small percentage of operations make a healthy bottom-line profit. Others are breaking even, some are operating at a loss, and others have a long uphill battle to profitability. No matter which one applies to your operation, you need to have the right financial systems, measurements, and understanding in place. Doing so will enable you to maximize profit and create stability to give you the greatest chance of success, which is, or should be everyone’s goal.
Some may only need to fine-tune certain areas and tie up some loose ends to maximize profitability. Others may be in a more challenging situation and require a greater amount of work and resources to change the course. The great news is those operations also have the greatest upside and rewards, which is important because they will have to put in the effort. But if it is worth doing, then do it.
It is hard work either way, so choose your hard.
There are companies and service providers that claim to have a quick fix or the one solution to solve all your profit problems. Some even claim that you can put your operation on autopilot. Be leery about these claims as chasing the dream of an easy solution may only lead to a dead end that has wasted valuable resources of time, energy, and income.
Don’t get me wrong – there are several reputable companies that specialize in very specific aspects of the operation, as well as software solutions that can be valuable resources. It is important to do your research to make sure you select the right company to work with. Equally, if not more important, is ensuring you know what exactly the problem is that you are trying to fix. Don’t get caught up in someone else’s opinion about your operation, especially if they have not taken the time to understand it.
Which side of the 49% are you on?
In 2023 it was reported that only 49% of restaurants were profitable. Which side of the 49% is your operation on?
If you are in the 49% that is profitable, it is not time to sit back. You may already believe your profit should be higher, but you may be uncertain of what the next step should be. Not knowing what steps to take is completely understandable, and it means that you understand that being successful in food and beverage operations depends on several things working together.
Food and beverage operations are complex, and one seemingly minor change could have an impact on other aspects of the operation. This is why a quick fix is not always the best idea, as you can end up chasing one problem after another. The reason is that the food & beverage operational structure is not built with individual linear processes, systems, and activities. It is more like clockwork.
What We Think – Processes Are Independent
What Reality Is – Processes Work Together
When looking directly at the gears on a watch, we see how they are all working together to make it function. The gear on the bottom may appear to have nothing to do with the gear on the top. Remove it, change it for one with more teeth, or try to make it better without understanding its impact on the gear on top and it may affect the performance, or the watch may stop working altogether.
How Do You Make the Change Without Stopping Time?
When problems related to profit are complex or involve more than one aspect of the operation (which they often do), how do you make changes without stopping time? Ideally, operations are better if they constantly evolve over time, as it is easier and less disruptive than big changes all at once. Big changes can only be accomplished with a well-thought-out and strategic direction.
Looking directly at the watch’s face, it would be next to impossible to see why the watch is not working properly. This is the same with food and beverage. You may not be able to see the problem or only what is on the surface. It can be very difficult for you to identify the problem and solution when you are immersed in the operation. It is very time-consuming dealing with all the tasks and challenges of the day-to-day business; however, with the right support and approach, the complex, interconnected systems start to become very clear. That is where a food & beverage expert can help. They can look at the operation objectively, and without having the noise of running the operation they can see the whole picture clearly.
What is a food and beverage expert, and what makes them different?
Aside from not being immersed in the operation, a food & beverage expert has or should have the edge.
What is the Edge?
Among other things, it is when you do something frequently, fail at it, succeed, and learn from others to the point where it becomes second nature. Some may say it comes naturally, but it isn’t natural, it’s learned.
You may be thinking I have spent too much time in the heat, but that is what an expert really is. They just seem to know, and if they don’t, it is easy for them to use experience to quickly understand and adapt to the situation at hand. Look at your favorite professional athlete. If they never played the sport and then went to try out for the big leagues, do you think they would make the team? Absolutely not! Sure, they have some natural genetics, but the rest is learned. They may be able to learn faster than others and can quickly adapt and change to a constantly evolving situation without hesitation. That is the Edge and with it, comes the ability to execute. Sure, some can mimic, but that doesn’t work well in business when every operation, employee dynamic, and situation is different.
I will never be able to fully explain elite athletes, how a child can just start playing the piano one day, how my phone can do what it does, or how hundreds of different things work, but food & beverage makes sense. It may be from being around the hospitality industry for as long as I remember or experiencing and working in different roles in many diverse properties for many years and having to learn how to identify problems and find solutions. It may also be from failing, learning from my mistakes, and having to unwrap what I created in the first place. It may be a combination of everything. All I know for sure is food and beverage operations make sense.
So, What! How Does This Help?
To my point, no matter how you decide to look for opportunities or for support, make sure that the people you work with get it. You need an expert. It will be the most effective way to support the overall success of the operation and ensure that everything is working together.
If you try to work on all aspects of your operation independently of one another you will be working with many different systems, coaches, and people. Don’t get me wrong, if you know you have one specific issue, and know someone who does just that, and feel like they are the right person – then hire them and go to work.
How do I know? I started my own business and spent time and money chasing one-off solutions. Even though I knew better, I did not know enough about everything to come up with the right plan. Finding the right coaches and support made all the difference.
The Past, Present, and Future
You know it better than anyone, our world has turned a bit upside down. Over the past two years, we have seen:
- Labor challenges,
- Costs increase dramatically,
- Dramatic increases in take out and delivery, and
- Decreased volume / Higher spend.
Customers in the present market have, for the most part, been accepting of price increases because they can easily relate to the rising cost of goods, understand the staffing issues, and are willing to accept less-than-perfect service levels.
The challenge in the future is that, in many cases, raising price increases only covered the COG increase. Continuing to raise prices and decrease portions will not be an option. As a friend likes to say, “that ship has sailed” because prices are at a tipping point, and portions can’t get much smaller. There still needs to be value, and to keep pushing that envelope is very risky.
Operators need to find other ways to increase profitability and to specifically address the labor shortages. Customers have been understanding to this point, but that won’t last forever. In fact, some operations have figured it out and are able to attract and retain the best talent. Whether we want to admit it or not, the workforce has changed, and it will cost money to attract new employees. We need to invest in training and development, improve work environments, and get the support needed to make it all happen.
What Can Be Done?
With the possibility of raising prices off the table, what can be done to increase profit, offer competitive wages and benefits, and fund employee development? It comes down to the boring, not sexy, but necessary financial fundamentals and foundation. End of story! There is no miracle around the corner, and gut feeling and hope will not get us through this.
Put the FU in Fundamentals
That’s right, financial understanding, what did you think it meant?
So, what is it?
Financial understanding and fundamentals. It is everything from recipes, purchasing, receiving, storage, food safety, menu content, menu pricing, menu engineering, menu layout and design, sales strategy, forecasting, productivity measurements, scheduling, budgeting, expense analysis and control, table configuration, processes, and standards. Yes, it is leaving no stone unturned.
That’s Too Much!
It may seem like an impossible undertaking, and some of you may have checked out, but if you have a food truck, restaurant, long-term health facility, hotel, or resort that has a dining area, kitchen, menu, POS, or a building, then you already have a lot to work with. The key is to work with an expert, someone with the Edge and ability to execute, help strengthen your foundation, and work with your systems and team to identify actionable solutions.
Now, you may have apprehensions – I get it. Every time there is a problem, someone wants to sell you the latest solution. I am all for technology, and that may be something that would be a worthwhile investment, but there is a lot you can already do. The investment in equipment and tech would be the cherry on top.
Here is the best way for me to relate buying equipment or tech if you don’t have the right foundation in place or leaders with financial acumen. As a terribly inconsistent golfer, I was paired with an older gentleman that I hadn’t met before. After a disastrous mad scramble to the green, I made an amazing putt. He looked at me and in his southern accent said, “You know what we call that son? Whipped cream on crap.” (Well, a bit more vulgar than that). Basically, no matter how great the putt was, the overall game was still crap.
When you have your operation in order, the whipped cream (equipment and tech) complements it. Because, like my golf game, no amount of equipment or tech will solve your problems until you have everything else in order.
The moral of the story is, nothing is impossible, and we all need support at one time or another. Find the right support you need and make the investment. The end result will be the cherry on top.