The Combination to Real Restaurant SuccessJun 13, 2022
All business problems are people problems.
I want to share with you some of the challenges that I faced back in the 90s when I opened my first restaurant….
Up to that point I had been in the industry for 15 years. It’s hard to believe that I’m coming up on 42 years in the restaurant world….(yes, I’m old).
I thought I had the experience required to open and operate a successful restaurant. On the surface, I did have a lot of the skills that a restaurant owner needs. Back then I thought that knowing how to run a restaurant was all I needed. Looking back now over four decades in this crazy industry….I see the errors in my thinking.
Having experience, work ethic and knowledge of how a restaurant operates is just 20% of what it takes. You see, I knew how to run a restaurant, but I did not know how to build a profitable brand that would give me the freedom I craved deep down.
Think about “why” you opened a restaurant? Was it to have a “job” or was it to have financial independence and freedom?
Instead of becoming “the owner” I gave myself six jobs instead: Chef, General Manager, bookkeeper, HR Director, Chief Marketing Officer, maintenance man, and Beverage Director.
And my restaurant didn’t “take off” as I expected. And I wasn’t sure why. I mean come on, I had worked in Santa Fe, New Mexico as a chef for years before opening my first restaurant. I had won awards and was praised in the media. Opening a restaurant was a slam dunk, right?
No. Far from it. In fact, I was like many restaurant owners thinking that I just had to work harder to get ahead. I can look back now and I describe it as falling into quicksand.
What happens when you fall into quicksand? Your first instinct is to fight harder and escape the quicksand. You don’t realize that the harder you fight back (work more) the faster you sink.
They say that when the student is ready, the teacher will appear.
I was just about when I was about to go under my mentor appeared.
Peter was a well-known and highly respected local businessman who built his fortune (around $65M) from his fire truck company. Yes, he built fire trucks.
We sat down one evening and he shared his story which was very similar to mine. He had an overinflated sense of confidence that he had a product that few offered and he would be a huge success overnight just by offering his fire trucks to the world.
He said that he didn’t realize (at the time) that fire truck sales are more about government contracts and relationships. He openly shared that his first two years were very lean and many times his accountant told him to close the company. Peter knew that sometimes when you find yourself hitting your head against the door you have to stop, reassess the situation and take a new approach.
Peter said, “I knew things had to change. I had to change. I stood back and realized that the solution to this wasn’t what I thought it should be. My ego and pride keep me stuck in a loop of getting the same results which were low sales and even lower profits. When I changed my mindset and my approach to the situation by not thinking about what I thought was best, but getting outside feedback and applying it…everything shifted in the right direction. I started to focus more on building relationships and not just closing sales…it opened the door to what we have today.”
He also offered to be my business mentor for a year. It was during this time that I was first introduced to The 3P Framework. He told me that this framework is what turned his company around and if I applied the same process map to my restaurant it would save me as well. Now, the original way it was taught to me is People-Process-Product.
For restaurants, I switched the order around to be People-Product-Process. The reason I changed it was because I feel that when people and processes are working together and supporting each other they bookend and protect the product.
Over the last 13 years, I have had the honor to work with over 2300 independent restaurants and this process has proven to be the most effective way to build true long-term success.
I often refer to it as The Combination to Restaurant Success
If I gave you a three-digit combination lock and said, “Open the lock.” Could you do it without knowing the combination? Just so you understand the statistics…in a three-digit combination lock, there are over 1000 possible combinations that COULD open the lock.
What if I gave you the three numbers AND I told you the order they go in? You’ll open the lock every time.
The 3P Framework is the combination to help you focus on the right things at the RIGHT time! By putting the numbers to opening the lock in the right order.
That’s the lesson I learned the hard way. The things I thought were keys to restaurant success were not the things that actually created long-term success. When you take shortcuts you can find some immediate results, but I can also say with 100% confidence that they are not substantial long term.
The 3P Framework is quite simple on the surface and yet has layers of complexities that are worth exploring. At this time let’s look at the level one frame: People - Product - Process
I like to think of it as building a house!
When you’re building a house the foundation is everything. Would you build a multistory building on a weak foundation and then move your family into the top floor? Hell no! So why compromise and create a culture that won’t allow you to have the restaurant you want?
Foundation (People) = Culture + Team
People is having not only the RIGHT people, it’s about having them in the RIGHT position on the team.
People is about cultivating a culture that will allow your brand to grow and operate WITHOUT you! If you don’t get the culture right then nothing else will fall in place and you will be constantly chasing your tail.
Culture is more important than you might realize. I’ve had clients that had a “toxic” culture and describe it as running on a giant hamster wheel every day.
Then they get an opportunity to expand their brand to another location (without fixing the culture first). What they get is not just another location, they get a bigger hamster wheel too!
#WriteThisShitDown - Without the right culture, you’ll always be stuck working IN your restaurant.
Culture starts with understanding the Triad (mission, core values, and vision) and bringing them to life every day within your four walls. 80% of restaurants talk a good game about the core values and few actually have the courage to live them through the actions they and their team take daily. Be in the 20% that walk their talk.
Hiring is the gatekeeper that protects that culture. When you take shortcuts and don’t conduct and solid interview you let in those that might damage your culture. It only takes one bad apple to ruin culture.
Training systems are another critical element to the foundation that many don’t give the respect it deserves. In my coaching programs, we follow the 70:20:10 method for training (known as blended learning).
70% of your training is hands-on (what’s known as kinesthetic learning), 20% is active feedback or mentoring (this uses auditory-visual), and the final 10% is reinforced learning via online training videos and quizzes.
Framework (Product) = Menu + Marketing
Only after you have a solid foundation is it time to upgrade your products. You basically have two products that work in unison with each other…your menu and your marketing (known as the M Squared Coefficient or M2C)
This would be the frame of your house. A solid frame can withstand harsh weather. When you have your products solid, your restaurant brand will be able to handle the economic storms that will come.
I moved the traditional process-product frames around for one reason…while 100% of restaurants have a menu and do some posting or advertisements, 80% do not have their menu costed out or know how to market effectively.
Not knowing the cost of everything on your menus is the number two sin I see in restaurants. The number one sin is mediocrity.
The framework modules are actually harder than the process work. When owners see the process part they immediately think that is the one thing they need to focus on now. Little do they know that if you don’t have the people and product phases solid…none of the process stuff matters.
So the product is not just having a menu. It’s understanding the business side of a menu and that is knowing your theoretical food cost.
Speaking from personal experience of being a chef and a restaurant owner, I loved the creative part of the culinary piece. Getting in the kitchen and playing with food was my flow state…I would lose track of time when cooking. The owner in me loved connecting and talking to guests. I’ll admit it was a little ego stroke to get raving compliments on the food.
My mentor (Peter) quickly pointed out that you can’t deposit positive reviews. You put dollars in the bank and if your numbers are not set up correctly from the start you’ll go out of business quickly.
It’s estimated that 20,000 new restaurants open each year in the USA. In just three years 10,000 of those new ventures will close their doors for good. No amount of hard work can save a restaurant concept that doesn’t know its costs.
I also have to come clean and confess that when I opened my first restaurant, I did NOT cost out my menu and did not do an inventory! For years as a chef when I worked for other, I was told to do those things because it was a part of my job. When I became a restaurant owner I honestly didn’t think I had to do that anymore.
It would have been better if I had just walked around with a giant S on my shirt! Not an S for Superman, an S for Stupid!
Peter told me that I cannot be blind or avoid the business side of my restaurant. He was right and until then, I was just making excuses when the reality is I avoided it because I didn’t like that side of the business.
#WriteThisShitDown- You will not like every job you have to do as an owner (or even manager) in your restaurant. You have to trust and respect the process or it will bite you in the ass!
In the product phase, we tackle this elephant in the room right away. It is the hardest part of my coaching program. Unless you are the kind of person that loves numbers and spreadsheets…it will test your patience and at times you will question if you really need to do this stuff.
Let me stop you right here and say: YES, YOU HAVE TO COST OUT YOUR MENU!
Once we swallow our pride and stop kicking and screaming about doing the costing thing…we move on to creating a menu that increases sales.
Contrary to the advice of your professional graphic designer who made you a menu that looks amazing…it is riddled with so many faux pax’s that it’s actually hurting your sales.
I appreciate and respect the skill sets of graphic artists, they just need to incorporate the elements of menu psychology to elevate the ordinary into the extraordinary!
After your menu is solid and profitable, now we can talk about effective marketing.
Let’s get clear on this: every restaurant posts or advertises…only 20% truly market their brand where they get a return on their investment.
The other 80% throw massive amounts of money down the drain doing things that just are vanity metrics such as likes or views.
I have a lot of friends that have over 100K followers on Instagram and yet they struggle to make a decent living from it. Followers does not mean that you have the “right” followers.
A well-designed marketing program will show you how to identify your ideal guests. It will show you how to tap into emotions. It will show you how to share your mission, core values, and vision with the world. You’ll learn how to take people with you on a journey (or story) through video and when that happens, they become raving fans.
Posting is easy. Marketing that matters and has an impact on your brand takes a plan and consistency.
Only after we have a rock-solid foundation and framework up on our house do we install the walls and place the roof on top.
Walls & Roof (Process) = Systems + Strategy + Sustainability
When you get here, it’s like all the pieces start to fit together seamlessly.
We start by putting up the walls by implementing a module I call is the Systems Stabilizer. Every restaurant has some systems in place. 80% don’t have all the systems they need or they can’t get their staff you use the systems properly. Now, looking back over The 3P Framework, IF you did the People phase properly then this does not become an issue for you.
The culture, accountability, and training should be embedded into your restaurant by now so this part is just about giving them the proper tools to make them more effective. If your team is more effective and self-sufficient, they don’t rely on you being there as much…
Do you see that this is the start of you working less IN your restaurant?
Systems need to be CCTE: clear, concise, trainable, and enforceable. The key word when installing systems is accountability. Without it, the systems will never be utilized to their potential. Many clipboards with checklists that are never followed hang on the walls in average restaurants.
You need to explain the standard and expectations for every task on the checklists or else the staff will make their own standard. Trust me that their standards are typically lower than yours.
Once we get the systems (or walls) up and secure to the framework, then we go to work on the roof.
Your roof is your strategic plan.
If you fail to plan you are planning to fail.
80% of restaurants have the plan of “open the doors and hope for some business”.
#WriteThisShitDown - Hope is NOT a strategy.
It breaks my heart to see good restaurants that have untapped potential just waiting for things to happen. I know because that was ME when I opened my first restaurant! I thought I could get by on my reputation and culinary skills…yeah, lesson learned the hard way.
To help you avoid the mistakes I made, I’m going to take you through my strategic planning system called stratMAPS, these tools have allowed my clients to focus on growth and put them in a position where they are ready to take advantage of opportunities that come to them.
Oh, that’s a byproduct of implementing The 3P Framework, you’ll rise to the top of the Success Pyramid and become recognized as a DRIVER in your market. Business opportunities will start to come to you out of nowhere and you’ll be very tempted to jump on them.
Here’s where I need to caution you to wait just a little longer until we finish The 3P Framework. You’re close to getting it ALL and it’s easy to be lured by the sound of opportunity.
Jumping on other opportunities (or projects) BEFORE you finish getting the entire 3P Framework in place would be like getting ill, taking an antibiotic, and just when you started to feel better…you stop taking the antibiotic before you take all the pills. What happens when you don’t finish the entire antibiotic prescription? The illness comes back twice as hard and kicks your ass! Let’s not do that.
For strategic planning you’ll need to look at six different views of your restaurant: 5-year plan, 1-year plan, quarterly, plan, monthly plan, weekly plan, and daily plan. I know it seems like a lot, but once you get the habit of doing this it becomes fast to maintain. Just like any new habit, the learning curve (the first 66 days) is the hard part.
Once our roof is secure, now it’s time to insulate and seal it (make it leakproof).
This is where you dig into those KPIs or Key Performance Indicators that drive profits. There are around 40 KPIs to look at, however not all KPIs are created equal. In the restaurant world, there are only 7 that really matter: Prime Costs, Guest Check Average, RevPASH, Discounts & Comps, Employee Turnover, Profitability, and Cash Flow.
You’ll also need a few key financial tools in the fight for profitability. Your P&L (Profit and Loss Statement) and your budgets. They become your engine and steering wheel that you refer to daily. How far would your car go with the check engine light on or if you were leaking steering wheel fluid? Not far.
Once you have these all in place you will have a house you can move into and be confident that it can weather the storms that will come to you. Recessions, market shifts, supply chain shortages, shallow labor pools, and ultra-competitive markets all hit restaurants. Depending on your location, these things could hit you more often than others.
The 3P Framework also becomes a tool for making decisions and staying on the RIGHT track. Distraction is a constant battle for most restaurant owners. Just like having that three-digit combination lock I mentioned earlier, you need all three numbers, in the RIGHT sequence to open the lock. Once you understand the combination you can open the lock whenever YOU want.
The Key To Scaling Your Restaurant Brand
Now, I’m not quite sure what your long-term goals are for your brand. A lot of restauranteurs want to grow their brand beyond one location. If that is you, then this is something you should realize…The 3P Framework the secret restaurant groups use to scale.
I saw this proven when I was a chef with Wolfgang Puck.
Wolf has a large restaurant portfolio that includes catering, casual concepts, airport restaurants, prepared food products, and his fine-dining restaurant group.
He set up his brand using The 3P Framework!
The people part (culture) at all Wolfgang Puck restaurants is the same. We had the same core values, mission, and Wolf’s vision. We also used the same hiring, onboarding, and training systems.
The process part was also the same across the brand. We took inventory the same, we had the same checklist, we followed the same P&L format, and we tracked the same KPIs.
You could easily take someone from one concept and plugs them into another Wolfgang Puck brand and really all they had to learn was the product part! It was so easy to move our people around (resources) as needed because the people and process parts were set.
That’s the true power of The 3P Framework.
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