Restaurant
Last year this family-owned and operated restaurant experienced the largest volume ever in its 52-year history. However, the business was not operating at a profitable level. The owner knew his restaurant needed to be turning a solid profit. He planned to move to a different part of the country and open a second restaurant, while leaving this one in the hands of his general manager.
As is often the case in the restaurant business, the owner - son of the founder - had a great deal practical knowledge and creativity in food operations. What he lacked was the ability to develop and implement formal programs that are necessary to provide consistency, as well as adequate managerial and cost control.
The restaurant's general manager had been an employee for four years before leaving to work in another industry. He recently returned as general manager, however, he had no formal business training or food service training. In addition, a waitress supervisor recently had been hired and was beginning to provide important contributions.
The 140-seat restaurant had a significant following in the area, thanks to various "specials" nights, which were drawing customers from miles around. It also was open 24 hours a day, seven days a week. All this was accomplished with no formal procedures anywhere in the business.
In this environment, the George S. May International Company Survey Analyst found a range of situations and issues that had grown through lack of established policies. The information discovered by the Analyst grew from a single Management Service Job into three different, yet interrelated, programs to get the business profitable. These programs included Food Cost Control, Organization for Management and Managers And Management Training.
Some examples of specific issues discovered in the course of our work with this restaurant included:
- Wait staff made few attempts at suggestive selling, being too ready to sell down to the specials instead of selling up to higher priced selections.
- Operating statements were prepared by a CPA, but not used in planning or operating business.
- The general manager was concerned his lack of training and business knowledge would show.
- Lack of formal procedures caused some confusion, as well as wasteful ordering and portion control.
The Management Service team went to work and over a four-week period developed a series of specific recommendations that they helped the restaurant owner and his general manager implement.
Some specific actions, such as increasing menu prices 15 percent to a level equal to the average prices at comparable restaurants in the area, were very significant in providing additional dollars to the operation. Other moves, like increasing the meal deduction for employees, provided smaller improvement but when totaled together became equally profitable.
Among the other recommendations that were implemented at this restaurant as part of the George S. May International Company Job Programs were:
- Develop budget and operations plan for restaurant.
- Establish controls over the food purchasing process.
- Check what is delivered by vendors with what was ordered.
- Perishable and non-perishable items need to be stored properly and rotated.
- Establish specific food preparation and portion guidelines.
- Adjust menu prices to market averages for the area.
- Develop job descriptions plus tasks-and-duties list for each position.
- Write an employee manual.
- Create an employee evaluation system.
- Develop and install a cash-flow forecasting system.
- Develop weekly operational reports.
- Create and put into operation an employee incentive program.
- Provide hands-on practical training for managers.
These actions supplied the owner with the management and cost controls that gave him the confidence that he could turn over operations of the restaurant to the general manager and fulfill his goal of moving and opening a second restaurant.
