Chain Reactions

7 lessons in profitability from the big boys.

Given their druthers, most diners prefer independent restaurants to chains. It’s a no-brainer. Independents cater to local tastes and fit comfortably into neighborhoods. Chains offer the same menus and decor regardless of their location. So it may seem counterintuitive for the big boys to offer the little guys words of wisdom. Yet independents should listen up. The systems that make chains efficient and profitable can yield the same results for independents.

1. Cross-Train Employees 

Chain operators make no bones about training staff to do more than one job. Cross-training employees is essential, especially when labor pools are shallow. If a consistently good guest experience is a top goal, only people who take on other tasks (like bussing tables and washing dishes) can make it possible. Hiring employees with flexible work schedules is also important. When a dishwasher calls in sick, a server, cook or host can step in.

2. Schedule Shifts According to Projected Sales and Traffic

Independent operators are prone to simply filling in blanks when it comes to scheduling (“I need three people at lunch and six at dinner”). A more systematic approach considers sales information to determine staffing. Let’s say that on Monday, a restaurant rings in $3,000 in sales. Figure out the number of front of the house workers needed to provide a consistently good experience to $3,000 worth of guests. Compare that figure against Wednesday’s $6,000 in sales and that day’s staffing. If it’s the same, you have to wonder if the guest experience suffers on Wednesdays. The process can be fine-tuned with point-of-sale software that uses data to provide insight from sales patterns, weather conditions and surrounding events that may have impacted business. Also, keep in mind labor costs, which should remain at roughly 30 to 32 percent of sales. Maintaining service consistency throughout the week despite day-to-day fluctuations in personnel impacts the bottom line.

3. Know the Real COGS

No chain would open a unit without knowing the cost of every plate down to the last ingredient. Unlike independents, however, chains have armies of auditors to figure out the cost of goods sold. Independents often get tripped up by theoretical versus actual COGS. Consider this example: Your POS system shows 20 brisket sandwiches sold during the week, each with 8 ounces of brisket. And let’s say you don’t use brisket for anything else. That should equal 10 pounds of brisket used each week, but you notice 12 pounds are gone from the order. What happened? Did 2 pounds get wasted? Was portioning off? Did servers make a mistake? Understanding what accounts for the difference between what’s sold and what’s used (known as the gap) is crucial to operating profitably.

4. Build a Culture

Culture is an overused word in business, but it’s nonetheless critical to team building and instilling a sense of purpose in staff. Many chains teach employees what it means to work at their restaurants. Unless you’ve created an environment where everyone understands their role is more than merely cooking and serving food, you risk providing inconsistent service.

5. Try Re-Portioning to Rescue Slow Sellers

Chain bean counters may price that brisket sandwich at $12 only to discover diners don’t order it because it’s too pricey. Headquarters immediately re-portions the sandwich relative to its new price. An independent may not act as swiftly, counting on personable servers to sell the sandwich. To avoid that scenario and the loss of money, make pricing and portion size systematic. Meet regularly with managers and key hourlies for financial and operational reviews. In the case of the sandwich, ask the team what the restaurant should do based on customer acceptance and cost. Then you can determine if a lower price requires re-portioning or new ingredients and whether the kitchen can rebuild the sandwich as easily as the original.

6. Manage Ordering  and Inventory

Independent operators wear many hats, which often makes monitoring inventory a hit-and-miss activity, or worse, leads to tying up capital. For example, a standing order of 12 cases of beer arrives weekly even though four cases are chilling in the cooler. This means you’re paying for four unneeded cases. Fix the problem by checking inventory and adjusting the order for each drop. This process frees money for other needs. Also consider the cost benefit of searching for the best price of ingredients. Could that time be better spent elsewhere? The best solution can be found in your POS. Numerous companies offer software to track inventory and product prices.

7. Monitor the Guest Journey

Chains have budgets to hire pricey consultants to systemize ways of satisfying guests. Independents can copy the process by redefining the guest experience in relation to the restaurant’s culture and values. Do hosts, servers and managers take their cues from guests? Or do they use a scripted one-size-fits-all approach that suggests they aren’t truly addressing individual needs? Today’s enlightened chains (and some independents) also consider the physical attributes of the restaurants—lighting, furniture, tabletop, food and uniforms—and how they influence a diner’s sensory experience. Conduct your own tracking by dissecting the five components of the guest journey: entrance, greeting, dining experience, payment and departure. Chart reactions at each section to gauge your operation’s strengths and weaknesses.