The restaurant industry is still chaotic. Inflation is here to stay. Costs are up. Demand seems impossible to forecast. This chaos is leading to uncertainty and confusion for many restaurant owners.
When the world swirls around us, pulling us from fire to fire, we can’t tell what’s around the next corner. We can get lost in the complexity and unknown.
It’s time to simplify.
A Different Response
In this type of market, leaders need to be deliberate in where they direct their attention. There are restaurant owners who are getting lost in the complexity and those who have simplified, becoming disciplined with their attention.
Here is what being lost in the complexity looks like:
- Your nervous energy leads to constantly checking in on cash.
- The number of “essential” data points you look at is growing faster than your ability to do anything about them.
- You find yourself constantly adding new menu items to try and lift demand.
Here is what simplicity and disciplined attention look like:
- You have a process for keeping an eye on your accounting, but you recognize that accounting is filled with lagging indicators and treat it as such.
- You have <5 core metrics you check in with regularly, and those metrics are constantly driving your decisions.
- You have a plan that, while imperfect, provides you with a clear path towards your goals.
A First Step to Simplicity
There is no golden lever that, when pulled, will show you how to solve all your problems. But there are some pretty good places to start.
One of the best metrics to look at is your prime profit.
Prime Profit = Sales – Food Costs – Labor
[STOP] If you are feeling overwhelmed with handling financing and accounting for your franchise, you shouldn't be -> Let's Talk
This is an offshoot of the Prime Cost Concept, but taking sales into account.
There are a few reasons I recommend this as a key metric:
- It’s simple: It’s a quick calculation without complicated equations.
- It’s wholistic: It provides a reasonably big-picture view on finances.
- It’s actionable: When you see a problem with your prime profit, it’s easy to see ways to improve.
You can’t cost-control yourself to success in the restaurant business, but when you start looking at this metric regularly, you will wonder how you ever ran your business without it.
You will want an above-store-reporting system to track these numbers quickly and easily (please reach out for a recommendation).
These types of recommendations are what we spend a lot of time talking to our customers about. Sure, we handle our client’s accounting, but that’s table stakes.
Are You Ready to Start Simple?
We really love to help clients by leveraging finances to inform decision-making and helping restaurant owners focus on the true drivers of their business. These types of partnerships bring simplicity to the chaos of the industry.
If you want to chat about what this looks like for your business, let me know.
Looking to Grow Your Franchise and Save Costs?SEE OUR SERVICES
With GSS, we meet our franchisor requirements on time and with accuracy. The local CPA could not handle our volume. We are so happy to have made the change. GSS knows our business and our franchisor requirements.Multi-unit fast sandwich Owner