The restaurant industry had an interesting past 50 years. We hurled through recessions, financial crashes, a pandemic, and inflation. Arguably these were all happenings that affected our industry greatly. However, I would argue the bigger enemy of success was the model we followed. Our restaurants lived on low margins, low pay, long hours, and the wrong KPIs (Key Performance Indicators).

My new book, Shift Happens, became available on Amazon August 1. In my book, I discuss seven false beliefs that plagued our industry. I identify them, then explain why they don’t work, and finish with seven strategies to replace those false beliefs and the broken model. In this edition of my Shift Happens Column, I am going to share these false beliefs and then share the mindset for change you need to embrace. Finally, I will share briefly the overall strategies for combatting those false beliefs so that your restaurant doesn’t just survive the “New Economy,” but thrives in it.

False Belief No. 1: You have to underpay your people to make profits

For far too long, we thought the key to profit was to work our people as hard as we could and pay them as little as possible. And we wonder why we aren’t successful. Let me ask you something. Would you hire the cheapest heart surgeon to operate on your spouse or child? Of course not. You would pay more if it meant the success would go up.

So it is with your employees. Hiring the lowest bidder never goes well. The model never worked because we looked at our employees as a liability on the P&L. So we tried minimize our spend. I propose we look at our people as an asset on a balance sheet instead. If we do this, we spend the money to properly train them. We schedule them correctly. They feel valued. They become self-managing, more loyal, more committed. Invest in your people as if they were an asset with more growth potential and you will see amazing results.

False Belief No. 2: Marketing is expensive

This false belief came from two main causes. First, we believed we had to do billboard ads, magazine ads, radio ads, and tv ads. Over the last 25 years we have seen shifts in the medium we use. And today, our marketing opportunity is literally in our hands with the ability to take pictures, record video, and post on social media. The second problem is that we had no way of measuring ROI (Return On Investment). Because of this we didn’t see the value of our marketing spend. Today, we can run campaigns that have built in ROI trackers to determine what works and what doesn’t.

False Belief No. 3: You have to work 70 hours a week to be successful

The work load that we endured and then put on our people wasn’t sustainable. Many people including myself burned-out. Many left our industry. It became difficult to recruit our hourly employees to management because they saw managers worked twice as many hours and made less money. The restaurant industry is a marathon not a sprint. While it may require sprinting occasionally, we have to play the long game.

I learned how to run some of the most successful restaurants in the country and also work a reasonable work schedule because I focused on time management, development, and delegation. I focused on what the most important things were. By doing this, everything else took care of itself.

False Belief No. 4: Good people are hard to find

This and the topic inflation are the most talked about problems facing restaurant owners and operators today. While there are certainly a lot of people who have left our industry since COVID, I argue that it’s less of a labor shortage and more of a leader shortage.

I never had a problem finding great people or keeping them … even during COVID. Here are a few tips I recommend.

Always Be Hiring (ABH). Don’t hire out of desperation. When you wait until you are short staffed, you hire the first warm body. Instead, hire out of strength. Then you can look to hire Rock Stars, not a pulse.
Become the Employer of Choice. Set the bar high .Keep your promises. Create a spectacular culture.
False Belief No. 5: You are in the food and beverage industry

40+ years ago we changed the name of our industry from Food & Beverage to Hospitality. But most restaurant owners and operators missed the significance of that name change. We went from

PRODUCT focused to PEOPLE focused.

The New Economy demands that we focus on caring for one another. While this is seldom seen, those that create real human connection will be wildly successful.

False Belief No. 6: Restaurants are bad investments

Restaurants often run on very little margin resulting in only a small percentage of restaurants operating above 10–15 percent profit. But there are successful restaurants that are running 20-plus percent. How do I know, because I did it as an operator and now, I’m helping my clients do it.

The reason why most restaurants fail is because we have been using the wrong financial model. We have been chasing percentages by cutting, cutting, cutting. All cutting does is make your pie smaller. Instead, focus on dollars over percentages. Drive top line. Grow sales, Invest in some of your percentages by spending some money to grow. After all, you don’t take percentages to the bank. I’ve never heard a restaurateur say to the bank teller, “I’d like to deposit 15 percent.”

False Belief No. 7: A penny saved is a penny earned

Today, inflation is completely out of control. It means that your money is depreciating. That means it’s value is going down. Spend it! A $100 bill is worthless. It’s just green paper until you spend it. In other businesses wealthy people buy assets with assets. Reinvest to scale.

If you are “old school” you may disagree with everything I said. But you would still be wrong. You would still be chasing a pipe dream. The definition of insanity is doing the same thing over and over again, expecting a different result. If you like what you read here and you would like to go deeper on these topics, pick up a copy of my new book, Shift Happens, which dropped on Amazon on August 1.

If you want to hear my session on Value at NextGen Restaurant Summit in Atlanta on Sept 4th visit

www.nextgenrestaurantsummit.com and get your ticket TODAY!

Source https://www.fsrmagazine.com/feature/7-false-beliefs-that-almost-destroyed-the-restaurant-industry/