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Restaurant finance, why is learn as you go acceptable?

Jim Taylor
Jim TaylorPublished on March 25, 2022

To all of the hospitality managers out there who have ever been asked one of the following questions...

- "Why is cost of goods so high?"

- "Why is labor cost so high?"

- "Why are sales down?"

I would be willing to bet that more often than not, you neither had the answer, nor knew where or how to find it. If this is not the case, then I congratulate you for being one of the few who really understand the dynamics of a restaurant financial model.

These questions are terrifying for young managers to be asked, they often seem to come out of nowhere, from someone more senior who seems to understand so much more about the business than they do. They are also terrifying because although the manager being asked may be "responsible" for the numbers, there is a good chance that they still don't have a great understanding of what they mean, how to impact them or why they are what they are.

I have always been amazed by the way in which so many restaurant companies both manage finances, and train(or not train) their people. I have interviewed hundreds of management applicants and have always been amazed whenever I asked "what is something you would like to learn more about?" the answer was almost always "PROFIT." I attribute this to what seems to be the norm for the entire industry... learn as you go. Most restaurant companies don't have a course, they don't formally train their managers, and some hardly even talk about it. Imagine a server in a fine dining restaurant not being trained about wine, or a chef not being trained to cook a steak properly...

If you are like me, you stared at a P&L statement for hours as a young manager trying to make sense of it. You tried so hard to "hit labor", only to find that it was a role of the dice more often than not. You hoped every week that you would achieve the results that your manager was looking for so you wouldn't have to answer questions about what was missed.

These are all real scenarios, and again if you haven't experienced them then I assure you that you are one of the few! Every day managers in various levels of the restaurant industry are trying to educate themselves on how to be profitable, what the numbers mean, and what to do to improve them... Add in a bunch of government regulations that limit their ability to generate sales and you've got a recipe for disaster for an entire industry! An industry that people need, for employment, for income and for mental health.

So what does this all mean? I believe it means opportunity! Opportunity for the industry as a whole to improve upon the transparency and education of it’s management in order to ensure it‘s sustainability. Opportunity to improve the knowledge and confidence of the young people who are making decisions that impact the financial resul

ts of their businesses every day. Opportunity to continue to treat hospitality management as though it is a "REAL JOB"!

I plan to make this a focus of mine, to work with organizations and decision makers in order to create systems, and to educate their people so that they feel empowered and confident every day that their efforts make an impact. So that they can identify areas of opportunity, come up with solutions, and improve results. It‘s time to change the game, and move away from "learn as you go" in an industry that employs millions of people.

Who's with me???

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