Flying Blind

Consistent sales, unpredictable cash. A schedule built on instinct, labor costs that won't stay still. An operator who loves the hospitality side and avoids everything else. Three submissions, three versions of the same problem. You're running a restaurant without being able to see where you're going. 

Transcript

SPEAKER_00 0:01

Every restaurant has a suggestion box collecting dust somewhere near the host stand. This show is a different kind. Operators send in their real challenges, staffing, costs, culture, systems, anonymously, and we talk through them on air. If you've ever felt like your operation is running you instead of the other way around, you're in the right place. I'm Ryan Hornebrook, founder of Elevated Restaurant Solutions, and this is the suggestion box. Welcome back to episode four of the suggestion box where real owners, real operators, and real industry pros send in their real challenges and we talk about it in real time. I am Ryan Hornebrook, founder of Elevated Restaurant Solutions, where we help independent restaurant owners lower costs without lowering their labor force or lowering their quality. Now, in the recent episodes, we've seen a common theme, and I feel like we're gonna see this theme pop up over and over and over again. Where uh again, title of the first episode, Symptom and the Source. The symptoms that you're often seeing are not usually direct symptoms of the source of the problem. They lead you to believe that the problem is elsewhere when in reality it is uh it is actually in a different place completely. Uh, we'll see more of that this week. Um but this episode is a little bit different. It's it's about the gap between running a restaurant and running a business. They're not necessarily the same thing. And a lot of operators are exceptional at one and struggle with the other because the hospitality instinct that makes somebody great with a guest can actually work against them when it comes to the numbers or the scheduling or the hard conversations. Because the more you want to help someone out, the more likely you are to sacrifice the numbers somewhere along the way. Uh, you know, you've you've heard the phrase there's no such thing as free lunch. Well, that is true. Somebody is always paying for it somewhere, and the better you are with people and wanting to take care of them by nature, the worse you might be, not are, but might be, at making sure that you're taken care of first and foremost, and your business is taken care of. So

Cash Flow Surprise

SPEAKER_00 2:34

let's get into the first one here. Uh, it states we have decent sales, nothing spectacular but consistent. The problem is I never know what's actually in the bank until I check. Some weeks I feel fine and then payroll hits and I'm scrambling. Other weeks I'm sitting on cash and I have no idea why. My accountant does my taxes and sends me a monthly PL, but by the time I see it, everything has already happened. I feel like I'm always a week behind. So I'll go ahead and say that this is actually probably more common than you think because consistent sales and consistent cash flow uh are not mutually exclusive. Meaning, um, you know, and a lot of people don't realize this until they're already in the scramble. But um, just because you're experiencing daily sales that seem fine, everything should be fine. People pay with cards, there's processing issues, it could be a number of things that is uh that is keeping your cash flow uh slightly behind your sales. Um the the monthly PL from your accountant, that's a historical document. The PL should have nothing to do with forecasting or telling you what's coming. It tells you what happened. And if you're running your restaurant off of a monthly document like that, it's it's like driving, but you're not looking forward. You're looking in the rear view mirror the entire time. You're driving forward towards a destination, but you're checking that rear view mirror to see what you passed instead of looking up ahead at the road and getting ready to make a left turn because you see your destination ahead. Not checking in your rear view mirror saying, Oh, there it was, missed that turn. So I know there's a ton of underlying stress because not knowing what's in the bank is um not just you know a financial management issue, it's an emotional one too, because it creates this constant low-level uh anxiety that is gonna affect every decision that you make um today, tomorrow, and until it's figured out. So I want to kind of reframe this because uh this isn't necessarily an accounting problem, it's more of a cash flow visibility problem, which is a different thing entirely. So there's a mismatch between when money comes in and when it goes out, and that's the real culprit behind all of this. Because a strong weekend in sales uh that you deposit on Monday or Tuesday doesn't help you when your payroll runs on a Thursday and vendor invoices are due on Friday. You know, look at third-party delivery platforms. This compounds all the time because some of those hold payouts for seven to fourte days. So you've already spent the labor, you've already spent the food cost uh on those orders, and you haven't been paid yet, that's gonna cause an issue. And uh operating without a cash flow forecast means that every week is a surprise. So if you don't know when money is coming in, you know when money's going out, pretty typically. But if you don't know when money's coming in, those aren't pleasant surprises. Because uh surprises in business, especially this business, are almost always expensive. So the scramble before payout is uh not you know it's not really a sales thing. Um it's more of a timing and planning thing, visibility, not knowing when it's coming. It's like driving in the fog. Go back to the driving analogy. So for something like this, I think it's a simple fix just to give you some clarity and give you some peace of mind. Um Google Sheet or Excel spreadsheet, I would just build a simple weekly cash flow tracker. Nothing crazy, just a spreadsheet that maps out what's coming in, what's going out by day of the week for the next two or three weeks, just so you can see and get an idea of when you're cash heavy, when you're cash light, and being able to plan for that. I would do it every Monday morning. It takes 15 minutes, maybe, and and I would do it the same time every week because it's gonna become one of the single most useful financial habits in your entire operation. Something as fundamental as this. Um, I don't know how many vendors you're dealing with. Obviously, the the lesser amount of vendors that you can deal with, uh, you keep it more organized. Um, I would check your vendor payment terms. Uh, most suppliers will negotiate net 14 or net 30, uh, depending on which one you ask for, especially if you have a good relationship and a clean payment history. Um, I would uh review your delivery platform payout schedules, you know, uh see if you can kind of line everything up to make it work for you when you need cash when you when you don't. Some of those platforms offer accelerated payouts for a minuscule fee, and if you're cash tight, it might make sense to do something like that. Uh, I think in all of this, the goal obviously is you never want a tight week. You always want to have a little bit of that uh buffer, a little bit of leeway. Because if you can see it coming two or three weeks out instead of finding it out Thursday morning when it you need it on Friday, that is always gonna be better. This is weird because this is one of those things that like you don't think about when you get into starting the business. And I'm not saying like it's not something you should think about. And maybe it is. I'm just you know, a lot of people don't get into this and think, okay, when am I gonna be cash heavy? When am I gonna be cash late? What surprises are gonna pop up that I need to have money in the bank for? What how how am I gonna structure this to be in my favor that I never have a tight week? There's a lot of people just, you know, thinking about the food. The business side of this in their mind would be the menu, all the all the cosmetic stuff, the aesthetics, the front. The the this is the sneaky back end stuff that can really stick a wrench in uh in the flow of things. So I would definitely set up that simple weekly cash flow tracker just to have a general idea of what is coming in when and what is going out when. Um just so you can plan your weeks a little better. And hopefully that can stabilize your situation a little bit.

Scheduling By Feel

SPEAKER_00 10:31

All right, this next one is also about flying blind, just in a different part of the operation. It reads, I build my schedule the same way I always have. I know when we're busy and when we're not. I've been doing this for long enough that I have a pretty good idea on it. Uh my labor costs are all over the place week to week, and I can't figure out why. Some weeks I'm over, some weeks I'm under, and the service suffers. I don't know how to get more consistent without spending more. Okay. This is such an industry standard. I would say more people than not still schedule this way. Uh, the gut feel schedule. Experienced operators develop this genuine, genuine intuition for their business, and I don't want to diminish that, or um I don't want to slight that because it is a genuine intuition. I mean, you know your business, but that being said, the problem is not your intuition, it's relying on that alone and just saying, I know my business. Because when you trust your gut implicitly, it misses the patterns that you don't uh that that don't happen the same way twice. Weather doesn't, local events, um, school calendars, graduations, things like that. Um the week after a holiday, uh all this stuff doesn't happen the same way twice. It can be a similar pattern, but when you rely on it completely, your gut, you miss those little patterns. So um the variability over some weeks, uh, under some weeks, that's a pretty significant signature of scheduling by feel rather than data. Here's what happens every time you spend a dollar over what your sales support, that's a dollar that didn't need to be spent. So say you do a million dollars. 1% labor over what your sales support, that's $10,000 for the year. The understaffed nights are a different issue because service suffers, team gets burnout, guests have a bad experience, uh, they don't come back. The cost is so much more long term than just in that moment your labor was elevated. So you do have to get it right. You should not ignore your gut, but you should not rely on it completely. Um, most POS systems already have the data that you can look at to help solve this. Uh, historical sales by day, by shift, by hour, you can break that down pretty easily depending on what POS you're using. Um, a lot of people have actually never pulled that report. Uh something that I like to look at a lot because I'm so pattern-based, I'm so analytical, it kind of makes me mad sometimes, but I overanalyze everything. My wife will be the first to tell you that. The labor percentage alone is uh gonna be an incomplete picture. So um if you're looking at just what your labor cost was relative to your revenue, it's not gonna tell you how efficiently your team ran. Um so it won't necessarily show what those hours converted into output. And something you should look into if you haven't already, and we can have a conversation about this. If you would like to, please reach out. Uh, we can absolutely go more in depth, but it's covers per labor hour or guests per labor hour, customers per labor hour, how however you want to call it. Because here's the breakdown if two restaurants can run the same labor percentage and have completely different staffing realities. One is efficient and one is overstaffed, and they're masking it with strong sales volume. So your cover per labor is covers per labor hour is gonna tell you which one how efficient you are on a daily basis. Um it shouldn't be built on what you think is gonna happen, it should be built on what happened the last eight times that this day of the week looked like this. So I would definitely pull the last couple months, maybe three months, call it 90 days, of sales by the day of the week and the time of the day. Because I think you're it's gonna be different. Um depending on your concept, depending on your model. I mean, I know some places do Taco Tuesday, some places do flights on certain days, some days or some places do limited time only. So you could really have a different labor model for every day of the week. Um so I would I would take it by uh day and then by hour, and um look for your actual cover and revenue patterns across those days and hours, not just what you assume is busy and what's not busy. Uh, I would set a labor cost target for each shift type. You won't really hear me talk about labor cost percentages too much because I don't like to harp on them because they can't be directly affected. There are things that you can do to influence those percentages, but in terms of keeping them within a certain parameter, you it's not just it's not as black and white as everybody says it is that you know, God, that's percentages too high, gotta get it down. No. But you can have target percentages as benchmarks to help you forecast what you need to do in revenue. That's something I do a lot. So maybe your target cost percentage on a Saturday might be 28%. Maybe Monday lunch, it looks more like 3233. And then you can kind of back into that. Um uh I wrote a uh it's a little ebook, but it's a powerful tool uh and framework, and it's what I use with everyone that I've ever worked with. It's called Back Into Success. You can find it on my website, uh Elevated Restaurant Solutions.com backslash free resources. Um you will find everything pretty much that I talk about in that in that framework uh right there. You can get it for free. So go check it out. But um you can use those uh percentages as targets and build your schedule backward, um, starting with the goal and then working it back in. Uh I would start with that and then layer in the the covers per labor hour that we were talking about as your efficiency bench benchmark. So pick a pick a benchmark. We'll we'll just keep the word uh where your efficiency was really good. Staff was running on all cylinders, nobody felt stretched, nobody was sitting around, sales looked good, customers were happy, and then find out what your um guess per labor hour was in that situation. That becomes your standard. If it's any higher, that means you were a little bloated, if it's any or you were a little stretched, if it's any lower, it means you were a little bloated. In terms of efficiency, um take the number of covers served in in one of those shifts, divide it by the total labor hours that were scheduled, and it's gonna tell you how hard each hour of labor actually worked, which the percentage alone is not gonna show you. So I would track that shift over shift for four to six weeks-ish, month to a month and a half, and your benchmark is gonna naturally show up. It's gonna show, it's gonna, it's gonna surprise you because it'll probably be pretty close to what that um benchmark number is, what that the your most efficient shift is, but the deviation, the slight deviation from each one, you're gonna look at it and look back and be like, yeah, you know what, that number makes sense because we were totally out of it that night. So it's gonna it's gonna reflect some pretty interesting uh information and how to use it to forecast and how to use it to actually staff uh your restaurant is incredibly powerful. So uh if you want to better understand it, please reach out uh to info at elevatedrestaurant solutions.com or just give me a call and uh we can we can talk more about it. But uh that's what I would um I would definitely lean heavily on. Um then I would track your labor against the target every shift. Uh I would just, you know, use the data to make sure that you're on track, but don't use it to create bad habits of calling it your gut feeling. And it's you gotta be on you have to maintain it constantly. It can't be an oversight. Um in order to help some of it in the quick both quick and long term, is I would cross-train some people, maybe two people per shift for at least one additional role to give you some flexibility in moving people around. That always helps. If you can have two or three people per shift um that can kind of move around and and and help out in certain spaces, you're obviously gonna be more efficient, the more somebody can do efficiently without burnout. Um, there's a lot that goes into this, but I'm trying to give you some surface level things to look at to to try and reel you in a little bit. Because we're trying to fix the deviation. Some weeks over, some weeks under. I'm not saying your intuition's bad, your gut feeling is is bad. It's your business, you know your business, obviously. But trusting your gut alone is not the answer. Your your gut is in is definitely valuable, but you need some data, you need some systems, you need some a little bit of forecasting. And stop driving by looking in the rear view mirror.

The Part You've Been Avoiding

SPEAKER_00 21:54

All right. This last one is probably the one that's gonna hit closest to home. For a lot of people listening, says I got into this because I love people and I love food. So do I. Uh, I'm good at running the floor, taking care of guests, building a team, but the financial side of the business makes my eyes glaze over. I avoid it. I know I shouldn't, but I do. I have a bookkeeper, but I don't really understand what they're telling me, and I honestly don't care and don't want to learn. I feel like I'm not qualified to own a restaurant. Okay. This is probably one of the most honest submissions that I've received so far. Naming something that you clearly are not interested in learning, but is such a large part of the business. Um, the instinct that built your place, you stated you love people and you love food. Um that is not a liability. Should not feel like a liability. It's the it's the reason that your restaurant exists in the first place, and the reason why probably all of your guests continue to come back. Um don't feel shameful for not wanting to learn the quote unquote boring stuff. You know? Me personally, I love that side of side of things that excites me because I love the the patterns and the data behind all of the stuff on the floor. I love everything else that you're talking about. I love taking care of guests, and uh it's it's my house. I'm inviting people to my house. I'm hosting a party every single night. I'm serving the hors d'oeuvres, I'm serving the food, I'm I'm communicating with people, I'm checking up on people. It is a house party every day. I want people to come back to my house party all the time. I'm charging a cover, which is the bill. Um, so but don't feel shame for not understanding and not wanting to to know the other side. It doesn't make you unqualified for to own a restaurant at all. I just want to make that clear. It just makes, you know, you were never taught, and uh anybody that came up through, I'm assuming you started maybe uh on the floor. You were just never taught the back end of it. Uh, because a lot of restaurant owners and operators learned hospitality by doing it, and nobody gave them like a finance curriculum along the way of of how to properly run it. Um but avoiding it is expensive. Not saying you have to understand it overnight, but the gap between what you know and what you don't know can be closed. Avoiding it is just gonna continue to widen it, which you don't want to happen. The um, I feel like the bookkeeper relationship might be broken because they're giving information that you can't use and it's not being translated properly into a language that connects uh to your actual operation. Like when I talk to somebody, I try and do my absolute best to boil down the most fundamental way to explain something to someone. I want to get to the point where we're essentially two kids on a playground having a conversation about whatever the topic is. And I use everyday analogies to get the point across to make it crystal clear of what I'm talking about. A PL full of accounting terms means nothing to somebody who thinks in covers, in check averages, in shift counts, and the translation layer is completely missing. You don't need to become a finance person. You just need to understand like four or five numbers well enough to make good decisions and notice patterns, and I feel like that's a very achievable thing. You know, when you we talk about compounding wins and compounding losses in terms of like waste and adding one dollar to every check and all of that stuff, it's the same thing here, you know. Don't don't get overwhelmed by not understanding the full scale of a PL or the full scale of the the financial side of the operation. Pick a couple things that are that are important and can actually give you some good insight and and give you some good direction every single week. You know, the one the people who thrive long term are people who lean into what they're really good at and then just get literate enough in the rest to know when something's wrong. You know, you just want to know enough surface level to where a red flag is raised whenever there's something uh that's gonna awry. So I would pick out four or five numbers, and I'll give you a couple, I'll give you five that I would use, and then if there's something that you want to swap out for, go ahead. But I would do obviously your weekly sales, I would do your customers per labor hour, I would do your um cash in the bank, obviously, what's owed to vendors, and your accounts payable, and then I would do your I guess maybe food cost percentage, just to give you an idea. Um just to start. And there's other ones that I would I would look at too. I mean, I would I would look at your average guest spend. Um, I would look at maybe your labor percentage just to see what it what it is. Um again, don't don't freak out about the labor percentage. Um just kind of give you an idea of where you're actually at. But I would pick five of those numbers and um five five of them, pick any five of them, and you'll that'll tell you most of what you need to know. And then I would have also a direct conversation with your bookkeeper that you're gonna be learning this stuff. But I would tell them, like, I need you to walk me through this in very plain language. Pretend like I'm 12. There's no shame in saying that either. Like, in but in terms of the means of the operation, not accounting categories, not all that. And I feel like any good bookkeeper will break it down and and explain that. A bad one is gonna make you feel dumb for asking, so also recognize that. If they if they either laugh or make you feel weird about it, bye. There's other people out there. Um because if they can't explain it, that's not that's not on you. It's that's their failure. And it might be time to find somebody else. Block uh maybe block some time out every Monday and sit with the five numbers that we were talking about. Five of those numbers. And um don't do anything with them, just just look at them. Try and try to break down what they actually mean. Pattern recognition. Um just take a look at what they're doing, how they fluctuate. Because the goal of all this is not to fall in love with the numbers, right? We're not gonna become an accountant, we're not. It's that that's not that's not what we got into this for. And a lot of times people get too into it, and that's why they forget. Luckily for you, you're actually the opposite side of what uh I see a lot and what I help people with, because um you're not blinded by the numbers, you're blinded by your love of why you got into this in the first place, which is a beautiful thing because that's what gets suppressed for a lot of people. That's what gets um pushed to the back of the brain when all of the mess of the noise and the numbers gets too loud, and you forget why you fell in love with all this in the first place. Owning a restaurant does not require you to be a financial expert, it requires you to be financially literate enough to know when to ask somebody for help and to know what questions to ask. And uh that should be enough to get you started. And if you need some help, I'm always here. I'm a resource, and I know a lot of people in this space uh that will also love to help out whenever we can. So look at that. Three more submissions down in the suggestion box. Um I appreciate everybody that reached out this week. Uh, these were a little more personal, a little more emotional, um, which I like. Switch it up a little bit. But uh again, if you are experiencing a challenge that you just can't work through yourself and would like to uh gain a different perspective or different insight, you can absolutely reach out to me at the suggestion box at elevatedrestaurutions.com. I'd be more than happy to talk about it on air. And if you'd like to talk about something specific that you'd like to dive a little more into uh and a little more depth, and uh we can have a conversation about your specific uh operation in real time. You can reach out to info at elevatedrestaurant solutions.com. Um, it has been another fantastic week. Uh, I appreciate the honesty and uh humility of the three submissions today. Without you guys submitting in, uh, this does not continue. So I am glad that we're building a small community of people that want to help each other and uh no judgment. You know, it is all anonymous, so don't feel uh any type of um feeling about sending problems in. Um, even in terms of after the show, uh, you know, I only reach out if it is invited. Uh, this is strictly for you to gain some insight on whatever you're dealing with. So thanks again to everybody. This has been another week of the suggestion box.