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RESTAURANT STRATEGY
Eight Crazy Things I Believe About Profitability
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#562 - Eight Crazy Things I Believe About Profitability ***** This week's episode is brought to you by: RESTAURANT SCALE SECRETSVISIT: https://restaurantscalesecrets.com/Chip This week's episode is brought to you by: OVATIONVISIT: https://ovationup.com/chip/ ***** The Restaurant Opening Bootcamp will save you tens of thousands of dollars in costly mistakes. Run by restaurant coach, Chris Hughes, this 12-week program will teach you everything you need to know about opening a restaurant. LEARN MORE: https://www.restaurantstrategypodcast.com/restaurant-opening-bootcamp-inqury-form ***** I believe dining out is a luxury product. I believe in 20% profits. I believe you deserve to be compensated. I believe in coaching, not consulting. I believe in the power of community. I believe owners are often a bottleneck and in their businesses. I believe in helping people. I believe in the Abundance Mindset. ***** If you want to snag a copy of Chip's book, The Restaurant Marketing Mindset... ...
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So our business is hard. I know that and I know you know that. But guess what? Our business is also awesome. And I know that and I know that you know that. Because why else would you do something so hard if it wasn't also awesome? Here's the thing. I spent a lot of time going around to trade shows, conferences, conventions. I talked to restaurant owners all over the country. And I talk. I talk about my perspective, my point of view. And oftentimes people look at me crooked, right? Like, you know when, like, you know when the fire alarm goes off and your dog's head starts going? People look at me and they're like, what are you talking about? And what I realize is that the things that I believe, that seems so obvious to me, I think other people think are crazy. So over the course of today's episode, I want to share with you the eight crazy things that I believe, that I want you to believe so that the awesome overtakes the hard. All of that. On today's episode of Restaurant Strategy. There's an old saying that goes something like this. You'll only find three kinds of people in the world. Those who see, those who will never see, and those who can see when shown. This is Restaurant Strategy, a podcast with answers for anyone who's looking. Hey everyone, thanks for tuning in. My name is Chip Close. I am your host here of this, the Restaurant Strategy podcast. We put out two episodes every single week, all meant to help independent restaurant owners dial in profits so they can get back some of their life, that they can grow their businesses successfully, sustainably, and, yes, profitably. I write books, I give talks. I host something called the P3 mastermind. It's a group coaching format. If you want to learn more about that, it's RSProfit.com that link is in the show Notes. I also run a membership site. It's called Restaurant Foundations. That link is also in the show notes. I am also getting ready to launch our first ever restaurant opening boot camp. If you are opening a restaurant anytime in the next 12 to 24 months, even if you've done it before, I would strongly urge you to sign up for this. It is 12 two hour sessions, 12 weeks in a row, where you get to learn some of the biggest pitfalls so you can learn how to avoid some of the biggest mistakes. Mistakes that will cost you tens of thousands or sometimes hundreds of thousands of dollars. Go and find that link in the show notes as well. Sign up. We only have 20 slots. You're going to submit an inquiry form. We're going to have a conversation to make sure you're a good fit because we want to make sure that these 20 slots to the people who are really, really need this work again. All of those links are in the show notes. We'll be right back. Restaurant owners, you want a steady, predictable flow of new customers, right? If that is the case, then you need to check out Restaurant Scale Secrets. They have a fully done for you marketing system that has already helped tons of restaurants, including more than 50 members of this restaurant strategy community. They work with a ton of my P3 members. I recommend Restaurant Scale Secret. It's because I know it works. They run meta ads, they run Google Ads, and they have an entire automated system to get people into your orbit and to get them coming in and coming back. The program works. It's why I recommend it not only here, but to all of my P3 members. You get to fill tables and add tens of thousands to top line revenue. So if you're ready to take that whole piece of marketing off your plate and start filling your seats, head to restaurantscale secrets.com/chip book a free discovery call. There's no pressure. Get to meet Monica and her team and you'll see what they do and what they have already done for so many people in this community. Again, restaurantscalesecrets.com chip as always, you'll find that link in the show notes. Okay, so on today's episode, I promise you I'm going to share with you the eight crazy things I believe that I don't think are that crazy. Counterintuitive maybe, but I don't think they're crazy at all. In fact, I think the opposite way of thinking, which is more the status quo, the common thought process here, I think a lot of that is crazy. So over today, over the course of today's episode, I want to share with you the eight crazy things I believe and I want to slowly, methodically change your mindset. Because I believe while our industry is hard, it is also awesome. And I think you need this mindset to make sure that the awesome outweighs the hard. So without any further ado, number one, I believe our product, right? A meal out, dinner at a restaurant is a luxury product. So there's two kinds of products in the world. There are commodities and luxuries. A commodity is a base good, right? So milk, eggs, gasoline, flour, right. For the most part, you know, gas is. Gas is gas. Milk is. Milk is milk, flour is. Flour is flour. They are commodities, right? And so when, when a consumer looks at a product, right? And they basically say, well, all things being equal, we make our decision based on familiarity, convenience, or price. It is the very definition of a commodity product. And I believe ours, a dinner out is very expensive. The markup we have to charge to make up for the labor and the utilities and the insurance and the rent, to say nothing of the cost of the products themselves. The markup we charge is astronomical, all things considered. It is a luxury that nobody needs. But from time to time, people want. I'll remind you that 100 years ago, people dined out maybe once or twice a year. Now it's once or twice a week. That's incredible. There's an entire industry that exists now that didn't exist way back when. And I for one, am grateful for that. I know you are grateful for that. But let's understand this. Ours is not a commodity. People don't need it. People need milk, bread, eggs, they need gas to be able to get from point A to point B. They don't need a dinner out. But from time to time, they very much want it. They are willing to splurge on it. Because you, the restaurant owner, put together a menu, you gave it some thought, you built recipes, you went and shopped for the ingredients, you prepped the ingredients. You're gonna cook the items for them, you're gonna get the guests anything they need during the time that they're there, that hour or two, and then you're gonna clean up later, right? Dinner's done. You're like, hey, don't worry about it. We'll take care of the dishes, get up, get out of here, right? And we pay for that. Because there are times when, like, I don't know what to cook or I'm bored of the same stuff, or I haven't had time to shop, or I don't feel like going to the supermarket. We're like, let just go out or let's order in. Ours is a luxury product. Stop pretending that it's something that everyone needs. It's something that everyone from time to time wants. If we have a luxury product, we have to start thinking it, thinking of it as a luxury. Now, I'm not talking about a Birkin bag, I'm not talking about a Ferrari. But it is a luxury. It is an indulgence that no one needs from time to time, they very much want. So we have. We are in the desire business. We have to make it so that people want the product we have. Hey, man, you don't feel like shopping? You didn't have a chance to shop, you don't want to prep, you don't want to clean up later. I totally get it. You want a really well made cocktail while you have your food. I totally get it. You're in the right place. That's how we have to market to people. Not as if it's something they need, but something that from time to time they want and it's something they're willing to splurge on. Number two, the crazy thing I believe is that I believe all restaurants should be doing 20% or more in operating profit. 20% or more. Average independent restaurant in the United states does about 5 or 6% profit. And I think that's insane. Meaning a million dollar restaurant. The average restaurant in the United States, about $1.1 million. So roughly a million dollar restaurant at 5%, the owners make $50,000 on that million. And oftentimes there are multiple partners. So if you have to split that two ways, $25,000 per person, that's insane. It doesn't honor the contribution. What you need is to build a business in reverse. You need to build a business that is profitable from the jump. And I think you just target 20%. Full service restaurants should be at 20%. Quick service or fast casual should be at 25% or above. That's just not my opinion. There are a lot of other really smart people that believe that too. They just don't talk about it so much. So if I'm out here on the Internet talking about this stuff, fine, you can think I'm crazy. It's not that crazy. And if you've never ever heard anyone else talking in this way, you need to get yourself in different circles. 20% should be the minimum. That's what we should target. Number three. The third crazy thing that I believe is that you deserve to be compensated. I say this a lot. What you do is too important and too difficult to not make money doing it. There's an entire economy that you prop up around your restaurant. Think about this. Your landlord gets paid because you rent space. You buy products from a bunch of vendors. They grow their their share revenue simply because you exist and you buy product from them. So your landlord, your vendors, you get people who work for you. Cooks, hosts, bartenders, servers, managers. They require the money that they get from your business to go pay for things, right? The other businesses on your block, the dry cleaner, the drugstore, the dance school, all of that, you guys support each other. People come to you and then go to the dry cleaner or they use that dry Cleaner, because the dry cleaner is right next to the bagel shop, your bagel shop that they love so much. So I always love coming here and getting my bagel and coffee in the morning. And since I'm always here, I might as well drop my dry cleaning off here. You help prop up an entire economy around your business. So when your landlord gets paid, your vendors get paid, your staff gets paid, the other people, right? The parking meters on your block, right? All of these play, right? So the city, the state, the sales tax that you generate for your state, everyone else gets paid. And oftentimes the owners get paid last. They make as much as they can. They pay out everything they can. They see what's left over and they take, as you know, whatever is left. And those are the scraps. And I believe what you do is too important to not be compensated appropriately. So that's the third crazy thing. I don't think it's so crazy. I think it's okay for you to make money doing what you do. I think it's okay for you to make money given the value that you provide for your staff, your consumers, your city, your state. I think you have to lead with that. You have to know that you deserve to be compensated and you have to build your books so that you are taken care of. There's a book called Profit First. I firmly believe it. It's very much what we teach in the P3 mastermind. You deserve to be compensated and compensated well. Look back to that 20% profit. A million dollar restaurant should be generating about 20%, $200,000 a year. And I think that honors the contribution that owners make to their community. So if you got a million dollar restaurant, I think you should be taking $200,000 to the bottom line. I believe in coaching, not consulting. So I was a consultant for years and now I've been a coach for years. Five years consulting, Five years coaching. I can firmly say that coaching works. Consulting, not as well. Now here's the, here's the caveat to that. If you've got a very narrow scope of work, right, Meaning you, you need help getting your inventory in place or your prep sheets, or reorganizing your walk in if you need to bring somebody in to help you manage your, your open table, your reservation platform, fine. Narrow scope of work. You should do very specific things. If you bring in a consultant to help you with something very, very specific, to set it up right. Look, what's wrong? Set it up and show you how to run it. Great, Fine. Awesome. That's the best use for a consultant. But if you're going to come in and say, I'm not making money, come in and fix it. That's not where you use a consultant. You find a great coach who can coach you through and help you implement the systems that are really to be profitable, consistently profitable. So coaching, not consulting. Now, do you want to pulse on what's actually happening in your restaurant? Ovation gives you real time understanding about your guest experience, transforming guest feedback into clear, actionable insights so you can stop guessing and start making smarter decisions about your business. Their AI driven reporting breaks down every review into restaurant specific categories like speed of service, order accuracy or food quality. And it shows you where to actually focus. One operator put it like this. Ovation is a game changer. It helps us identify issues early before they turn into bigger problems. Another operator starts every staff meeting by reviewing recent Ovation data, giving the team one source of truth to work from. With heat maps, goal tracking and performance dashboards. Ovation doesn't just tell you what's wrong, it actually helps your team fix it. You can even assign action items and track the follow through on those items. So if you want to get all the answers without having to ask all the questions, go to ovationup.com chip to book a demo. Mention this podcast and guess what? They'll waive your setup fee. As always, you'll find that link in the show notes Number five. I believe in the power of community. I believe in getting into a room with a whole other, a bunch of other people who do exactly what you do, who are struggling with so many of the same things. And you basically, you know, open your books. I think you, you know, warts and all, the good, the bad and the ugly. You show them what's going well, what's not going well. You share the things that you figured out and you ask for help on the things that you still need help with. I believe that we can help each other and your success does not take away from their success. Vice versa, their success does not diminish your success. It's like laughter. Laughter begets laughter begets laughter. When you give more than you take, I promise it will come rebounding back in copious, generous amounts. That's what I believe. I believe in the power community. Number six. I believe in most restaurants, the owners are the bottleneck in the business and they are a liability. So there's this statement that's been floating around, a famous quote, right? The more valuable you are to your business, the less valuable your business actually is. If someone's going to come in and buy your three unit regional chain, right, you got three locations or something. But you are required to do all of the, you know, to do all of the catering business, right? It's all of your contacts. If you are required to work the line, if you are required to run the reservation book, if you are required to place the orders, well, then what happens? Why would anybody buy your business? Because it only works when you are there. When you systematize everything, then anyone can step in and see exactly how to do it and what to do it. That is the true value of a business. So I believe often owners of the bottleneck because they think they're the only ones who can do it or they're the best ones to do it. And I think that's very rarely the case. I have people all around me in my business to say, to take nothing away from the contribution and the value I bring. To me, my business, restaurant strategy is my business, right? So I am the face of the business. I'm on the podcast, I do the YouTube videos, I do all the social media, I give the talks, I write the books, I certainly host the events, all of that. But then I've got three coaches who work alongside me, who have much better resumes than me, who've got more or battle tested, have more scars and real life experience than I do. That's valuable, right? I've got a marketing person who is better at it than I am. I've got a salesperson who is better at it than I am. She's sensitive, she's gentle, she's compassionate, she knows who we're looking for, who would fit really well in this program. So why do I need to hold on to that? I don't let her do it. She does it so much better than me. I think you're going to find as you look around that oftentimes you are the bottleneck. And if you are the bottleneck and if you are the linchpin, you're required to be there. You become a liability. Because what happens if you get hit by a bus? How is the business going to run and continue to support your family? Because go back to that profitable and you deserve to be compensated, your family deserves to be taken care of. So a restaurant that just runs, right? So I step off the, you know, I step off the curb, I get hit by a bus, my wife can step in. Because there are systems in place, there are professionals who are great in their departments who can, you know, basically keep operating the business and she can make long term, big picture strategic calls about the business. The business can continue to run and continue to support the family. Now, who's going to be the face of the business to be figured out? I don't know. I got hit by a bus. I'm a pancake. But she can figure that out because she's smart. But if the business only ran because I did everything I did the marketing, the sales, the coaching, well, then it'd be really hard for her to step in and take over. So I believe owners are often the bottleneck and almost 100% of the time are a liability for the success and growth of the business. Business number seven, I believe we are in this to help people. I believe in helping people. Most important quote I ever heard in my life, the one that changed my mind about changed my life about 11 years ago when I heard it is a Zig Ziglar quote. Look him up. He was a sales guru, marketing guru. However you feel about Zig Ziglar takes nothing away from this quote says you can get anything in life you want as long as you help enough other people get what they want. Want. I firmly believe that I help my clients get the things that they want. And so naturally it comes back to me. I help my staff get what they want, be able to provide for their families and all of that. And naturally it will come back to me. So I will be taken care of as long as I don't focus on taking care of me. As long as I focus on taking care of everybody else so I can take care of my team. You should take care of your team. Your team should take care of your people, right? If you help people, get a second date. If you help people, close the deal, right? Build deeper relationship with clients. If you help people, you know, have a really great dinner with their friends. If you help people, you know, entertain their kids so all the parents can chat. If you give them the things they need, they will continue to support you. They will come back, they will give you more money, they will support your business. I can't tell you how important this is. You can get anything in life you want as long as you help enough other people get what they want. Focus less on you and more on everyone else. You build a business that exists to support you and your family. You do that by design so that every other moment of your day can be focused on helping your staff, helping your landlord, helping your vendors, helping your guests. I believe in the power of helping people. Finally, number eight, the eighth crazy thing I believe in I believe in the abundance mindset. Now, there's two ways of looking at things. There's the commodity mindset. Talked a little bit about commodities and luxuries earlier. So there's the, the scarcity mindset, which goes hand in hand with the commodity mindset. And then there's the abundance mindset, which comes from the luxury mindset, right? Talked about commodities and luxuries. Now let's talk about scarcity and abundance. I think there's two ways to go through the world, right? We either see the world as, you know, there's a pie and I got to get my piece of the pie. I got to get my little piece, the thing I deserve, right? That's the scarcity mindset, this finite mindset, or there's the abundance mindset, the infinite mindset, which basically says, there's not just one pie, I have the recipe for the piece, so I'll just make more pies over and over and over and over again. Why scrape and fight my way for just a piece of the pie when I've got the recipe, I can make more pie and more pie and more pie and more pie. It again is like laughter. Laughter begets laughter begets laughter. Anybody who's sat around a kitchen table with your family, laughing deep into the night, knows that the more people laugh, the funnier everybody else becomes. Abundance is the same way. If you see the world as finite as, as scarce that, that money as a scarce resource, you're never going to see that you have a business that can just generate more for you. It will happen if you choose to see it that way, right? There's all kinds of neurological research that's been done on this about, you know, what you believe or what you become follows what you believe. If you believe the world is an abundant place where we can just make more pie, I don't have to fight for my little share of this one pie. Your life changes. My life changed 11 years ago when I saw that, I read that my son was born and I started my business nine months later. I can draw a direct line to, to, to learning about this, that Zig Ziglar quote, learning about this scarcity and abundance mindset, starting my business, and I've steadily grown my business over 10 years, and it has exploded over the last four. The same thing can happen for you, but you have to understand these eight crazy things that we have to believe as business owners and certainly as restaurant owners, communities baked into what you're providing. Networking, honesty, compassion, hospitality. And if you help enough other people, they will naturally help you. By extension not because they want to help you, but because they can't help but help you. Those are the eight crazy things I believe. And I don't think they're that crazy. I think it's crazy to see the world as scarce. I think it's crazy to look at our product as a commodity. I think it's crazy to not want to compensate ourselves because it's like the oxygen mask analogy. You put on your mask first and then you're just in better shape to help everyone around you. Like most of the people I work with and help and coach actually are after something very, very modest in life. Now, whether you want something really big and crazy in life, that's fine. God love you. I believe you should get what you want. Life is too short to not get what you want. But I believe most people would be happy with a very modest win. This is what I believe is required to get these very modest wins. Here are the eight crazy things I believe. If you believe this, then I'd love to have a conversation about the P3 mastermind. It's the most incredible community that I've ever seen. Restaurant owners from all over the country. We've actually represented by 46 states, including Washington D.C. and we've had members in eight different states or eight different countries apologize. Eight different countries all around the world. It's an incredible community, all focused on making you more money so that you can work less. Rsprophit.com is the website. That link is also in the show Notes. As always, guys, I appreciate you making this show part of your week. Thank you very much and I will see you next time.