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RESTAURANT STRATEGY
Two Mastermind Case Studies
00:25:01
#505 - Two Mastermind Case Studies ***** This week's episode is brought to you by: KICKFIN Thousands of restaurants across the country use Kickfin to send instant, cashless tip payouts, directly to their employees’ bank accounts, the second their shift ends. Get in touch today for a personalized demo and see how restaurants and bars across the country are tipping out with Kickfin. VISIT: https://kickfin.com/demo/ ***** What happens behind closed doors? And what sort of impact does the P3 Mastermind have? This episode is for you... sharing 2 case studies from similar sized companies, though in very different markets. This is the power of the P3 Mastermind! ***** If you want to snag a copy of Chip's book, The Restaurant Marketing Mindset... CLICK HERE: https://www.therestaurantmarketingmindset.com/ If you're ready to learn more about the P3 Mastermind... CLICK HERE: https://www.restaurantstrategypodcast.com/p3-mastermind-program If you want a free 30-day trial of our Resta...
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- [00:01]
A
So what exactly is a mastermind and how does group coaching actually work? Those are questions I get all the time. Today I'm going to share with you two different case studies of P3 members just over the last 12 months. One very recent happened in the last two months. One that happened about a year ago. And I think they illustrate the work we do and most importantly, the impact that a really good coach can have on your business. 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.
- [01:02]
Hey everyone, thanks for tuning in. My name is Chip Close. This is the Restaurant Strategy Podcast. Two episodes every single week, helping independent restaurant owners increase the profitability of their businesses. I wrote a book, it's called the Restaurant Marketing Mindset. You will find that link in the show Notes. If you want to buy my book. I give talks all over the world. I have a membership site, it's called Restaurant Foundations. You will find that link in the show Notes as well. If you are interested in joining that. I also run a group coaching program. It's called the P3 mastermind. We're about four and a half years old. We've grown from one group all the way up to four groups. Currently there are about 150 members in the group. We've put over 350 people through the program. The program has grown because the program works. If you have a busy restaurant, meaning you're doing at least a million dollars in annual revenue, you've been open for at least a year, but you're struggling to drop a consistent, meaningful number to the bottom line. And I define that as 20%. If you struggle to make 20% to the bottom line of your business, then we should chat. There's no pressure, but you start with a conversation. The link is in the show notes, but it's RestaurantStrategyPodc.
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You'll grab time on the calendar. You'll chat with me or someone from my team. We'll get to ask you questions so we can learn more about what's going on. And you'll get to ask questions so you understand how we work with restaurant owners and how we might be able to help you. If it's good fit, we'll talk about the next steps. If it's not a good fit, at least what we have, we will have met and hopefully you come away with some action items. But you'd be amazed at how common the problems are across all different concepts in all different markets. Again, restaurantstrategypodcast.com schedule as always, you'll find that link in the show notes. Okay, so today's episode actually goes hand in hand with that because it's a question I get all the time. What exactly is a Mastermind? What is group coaching? How does it work and most importantly, how does the work happen and what sort of impact, what sort of return on my investment can I expect? And they're all great questions because I run a program that's really behind closed doors. It's tough to know what's in the room until you get in the room. But that's the nature of it. That's why it's a closed room. There has to be a room that you go to where you can ask students stupid questions, where you can show warts and all what's going on in your business so that we can begin the hard work of actually fixing the problems. That's what the P3 mastermind is. I launched it with 10 people in a single group in the summer of 2021. And over the last four and a half years, it's grown now to again. We've put over 350 people through the program. We've expanded it to four unique groups. We have three other coaches who work alongside with me. It is an incredible, incredible community of owners, operators spread all over the world. Eight different countries, 48 states in this country, including Washington D.C. all different concepts at all different levels in all different markets. Now, it's no pixie dust, it's no silver bullet. What we do is teach you the systems that all the big restaurant groups and chains have dialed in. We teach them in such a way that you can teach it to your people and implement them very easily, easily into your business. They are the most important systems for targeting and automating profit every single month. So on today's episode, I want to share two case studies. I'm going to hide the names because there's a certain amount of anonymity that is expected when you come into the P3 mastermind. But I hope that you see the common threads. So I picked two multi unit operators. Both of them have three units. One's in Wisconsin, one's down south in Louisiana. They've got very different businesses, very different problems, but we solved them. We solved them over the course of their time in the P3 mastermind. First one, I'm Going to work with is a big operation. Again, three locations down south in Louisiana. Collectively, they were doing about $8 million across the three locations. When they came to us, the owner said, man, we're doing pretty good. They're dropping 12% of the bottom line. And you do the math. 12% on $8 million in top line is almost a million dollars in bottom line profit. That is the kind of business I want, but I want one that's more efficient, that can more effectively drop profit to the bottom line. Because 12% is good, but it's not great, especially for their concept. It was a family restaurant. It was a casual restaurant. So they didn't have fancy stuff. They weren't serving lobster and caviar and foie gras and truffles. They weren't. They were serving chicken and pork and steak and meatloaf and turkey. And we should have been able to do more from there. They want it more. I want it more for them, which is why they came to the program. When they came to the program, top line was doing pretty good. Labor was dialed in. They signed brilliant leases. Their overhead was very low. Their problem was cost of goods sold. Their COGS percentage was over 38% percent at each of the locations. They were remarkably consistent. It wasn't like one was killing it and the other two were dragging it down. It's not. They were all at a 38.5% cost of goods sold consistently over many, many months, which meant that they had a pretty good operation. But they didn't. They didn't do the. They weren't doing the. The important work of driving that number down. I got to tell you, we got them down below 30%. That was another 8 to 10% across the board. That dropped to the bottom line. Again, you do the math. It was somewhere between 750 and $800,000 over the course of. Over the course of this year. That was on top of the nearly million dollars they were already dropping to. The bottom line. So went from about $970,000 in bottom line profit to about 8, $1.8 million in bottom line profit. It's been an incredible, incredible year for them. This. This in a year, especially when we talk about cost of goods sold, it's a down year. The economy, right. There's lots of uncertainty. The economy is. The economy is dipping. And this was hurting them. A casual family restaurant. It was value. Big portions, you know, relatively inexpensive food. But still, it's. They had to keep. They had to maintain a certain price point. People went there for A reason. So when we got them from 38 to, it was about 29% that we got them. What exactly did we do to get them there? That's what you care about. That's what I want to share with you. So the very first thing we did is I said, we need to run the product mix because they had a ton of items on their menu. And I said, I'm guessing you probably need a whole lot less. Some of this is probably waste or spoilage or, you know, you don't have enough cross utilization. So I want to run a product mix report to really understand what's selling and what's really not selling. Also because I said it's not my call. But I think what we're going to do is we're going to end up cutting about 20 to 25% of the menu, which will give us some breathing room on the menu. It will give us some elbow room so that we can move things around. We can come up with different categories. We can do call outs like pictures and boxes and, you know, put my, you know, fan favorite or signatures and things like that. We didn't do that yet. I just knew that's where we were going. So we ran the product mix to see what was selling and what wasn't selling. That was very illuminating. When we got that report, we mapped out the recipe cards. So they had the recipe cards. We spent about two weeks to make sure they were all absolutely correct. We did that. What we found is that there were a bunch of items that they were getting killed on, happened to be a lot of the items that they were selling a lot of. So we knew that those were things to fix, what we had to figure out. Then we looked at the product mix and when we looked at what was profitable and what wasn't profitable, we figured out what dishes are getting cut from the menu, like which ones are off tomorrow, right? Then we played around with the portion size. Yes, we messed around with pricing, but we also renegotiated, went back to our vendors and said, hey man, we're doing $8 million in business. That's like two, three, you know, two and a half million dollars that we're pretty much giving you. So you gotta come to the table, you gotta play ball. And so we renegotiated prices. We looked at other SKUs. We, you know, swapped out this stake with this, you know, with a new stake, a new purveyor, all of that, right? So we went back to our vendors and they became partner in the process. We swapped out different Skus, we simplified some of the recipes for things. And yes, finally, like I said, we reworked the menu. So we cut about 25. We actually cut a little bit deeper. It was like 25 to 28% of the menu, something like that. And then we had lots of breathing room, lots of white space on the menu so we could move things around, we could do call outs, we can do that menu engineering thing. And that was it. That was the biggest thing. They just were afraid, honestly, they were afraid to mess with the menu because they've been around for so long. They were afraid to mess with the prices because they felt like their people were so value conscious. And what I told them and what we learned over the process is everywhere else in their life, prices are going up on gas, on clothes, their rent, everything across the board, prices are going up. Now you can say, maybe I'm the one refuge. This is where, you know, things are like they used to be and they can afford this. But I think that's crap. I think people know, because it's all we're hearing on the news, that the costs of things are going up. And I think you just have to join them. And what they learned over the course of very quickly, two weeks, nobody said anything. It wasn't like they had a handful of people every night that were like, oh, you know, this is much more expensive. This is pretty expensive. No one in the first two weeks, no one said anything. In fact, it's now been months since they've done this, and no one has said anything. So this is a lesson to all the listeners out there who say, well, my audience, my customers are very value conscious. Not as much as you think. Dining out is a luxury. People dine out not because they need to, but because they want to. Because they don't want to shop, they don't want to prep, they don't want to clean up. Afterwards, they come to the restaurant and say, hey, can you come up with a menu? Can you go shopping? Can you make it for me? Can you take care of me for the hour that I'm here? And can you do all the dishes later? Sometimes on the end of a busy day or a busy week, you're like, you know what? I just want to be taken care of. And that's okay. We have an entire business, our industry is propped up on this idea of serving people. So that's what they did. They came in with an $8 million business. Good business for three restaurants, right? 12% of the bottom line. It was almost a million dollars in bottom Line profit going into their pockets. But they wanted more. The cogs with a problem, it was about a 38. We got them down to 29. And by the way, we're still trying to go lower because. Because we can. Because they're a casual place and I think we can find more savings. So we go from 29 to like 26 is, I think, where they're going to land. That's another three points. The bottom line. You do the math. Three points on $8 million. It's a meaningful amount of money. So that's what we did. We went through the process of running the product mix, seeing what was selling, seeing what wasn't, looking at our recipe cards, laying them over, creating a matrix, seeing, man, what. What's really popular and really profitable. Let's sell more of that. What's not popular and not profitable? Let's get rid of those. Where do we put things on the menu so that they sell more? What do we take off the menu? And we just have the servers hand sell. What do we do? And the cogs dropped. I mean, literally, it was immediate. One month they were at 38. The next month they were at 29. And here is the crazy thing about the whole story. They were scared to death that sales were going to go down. And sales actually went up. Not just because we raised the prices on some items, though. That was it. But they also, the sales, like the. The how many items were on the check went up because they weren't buried in a, you know, menu that looked like a page out of the dictionary. They could actually take in all the stuff and they found other things they wanted. We offered snacks, we offered side dishes. We were offering some sauces. There were ways to upsell and spend more money, and it was awesome. That's the first case study. Next case study in a second, after a word from our sponsor.
- [13:12]
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Business and they're cash flow positive. They're making money, they want to make more. Right. So this guy in particular wanted to open more locations, which by the way, he's done since, since joining the P3 mastermind. And he wanted to make more money out of each one. It's totally noble. It's great. So at the time they came in, there were three locations, $4.5 million a year, dropping about 10 to 14% to the bottom line. Right. First thing we did is we got cogs and labor in line, which brought everything to an even like 18% across the board. We realized that a lot of the consistency problems really had to do with how prime cost. But then, then we focused on the good stuff. So everyone always hears me say revenue does not necessarily cure all sins, and I believe it. But I'm not an idiot. I understand the impact that revenue growth has on bottom line profit, but not before we get prime cost in line. So that's what we did here with this restaurant group. We got cogs in line, we got labor in line, gave them a system to manage those prime costs. We basically automated their sales, automated their profit. But then, then over the course of a year, we added a million dollars to top line revenue. Right. So by the end of the year, they're going to be up about 25% over last year. They're, they're a million dollars up so far year to date with another, I don't know, a month and a half at the time of this recording, month and a half left in the year. So they will be up between 25 and 30% year over year, 25 to 24. But how, how did we do it? So here is what we did. We got rid of menus on first approach. So guests were no longer seated with menus and they were no longer greeted with menus. They were sat with a beer list and a cocktail list and the host sat them and said, oh, your server will be right with you. Here's the cocktail, here's our cocktail list of cocktail, signature cocktails and also our beers. Take a look. Your server will be right with you to take your drink. Right. We cued them. So then they start looking, they start figuring out what they want to eat. Server comes over. Server did not greet in the first minute. Gave them just a little bit longer to make sure to consume the reading material so that they could have an idea in their mind of what they wanted. Server greeted with them within the first four minutes. So still pretty early on, but yes, not as quick as they had been, they came over and they said, hi, my name's Chip. I'll be taking care of you. Welcome. I'll be over with menus in just a minute, but I'd love to get you started with something from the bar. Did any want one of our signature cocktails or a beer? And then they did the thing that I always say. They found the thirstiest person at the table and said, sir, looks like you know what you want. What can I get for you? And they ordered. And then it was easy to get everyone else's order. They said, great, let me get the bartender working on these. I'll be right over with some menus. So they used the handhelds. They put the drinks order in there. They sent them to the bar, and then they walked over, got the water, got menus, and greeted them with menus. Here are the menus. Actually, when they greeted the table again, they said, oh, I'll be over and with your drinks in just a minute. But here are the menus. Couple of quick things to mention about the menu. So they didn't tell them about the specials or the 86 as later it was right then, as they were passing out the menus, because otherwise they start looking for five or 10 minutes, and they already find stuff they like. They already found their favorites. And then when we tell them about our specials, our additions, then what happens is they have to figure out. They have to figure out, oh, do I like that more than the other thing, or can you give me another minute to think? Right then and there. That was the first thing we did. And it made sure that everybody got a drink early. So what happens is when you give people menus, they naturally start reading. They start figuring out what they're gonna eat. And so when you say, can I get you something from the bar? What you hear most often is, oh, you know, I'm gonna figure out what I'm gonna eat first. But that's not what we want. We want them to have a drink first before their food, and then we'll get them something to drink that goes with their food. And that was the first thing they did. Number two. We sold more extras on the table. We made better sides. We had them more prominently located. And we got really good at selling, like, an appetizer for the center. So everyone gets an entree. And then we say, oh, looks like you guys didn't order appetizers. Food's going to take a little while. Can I recommend this? And this. They work really well in the center of the table. That way everyone can have stuff. So if anybody wasn't going to order appetizers, we got the servers really good at getting appetizers on the table. Table. And if everyone ordered an appetizer and everyone ordered an entree, we got really good at selling like an appetizer for the center and. Or an entree for the center or side dishes for the center. We made specific scripts for that. We got better at that. Number two, we focused on second beverage sales. I've talked a lot about this. Making sure that we frame it right and we time it right. Framing means we don't ask a yes or no question. We ask a this or that question. So when someone's almost done their drink, we don't go over and say, hi, sir, would you like another? Because a 50, 50 chance they say no. Instead what we do is say, sir, did you want another one of these beers or did you want to switch to something else? So it's do you want this or that? That was another thing we did. And then we focused on timing, making sure that we did a loop back and got that second beverage order before the entrees hit the table. Because there's a considerable amount of data that shows that is the way to do it. And then the craziest thing we did is we got rid of all desserts except one. We cut the dessert menu down to one can't miss signature dessert. And what happened? Sounds weird, right? You think, oh, less choices. If somebody's not in the mood for that, they're just not going to order that, right? False. We ended up getting at least one of them on every single table. It was just like, hey, at the end of the meal, say hey. Just so you know, we have one can't miss signature dessert. You have to get one on the table. If you want two though, I can bring you two. It's this, right? I'm not gonna tell you what it was. Cause it doesn't matter. And if I tell you, you'll know exactly what it was. A place I'm talking about. My point was it was counterintuitive. It was crazy. But it worked. And they pretty much sold way more desserts, which allowed them to go sell after dinner drinks and coffees and cappuccinos and another beer. It helped them. And now both of these places, I want to make sure you understand. The first one was a value driven, like Southern comfort food, family restaurant. This second brand, the one I'm telling you about, three locations, all the same concept. It's like a Pub. It's like an upscale pub. I don't even want to say gastropub. It's like an upscale pub tavern. They had like, you know, like burgers and sandwiches and salads and beers and like. So these were not fancy. They just dialed these things in. And again, in the first example I used earlier before the break, they added almost a million dollars in bottom line profit over the course of this year. And this example I'm just using, they drove an extra million dollars in top line just from being really focused on increasing check average. That's the power of working with a group. It's the power of working with a coach. Somebody who can bring you ideas and help you with the execut. That's the P3 mastermind. These are two case studies of real clients, real members who are in the program. If this sounds at all interesting, I want to have a conversation. It's absolutely free. There is zero pressure. We bring about 10 to 12 new members into the program every single month. So trust me, it's no pressure. If you don't think it's right, if you don't want to join, it's fine. Plenty of other people will take those spots. If you want to learn more, you go to restaurantstrategypodcast.com schedule yes, that link is in the show notes. And I appreciate you guys being here every single week. I appreciate you guys making time for this show. Thank you very much. Again, my name is Chip Close. I am your host of Restaurant Strategy. I will see you next time.