Don’t Give ‘Em a Management Entitlement Program

By David Scott Peters

www.therestaurantexpert.com

If I had a nickel for every time I am asked about how to properly structure a management bonus program, I could start thinking about retirement. No really, this has got to be one of the most-asked questions.

The truth is that structuring a bonus program is actually not that difficult. Often the bigger challenge is having the right systems in place to build it properly. Without the right systems, many management bonus programs are what I call management “entitlement” programs, where managers expect a bonus just for showing up.

To help you avoid this profit-sucking mistake, I am going to share with you the six systems you need to have in place to write a useful management bonus program that will encourage your managers to earn their bonus:

Job Description

This is a no brainer, yet often overlooked when we talk about management. Without a detailed job description for each level of management in place, you have managers on the floor who have no real clue of what their job is or how well you expect them to do it.

This becomes your paint-by-numbers outline when you start to write your bonus program because your minimum expectations are already outlined in black and white.

Budgets

Budgets give you, the operator, the ability to set targets, measure progress, evaluate performance and ensure you run profitably. Honestly, without a budget and targets in place there is no structure for any reasonable bonus program.

Prime Cost Control Systems

When you have budgets in place for your restaurant, you have cost of goods sold and labor targets (together they make up what is called your prime cost), but do you have systems in place to help management achieve those targets? You must give them a road map of how to control those numbers and achieve their goal, or you might as well not even bother implementing a bonus program. They will never hit their goals, which ultimately translates to lost profits for you.

Scoring Systems

When I refer to scoring systems, I am referring to both those that you impose and those that are imposed on you, such as the health department for the former and customer comment cards for the latter. Profitability alone should never be your sole focus. Implement, utilize and evaluate your scores. They will tell you a lot about how well you are doing and should be included when evaluating managers’ performances.

MBOs

The concept of MBOs was originated by Peter Drucker at The Harvard Business Review. He is called the Father of Modern Management, and he outlines MBOs in his 1954 book, The Practice of Management. There are five basic steps to the MBO Process, which are: 1) Review the objectives the company would like to accomplish, 2) Set objectives for your management team, 3) Continually monitor progress, 4) Continually evaluate progress, and 5) Reward the achievers. When you’ve done all that, you then start the process over again.

Timely Reporting

Last but not least, you have to have timely reporting. It’s not good enough to have all of these systems in place if you can’t gather, analyze and distribute your results to your team on a timely basis. Taking too long can de-motivate your management team and even worse yet, cause you to lose money.

With the right program, your managers will work harder than ever to earn that bonus and won’t blame you if they miss their targets. My goal with this article is to get you thinking about how important systems are in your restaurant and how they relate to rewarding your management team. Go down the list and take an inventory of what you have in place and if something is missing, add it to your I MUST IMPLEMENT LIST.

David Scott Peters TheRestaurantExpert (1)David Scott Peters is a restaurant expert, speaker, coach and trainer for independent restaurant owners. He is the developer of SMART Systems Pro, an online restaurant management software program helping the independent restaurant owner remain competitive and profitable in an industry boxed in by the big chain restaurants. He is best known as the SMART Systems guy who can walk into any restaurant and find $10,000 in undiscovered cash before he hits the back door… Guaranteed! Learn more at www.TheRestaurantExpert.com.

How to Hit a Home Run in Labor Controls

By David Scott Peters

www.therestaurantexpert.com

How do you make money in the restaurant business? The reality is it’s the small things that add up, such as reducing the cost of cheese by a nickel a pound, or reducing the number of garbage pickups a month by one. But every so often, with the bases loaded, you bring up your cleanup hitter to clear the bases with one big swing, known in baseball as the “grand slam.” If that cleanup hitter is a system, then with that one system you’ll reap huge savings.

This article is about choosing the system that is your cleanup hitter. It’s the one batter who can hit a restaurant profits grand slam for almost any restaurant. You simply need to know how to send him in.

Start with the right equipment

Using the right equipment or tools is how you control your labor expenses! And controlling them starts with a labor budget and labor budgeting system.

First, you need to know your target labor costs. That starts with knowing what your prime cost should be. That’s the sum of your total cost of goods sold and your total labor costs. Prime cost for a full-service restaurant needs to be 55 percent, no matter what type of restaurant you are. Please note that it doesn’t matter where each of the individual expenses are, just so that together they don’t exceed your prime cost target.

You need a good warm up

Before you can hit the big one, you have to be warmed up. To warm up, you need to calculate what your labor expenses were last week. This will give you some key numbers to ensure you hit your projected labor budget for next week. Below is an example of what you need to calculate.

DSP 1

With this information, you’ll be able to tell each of your managers, by department, how many hours they have to schedule and how much money they have to spend (not including taxes, benefits and insurance.)

Swinging the bat

Now that you know what your average hourly wages are by department, average hourly wage for all line employees and the percentage of hours by department, you can now follow my step-by-step system to ensure you hit your target labor costs and ultimately make more money!

1)      You need to know how much you have to spend on labor next week. To do this you need two pieces of information: a) your projected sales for the week; and b) your target labor cost percentage, excluding taxes, benefits and insurance.

2)     How much money do you have to spend, minus management salaries? Since management salaries are a fixed expense, simply subtract their salaries from your total dollars available.

3)      How many hours do you have available to schedule for your line employees throughout your entire restaurant? Take your average hourly wage for the entire restaurant and divide it by the total dollars you have to spend for all of your line employees.

DSP 2

 

 

 

 

 

4)      How many hours does each department get? You were probably asking yourself earlier, “Why do I need to know the percentage of hours each department used last week?” By multiplying those percentages by the total number of hours available for next week, you quickly determine how many hours each department gets.

5)      Last but not least, based on average hourly wages by department you’ll be able to allocate every penny each department gets and stay within budget… guaranteed!

Hitting the home run

You should be saying to yourself, “WOW! That’s really easy!” And that’s because it is. Your final step is to give each manager the number of hours they have to schedule for next week and how much money they can spend. Then have them write their department schedules. The attitude here is to schedule to stay within budget, not just to fill shifts.

By following my step-by-step labor budgeting system… you’re in position to hit your very own restaurant profits grand slam!

 

 

David Scott Peters TheRestaurantExpert (1)David Scott Peters is a restaurant expert, speaker, coach and trainer for independent restaurant owners. He is the developer of SMART Systems Pro, an online restaurant management software program helping the independent restaurant owner remain competitive and profitable in an industry boxed in by the big chain restaurants. He is best known as the SMART Systems guy who can walk into any restaurant and find $10,000 in undiscovered cash before he hits the back door… Guaranteed! Learn more at www.TheRestaurantExpert.com.

 

Small Family Operation, Big Mistakes

By David Scott Peters

www.therestaurantexpert.com

There’s a small New-York-City-style deli near our office. They serve high quality meats and have incredible egg salad. What makes them a draw for me is they put their sandwiches on their bagels that are made daily. The combination is really good.

But with that said, they do so many things that just kill me to watch. Let me share a typical visit for lunch. After a few lunches with them, I can hardly stand to go in anymore because I can’t stand to watch them make so many mistakes that are costing them business.

Let me tell you what I see as their mistakes and how they should go about fixing them.

1)      Checklists – The restaurant was dirty because they don’t have checklists. We teach that checklists are the foundation of ALL restaurant systems because they set standards and expectations. Without checklists, especially in a small family business, everyone has their own idea of what clean means. If they had checklists in place, there would be only one standard for everyone to follow and nothing would get missed.

2)      Point of Sales System – They’re using a cash register – which is a horrible idea! If they actually had other employees it breeds theft. In their situation I highly doubt internal theft is even remotely a concern. But, when they type in the sale price of everything sold, they lose their ability to analyze their sales mix to find ideal food cost or just know what their customers are buying.

3)      Customer Service Training – While I love that they are a small family business, they have no sense of customer service. They unfortunately treat you like an inconvenience, politely to your face. If they put a “WOW” customer service program in place, they would kill the competition because they would endear the customers to them and get them to visit and say, “I know the owners!”

4)      Selling Tickets – You think that today everyone would understand Restaurant 101 includes staging and selling tickets. If they would learn to fire items and work their stations as a team and call the customer when the complete order was up and ready, they would instill a sense of urgency and improve customer service. I wouldn’t be done with my sandwich by the time my wife gets hers.

5)      Recipe Costing Cards – It is 100 percent clear to me that this restaurant does not have recipe costing cards. Why? Nobody can sell a fresh bagel with Boar’s Head meats in generous portion and give you a fountain drink for under $6.50! Heck, the sandwich itself should probably sell for more than that. Add the fact that they are giving up $2 – $2.50 for every sandwich they sell, they are committing financial suicide! Charge for quality. Charge separately for sodas because customers don’t price shop a drink.

So what about you? Do any of those situations sound familiar to you in your restaurant? I bet some do! Let’s run through each question you should be asking yourself.

Do I have checklists in place for every position and every shift in my restaurant?

Do you have a point of sale system or better yet, is it accurate?

Do you have a real training system in place?

Is your kitchen run professionally by professionals?

Do you have accurate recipe costing cards done for ALL recipes?

Be proactive in your restaurant! Let us help you make sure your restaurant isn’t making these common mistakes.

David Scott Peters TheRestaurantExpert (1)David Scott Peters is a restaurant expert, speaker, coach and trainer for independent restaurant owners. He is the developer of SMART Systems Pro, an online restaurant management software program helping the independent restaurant owner remain competitive and profitable in an industry boxed in by the big chain restaurants. He is best known as the SMART Systems guy who can walk into any restaurant and find $10,000 in undiscovered cash before he hits the back door… Guaranteed! Learn more at www.TheRestaurantExpert.com.

How to Develop a Management Plan in Your Restaurant – Part 2

By David Scott Peters

www.therestaurantexpert.com

In my last blog post I explained what a management plan is and the benefits of developing one in your restaurant.  For this blog post I want to give you the tools you need to create your restaurant’s management plan.

What’s next?

First you have to evaluate your restaurant.

Your management plan is divided into sections that correspond with many of the most important areas of your operation. Each section includes a personal evaluation of your restaurant’s current approach to running a profitable and easy-to-operate business. Use the following questions to create your own evaluations for each of the key areas of your restaurant.

Financial Plan

Using a scale of 1 to 5, 1 being strongly AGREE and 5 being strongly DISAGREE, rate your restaurant on the following:

  1. Based on my restaurant’s current efficiencies, good or bad, I know my breakeven point ­­­____
  2. My restaurant is on an accrual accounting system ­­­____
  3. I supply my accountant, or whoever prepares my books, my ending inventories within five days of the end of every month ­­­____
  4. My profit and loss statement is currently set up in such a way that cost of goods sold and labor are broken out into easy to read sections before all other expenses ­­­____
  5. My restaurant uses weekly and monthly cash flow projections to help run the restaurant efficiently and pay its bills ­­­____
  6. My restaurant has a detailed monthly budget that everyone in the management team understands and is expected to achieve ­­­____
  7. My restaurant knows its dollars per square foot and or dollars per seat ­­­____

Cost of Goods Sold

Using the same scale above, rate your restaurant on the following:

  1. My restaurant uses a budget variance report so management can clearly see how they are managing our controllable expenses ­­­____
  2. My restaurant does a monthly food and liquor inventory ­­­____
  3. For even better controls, my restaurant does a weekly and/or a daily food and liquor inventory ­­­____
  4. My restaurant calculates its cost of goods sold by category at least monthly ­­­____
  5. My restaurant manages its inventory turns to minimize the amount of product sitting on our shelves at any given time and keep our cash in the bank ­­­____
  6. My restaurant keeps an eye on our change in inventory to see if we are ordering properly ­­­____
  7. All of our recipes have a completed recipe costing card filled out and updated on at least a quarterly basis ­­­____
  8. Utilizing our POS system, we know our restaurant’s ideal food and pour cost, and we measure our performance against these numbers ­­­____
  9. In my restaurant we use tools such as a key item report and waste sheet to control our food costs ­­­____
  10. My restaurant uses a purchase allotment system to make sure we are ordering correctly ­­­____

Food Systems

Using the scale above, rate your restaurant on the following:

  1. My restaurant uses par levels for products it purchases ­­­____
  2. My restaurant utilizes a purchase order form to ensure ordering, receiving and costs are done accurately ­­­____
  3. My restaurant only allows management or line employees who have been sufficiently trained on receiving procedures to check in orders ­­­____
  4. My restaurant uses a daily prep list to ensure we prep the appropriate food levels to run successfully each day based on the business we expect ­­­____

Labor Systems

Using the scale above, rate your restaurant on the following:

  1. My restaurant uses a master schedule for all departments so that any manager can write an accurate schedule even if it’s not their own department ­­­____
  2. Every manager knows how many FTEs are needed by department and hire accordingly ­­­____
  3. Schedules are written based on forecasted sales for the week by day and shift ­­­____
  4. Before schedules are done for the next week, management is given projected sales, how much money they can spend and how many employees they need to fill their shifts ­­­____
  5. My restaurant tracks labor cost daily ­­­____
  6. My restaurant trains all managers to write a schedule the same way all of the time ­­­____

Running the Restaurant

Using the scale above, rate your restaurant on the following:

  1. My restaurant uses AM and PM manager checklists on a daily basis ­­­____
  2. My restaurant has a pre-shift meeting 15 minutes before every shift for both front of house and back of house staff ­­­____
  3. My restaurant uses a manager’s log on a daily basis to communicate ­­­____
  4. My restaurant has clearly defined house policies ­­­____
  5. My restaurant trains all managers to follow a step-by-step systems for checking-out ALL line positions ­­­____
  6. All of my managers have been trained in the proper use of the I-9 Employment Eligibility Verification Form ­­­____
  7. My restaurant has a HACCP Plan in place ­­­____
  8. My restaurant has a tip reporting system in place to comply with the yearly filing of our 8027 Tip Report to the IRS ­­­____
  9. My restaurant complies with the OSHA posting requirements ­­­____

Finally

To develop your management plan, after you evaluate each section, start putting your plan on paper in the form of both short-term and long-term goals.

When you are finished with this exercise, you will have put together your complete management plan for success.

David Scott Peters TheRestaurantExpert (1)David Scott Peters is a restaurant expert, speaker, coach and trainer for independent restaurant owners. He is the developer of SMART Systems Pro, an online restaurant management software program helping the independent restaurant owner remain competitive and profitable in an industry boxed in by the big chain restaurants. He is best known as the SMART Systems guy who can walk into any restaurant and find $10,000 in undiscovered cash before he hits the back door… Guaranteed! Learn more at www.TheRestaurantExpert.com.

 

How to Develop a Management Plan in Your Restaurant – Part 1

By David Scott Peters

www.therestaurantexpert.com

First, what is a management plan?

A management plan is your written strategy for how to get your restaurant to where you want it.

New ideas have very little value unless they are put into action. This management plan is a tool that translates ideas (I should or I’ll try to) into action (I am). This helps solidify your commitment to turning your restaurant into a profitable and smooth running operation. It also provides the direction your management team needs to do their jobs to your expectations.

In developing your plan for improving your restaurant operation, remember these helpful tips:

  • Study every aspect of what you want to implement – does it fit with your management style and goals.
  • Believe in your plan – have confidence in your ability to make it happen and work.
  • Teach, involve and delegate to your team. You can’t do it alone and you need their commitment, buy-in and most importantly their support.
  • Work hard to make it happen! See rapid results!

Benefits of a management plan

A management plan produces:

  • Clearly defined goals to achieve
  • Knowledge of achieved success
  • Clear communications
  • Organized thoughts and ideas, identifying/rectifying omissions
  • Systems for realizing short and long-term goals
  • Less stress
  • Increased bottom-line
  • Increased cash flow
  • Improved employee morale
  • Business growth

You should have several objectives in mind when developing your management plan, but your ultimate goal is to build a more profitable business (a virtual cash machine), work less, have less stress, and have a real personal and family life.

Just remember, any business is only as good as its people believe it is!

In the next blog post, I’ll provide you with the questions you need to ask of yourself and your restaurant to be able to put your management plan together.

David Scott Peters TheRestaurantExpert (1)David Scott Peters is a restaurant expert, speaker, coach and trainer for independent restaurant owners. He is the developer of SMART Systems Pro, an online restaurant management software program helping the independent restaurant owner remain competitive and profitable in an industry boxed in by the big chain restaurants. He is best known as the SMART Systems guy who can walk into any restaurant and find $10,000 in undiscovered cash before he hits the back door… Guaranteed! Learn more at www.TheRestaurantExpert.com.

 

Dunkin’ Donuts and Baskin Robbins Stores Use Remote Eyes to Crack Down on Employee Theft

Franchise Management Service, Inc. a franchisee of Dunkin’ Brands, Inc. which owns and operates the majority of Dunkin Donuts and Baskin Robbins stores in Eastern Maryland has deployed Remote Eyes POSWatch to manage store-level cash flow. 

According to Nick Nistazos, Owner of Franchise Management Services, “The Remote Eyes system has been instrumental in allowing me to effectively manage a 40 store operation from a central location while keeping close tabs on my cash flow. The Remote Eyes alert system helps my managers instantly pinpoint stores and employees who require closer scrutiny.”

Can you afford to not have Integrated Video Surveillance?

You can read the full press release below:

Franchise Management Services, Inc.

Uses POSWatch Enterprise™ to Manage Store Operations

Enterprise management tool cracks down on employee theft

Hanover, Maryland, July 29, 2013 – Odyssey Technologies, Inc., manufacturer of Remote Eyes® digital video management systems, is pleased to announce that Franchise Management Services, Inc. a Franchisee of Dunkin’ Brands, Inc. which owns and operates the majority of Dunkin’ Donuts and Baskin Robbins Stores in Eastern Maryland and several locations in Baltimore City, has successfully deployed POSWatch Enterprise to effectively manage store-level cash flow by dramatically reducing the amount of loss attributed to under-ringing customer orders. POSWatch Enterprise uses the real-time electronic journal output from the Radiant POS server in each store to build a centralized aggregated transaction database, produce reports that alert management to problem stores and employees, and generate real-time alerts of transaction exceptions that require management attention. POSWatch Enterprise is integrated with the Remote Eyes video management system to provide management with the forensic evidence required to take administrative action against dishonest employees. The video forensic evidence retained by the Remote Eyes system is court admissible and supports appropriate legal action by Franchise Management Services when necessary.

According to Nick Nistazos, Owner of Franchise Management Services, “The Remote Eyes system has been instrumental in allowing me to effectively manage a 40 store operation from a central location while keeping close tabs on my cash flow. The Remote Eyes alert system helps my managers instantly pinpoint stores and employees who require closer scrutiny.”

Nistazos continues, “The team at Odyssey has been a dream to work with and very responsive to our needs for software customization. For example, we jointly designed the store network reporting system to match the way we run our operation, Odyssey created a high-speed network video review capability at our request, and they added a system alert tool that instantly tells us when we have network, equipment, or software problems. If you are trying to run a multi-location operation without using a tool like Remote Eyes, then you are behind the curve.” 

Watching…. MSN.COM Poll – Cash Registers Vs. Mobile Payment

The results are not final yet, but in over 120,000 replies so far to a poll on MSN.com many consumers are still saying they overwhelmingly prefer cash registers to mobile apps.

Granted the poll doesnt ask if this is in regards to the gas pump, grocery store restaurant, bar, or retail outlet but the results are none the less interesting.

Post below with your comments on why you think this may be.

POS vs Mobile WHAT DO YOU THINK?

More stores are having salespeople & and even shoppers ring up sales on smartphones & tablet computers.

How do you feel about stores using tablets & smartphones to ring up sales?

12 % I like the technological upgrade. 14,366 votes
59 % I prefer cash registers. 72,498 votes
13 % I’m not sure yet. 16,269 votes
16 % I don’t care. 19,996 votes

Total Responses: 123,129

More to come when final results are released!

RDS Colorado Customer on Bar Rescue – Spike TV Sunday 9:00 CST.

We are pleased to announce that NEW RDS of Colorado customer Solids and Stripes will be featured on Spike TV Sunday March 10 at 9:00 CST. GM Fred Ward and his team were called upon by the show to provide a Point of Sale solution to this great but struggling pool hall / bar in Denver, CO. Congratulations to our new customers on the relaunch of their business and to our team in Colorado for doing such a great job on the technology and services side of the house.

RDS Southeast Showcasing at the 2013 Hospitality Career Expo

Retail Data Systems SE showcasing the Aloha Point of Sale System at the 2013 Hospitality Career Expo Friday February 1st at the Georgia International Convention Center.  RDS staff met with and networked with over 2,500 future employees, customers, hospitality students, teachers and mentors.  Showcasing OUR BRAND and making a lasting first impression on the industries future buyers.  Educating the future of the hospitality industry and training the educators who influence our industry is another way we take pride in the industries we serve.

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