Scott Barnett & Associates Blog
Restaurant Ownership Lessons from a Local Gem
September 5, 2023
Almost all chain executives started their careers working in a restaurant and most did a stint as a manager. If they didn't, I am not sure how they can ever be any good at their job. They simply have to have spent time in the trenches.
If you have never had to deal with 45-minute ticket times, counseled a poor performer, scrambled to make payroll, cut off a drunk or fixed a massive water leak; you will never understand how the business really works. Though my degree is in Finance and I was once a CFO, it's not where I learned the business.
A Small Footprint, an Immense Example
In these blog posts I sometimes mention a restaurant operator whose restaurant is only a few blocks from my home. It is an Italian woman who owns it and we will call her "Linda."
I spend a lot of time talking casually to her about the business - specifically hers. Usually I'm with a group but sometimes I go alone for dinner. Ultimately, I go there to learn. She grew up in the business and I am sure that by age 15, she had done every job in her father's restaurant. The rest of her family did the same.
When she came to the US, she worked for a few restaurants as did her sisters but she eventually opened her own place. It is still there, is very popular with locals and tourists (we are in San Diego) and she approaches the business in exactly the way she has for over 20 years.
We have talked over just about every issue facing the industry and her restaurant by extension. She has strong opinions - show me a successful entrepreneur who doesn't - and she is not always right. But 95% of the time she is right. In fact, she is usually spot on.
I spend a lot of time talking casually to her about the business - specifically hers. Usually I'm with a group but sometimes I go alone for dinner. Ultimately, I go there to learn. She grew up in the business and I am sure that by age 15, she had done every job in her father's restaurant. The rest of her family did the same.
When she came to the US, she worked for a few restaurants as did her sisters but she eventually opened her own place. It is still there, is very popular with locals and tourists (we are in San Diego) and she approaches the business in exactly the way she has for over 20 years.
We have talked over just about every issue facing the industry and her restaurant by extension. She has strong opinions - show me a successful entrepreneur who doesn't - and she is not always right. But 95% of the time she is right. In fact, she is usually spot on.
Linda was a head of competitors in building an outdoor patio during COVID, she interviews job applicants on the spot to help overcome labor shortages, she has an outstanding palate and caters to a loyal crowd.
During Covid she negotiated a deal with her landlord to build out a permanent and attractive outdoor patio. While her competitors were serving in parking lots and converted space, she had the customers.
Like everyone, she has been dealing with the chronic labor shortage but she interviews people on the spot if they walk in looking for a job - even during the dinner hour. Her husband is a co-owner and she has two sisters, a son, a niece and assorted others regularly available and working if necessary. She makes use of her employees in finding new hires with the thinking, "If this person is good, they probably have friends who are as well." And she retains them - because she knows them. The lead busser has worked there for 10 years.
She has an excellent palate with an eye toward value so her wine selections are outstanding and reasonably priced. She rotates specials about every month but keeps the core menu steady. Her own art decorates the walls and you always hear Sinatra and Dean Martin lightly but clearly in the background.
It's in every sense a family business catering to a discerning and loyal crowd. While it is a small restaurant, the lessons learned here and the example set by Linda can extend to any restaurant, including chain operators.
Like everyone, she has been dealing with the chronic labor shortage but she interviews people on the spot if they walk in looking for a job - even during the dinner hour. Her husband is a co-owner and she has two sisters, a son, a niece and assorted others regularly available and working if necessary. She makes use of her employees in finding new hires with the thinking, "If this person is good, they probably have friends who are as well." And she retains them - because she knows them. The lead busser has worked there for 10 years.
She has an excellent palate with an eye toward value so her wine selections are outstanding and reasonably priced. She rotates specials about every month but keeps the core menu steady. Her own art decorates the walls and you always hear Sinatra and Dean Martin lightly but clearly in the background.
It's in every sense a family business catering to a discerning and loyal crowd. While it is a small restaurant, the lessons learned here and the example set by Linda can extend to any restaurant, including chain operators.
Constant Questions for All Operators
Whenever I dine at the restaurant, Linda and I chat for some time, usually peppering each other with questions about the business:
Should she get a full liquor license?
She says no. (I suspect because she does not want to deal with the issues.)
Is plant-based here to stay?
Maybe, but people always talk healthy and then indulge.
Should she pass on the credit card fee to the customer?
She is going to let the competition be the pioneers (with the arrows in their backs) on that one.
Will she "join the 21st century" on some things like a database of her customers?
Probably not since she knows all of her (hundreds of) regulars by name.
How about advertising?
Why would she?
Does she have an ideal food costing system?
Well, considering she only takes inventory once a year, no.
Is all of this a big point of difference with the way her children would do it?
Maybe, but she is not going to change. Why should she?
Linda, like any restaurateur, is constantly making decisions that affect her bottom line in the face of ever shifting trends and market fluctuations. Besides being blessed with good judgment and a lifetime of restaurant experience, she also excels in other key areas. She is an expert in food, wine, ambiance, every aspect of service and purchasing. (If I was a vendor, I wouldn't even think about trying to slip a brown stemmed head of lettuce by her).
Should she get a full liquor license?
She says no. (I suspect because she does not want to deal with the issues.)
Is plant-based here to stay?
Maybe, but people always talk healthy and then indulge.
Should she pass on the credit card fee to the customer?
She is going to let the competition be the pioneers (with the arrows in their backs) on that one.
Will she "join the 21st century" on some things like a database of her customers?
Probably not since she knows all of her (hundreds of) regulars by name.
How about advertising?
Why would she?
Does she have an ideal food costing system?
Well, considering she only takes inventory once a year, no.
Is all of this a big point of difference with the way her children would do it?
Maybe, but she is not going to change. Why should she?
Linda, like any restaurateur, is constantly making decisions that affect her bottom line in the face of ever shifting trends and market fluctuations. Besides being blessed with good judgment and a lifetime of restaurant experience, she also excels in other key areas. She is an expert in food, wine, ambiance, every aspect of service and purchasing. (If I was a vendor, I wouldn't even think about trying to slip a brown stemmed head of lettuce by her).
Challenges and Lessons for Chains
The chain operator has some advantages over a mom and pop in this industry. Good chain operators have a system for everything. Elaborate technology tools are on hand to analyze customers' buying habits and to manage staff. There is access to robust supply chains and a greater purchasing power to buy at economies of scale. A deep wealth of institutional knowledge and promotion pipelines usually exist too.
For all the advantages that chain restaurants have over mom and pop's in technology, purchasing power and more, the ever present issue is finding people to run a chain like Linda runs her restaurant.
The chain operator has some advantages over a mom and pop in this industry. Good chain operators have a system for everything. Elaborate technology tools are on hand to analyze customers' buying habits and to manage staff. There is access to robust supply chains and a greater purchasing power to buy at economies of scale. A deep wealth of institutional knowledge and promotion pipelines usually exist too.
The perennial challenge for chains is getting buy-in from their front-line people, especially managers - to make them "run it like they own it." Well-designed systems and cutting-edge technologies are all well and good, but you need the people on the ground to have passion, steadfastness and attention to detail to really make things work.
However, upon further reflection, you don't need managers to just "run it like they own it" - you need them to be more like Linda. Plenty of folks own restaurants and run them into the ground. Linda owns the restaurant and runs it incredibly well - nearly perfectly.
That has always been the conundrum for chain restaurants. How do you get buy-in from managers to run a unit like they own it, and how do you ensure that they run it like a well-oiled, profitable and pleasant machine? Like Linda does.
I think I know. But I'll keep asking her questions.
The perennial challenge for chains is getting buy-in from their front-line people, especially managers - to make them "run it like they own it." Well-designed systems and cutting-edge technologies are all well and good, but you need the people on the ground to have passion, steadfastness and attention to detail to really make things work.
However, upon further reflection, you don't need managers to just "run it like they own it" - you need them to be more like Linda. Plenty of folks own restaurants and run them into the ground. Linda owns the restaurant and runs it incredibly well - nearly perfectly.
That has always been the conundrum for chain restaurants. How do you get buy-in from managers to run a unit like they own it, and how do you ensure that they run it like a well-oiled, profitable and pleasant machine? Like Linda does.
I think I know. But I'll keep asking her questions.
