Blue Orbiting

I recently had the opportunity to sit in on a planning meeting at a major corporation.  They were rolling out a new training program and were already encountering big problems with the system.  The team leader outlined the issues, asked for suggestions, received very few and the meeting ended with no resolutions.  Later  in the day I heard almost everyone who attended that meeting talking about the problems with the system and many had great ideas.  I wondered why no one had voiced their ideas in the meeting so I just kept listening.  I kept hearing more great ideas, but I also heard a lot of fear.   There was fear of not being heard, of being shot down, of receiving blame and of insulting the team leader.  It became obvious to me that the root of the problem was lack of trust.
“Trust” is the assured reliance on the character, ability, strength or truth of someone.  In my mind trust means you work for a good person.  Someone who is honest, has no hidden agenda, respects his reports and has their back in hard times.  An environment of trust encourages the expression of opinions, feelings, and doubts.  Trust allows for the sharing of important information and ideas and fosters enthusiasm.  Trust builds strength.
However people don’t automatically trust.  A good leader has to earn trust and build confidence.  There are a few simple things a leader can do to build trust.  The hard part is that you have to live them consistently every day.  They have to be so deeply ingrained within you that they are actions as important to your survival as breathing.   I find many leaders are unwilling to commit to the following way of life.
1)     Know Your People:  Relationships are the key to most successes.  A good leader knows his people both personally and professionally.  That means he knows how many children they have and at the same time knows they can manage a profit and loss statement better than anyone in the building. Knowing them personally proves that you care.  Knowing them professionally allows you to assign tasks according to their strengths.  That way everyone on the team is a winner.
2)    Communicate, Communicate, Communicate:  Communication begins with listening.    Everyone needs to feel that they are being heard or they stop talking.  Listening helps you to understand what motivates people.  And when all have been heard then it is your turn to talk. Be explicit and direct, never leave anything to assumption.  Let people know where you stand but also let them know why you stand there.  This is their turn to understand what is important to you.  Good communication builds a common vision and a clear path to that goal.
3)    Do What You Say You Are Going To Do:  Many leaders lie to their people every day and don’t even know it.  I call this “Loose Jaw Syndrome.”  It is so easy in the rapid pace of our day to promise things without even realizing it.  “Sure I can adjust your clock out time for yesterday.”  “I will get that insurance signup information to you this afternoon.”  “I would be happy to call your best friend in for an interview.”  All of these are simple promises but they come out of that “loose jaw” without the mind engaging.  They are low on our priority list but important to our people.  In these simple statements you have made commitments to your people that require immediate action.  If you don’t deliver you lose trust.  Instead you need to listen (there’s that word again) more carefully and only promise what you can deliver in the expected time.  If you can’t deliver explain why.
4)    Give Small Gifts:  The greatest gift you can give to your staff is the Sharing of Credit for successes.  You never do it all on your own, make sure everyone knows who played a part and what they did.  People are motivated by recognition. Allow them to go home every day proud of what they have accomplished.  Credit is an easy gift to give but there are many more.  How about honoring schedule requests, or cutting someone early when you overhear that they need to get out early?  Small gifts may be the easiest part of building trust and could have the largest impact in the smallest amount of time.
5)    Be Seen Working:  You have heard it a million times.  “Never ask your staff to do anything you wouldn’t do.”  I do not believe that statement to be 100% percent true. I ask my people all the time to do things I wouldn’t do because they can do it so much better.  But I will step into the dish pit when it gets backed up and run through some racks or carry trays of food up a flight of stairs to make sure it is delivered to a banquet fast and hot.  Being a worker is just being part of the team.  It gives you insight you can never gain standing on the sidelines and it lets your people know that you can help if they need you.
6)    Admit When You Are Wrong:  There is something comforting and refreshing about working for someone who is Human.  We all make mistakes, we all learn from those mistakes.  There is nothing wrong with sharing that with your staff.  They respect you for your honesty and they also learn to avoid that same wrong road.
7)    Don’t Believe Your Own Hype:  The worst thing a leader can do is think that he received the position because he knows everything.  It is true you wouldn’t be “the guy” if you weren’t pretty good at what you do, but a little humility goes a long way.  Be seen as confident and in charge, your people need that security.  They need to know that there is a decision maker in the building.  They also need to know those decision are based on sound advice from a knowledgeable source and that source is not always your own head.

If you are really committed to building a team that shares ideas and gets results show them they are important and work every day to earn and maintain their trust.  It is an environment that is contagious.  You will see your staff operating the same way with their peers and their subordinates. Most importantly problems will get solved in daily interactions and solutions will not drift away as they are grumbled into dead air.

There isn’t much better than a big fat pastrami sandwich. I’m talking about the 16 ouncers…you know…the 7th Avenue crowd in New York…Carnegie or Stage or Katz.  Far too often, especially in chains like Jason’s or Schlotzky’s or Wall St., you get the sense that someone is putting the meat on a scale.  There’s no “Look at THAT!  I DARE you to try to finish it!” like at the places that have a reputation.  If you’re a Deli and you don’t serve an enormous Pastrami sandwich, are you really a Deli? (that’s rhetorical, thank you).

A few years ago I used to watch a show on TLC called “Junkyard Wars”… a little geeky, but I learned a valuable “rule of thumb” from it (it has since been pulled but you might be able to catch some in BBC syndication…it wasn’t that great of a show so don’t worry about it…just listen up).  In the show, two teams were asked to build motorized vehicles to perform some task defined at the beginning of the show using whatever junk they could find from around a junkyard.  The vehicles could be boats, planes, motorcycles, ATV’s, or trucks.  Regardless, the game was the same. “You build yours, I build mine, then we race them”.  The show went off the air, I believe, because the story line was too predictable: Whomever had the best power to weight ratio ALWAYS won.  A Honda CR 125 dirt bike generates probably 25 horsepower. A 1967 Mustang GT (Eleanor from “Gone in 60 Seconds”…sorry…had free Direct TV preview from Starz this weekend) has, probably, 400 horsepower.  In a 1/4 mile sprint the dirt bike will smoke the Mustang every time.  The significantly lower horsepower in the bike is more than offset by the significantly higher weight of the Mustang (250lbs vs 4000lbs).   For a restaurant, determining the right “power to weight” ratio is not always easy.  A hot dog stand is akin to a motorcycle…low overhead (weight), high profit margin percent…but not much in gross profit dollars (power).  A large Market & Bakery generates incredible retail sales (often $1000 per square foot) but it is labor intensive and the profit margin is low.

It isn’t so easy to identify which combination of seating capacity, through put, profit margin, and production complexity will win the race but you can level the field in a big hurry if you stick with one altruism:

“Occupancy Costs as a percentage of Sales < = 6%”.

This one is probably my favorite “rules of thumb” because the startup process generally leads with an idea for a concept followed by an emotional site selection process.  “I’ve always wanted to put a restaurant here!” or “Look at the traffic! It’s a sure hit.”  Hey look…you can find out the cost per square foot pretty easily. Brokers and Landlords aren’t shy about it don’t keep it a secret.   Bake in the CAM (common area maintenance),  multiply it by the number of square feet and voila!…there’s your annual Occupancy Cost.  Divide it by 6% and bang…you had better be able to meet or exceed those sales numbers or you have the wrong place.  Don’t violate this or you’ll be in for trouble. Pizza place, sandwich shop, steak house, dinner-only fine dining, bagel shop…don’t care.  If you can’t do the sales, look elsewhere.

Here’s an example.  The Landlord is offering a 5000 sq ft end cap unit for $28 sq. ft. with $4 CAM.  Occupancy Costs = $160,000.  You had better be able to deliver $2,666,667 in top line sales or you’re at a disadvantage.  Why?  Because I said so.  Because this number works.  Because that bit above about “it’s hard to get the right power to weight ratio” is not hard when you’ve opened enough restaurants and been through enough closings to know.  It gives you breathing room.  It allows you some room to fiddle with your consumer value proposition so your guests don’t feel pinched every time avocados or tomatoes or lettuce or beef prices get jiggy and you feel compelled to goose prices or pull an ounce of meat off your sandwiches.  Screw around with the value proposition and you’ll lift your head from your computer one day to find that Fred (the bar regular who likes Makers Mark Manhattans, perfect, up) and Julie (the lady who always takes two cannoli’s home for her daughters) and Richard (the guy who thinks “medium rare” is “warm pink center”) and that-cute-little-old-couple (that come every Tuesday at 5:15 and request table 42 with the Ocean View) have stopped coming in.  Too late.  You’re screwed.  Get the rent right on the front end, because the back end isn’t pretty.

I’m always amused when I hear of would-be-restauranteurs looking for locations but they can hardly articulate their concept. “It’s gonna be great!  I’ve got a great recipe for ribs and BBQ pork butt that will knock your socks off!…seats? prime costs? direct expenses? debt repayment? operating capital? construction contingencies? tenant improvements? FF&E? I’ll figure it out after I get the location”.  Are they mad?  They skip the financial profit structure…the part where the ‘power to weight ratio’ is defined through knowing what kind of check averages the market will voluntarily bear and what kind of costs are associated with hanging that shingle on the door.

If you’re a restaurant broker or are in commercial real estate and you have a potential buyer on the hook that never calculates their rent as a percentage of expected sales, then you have a future failure on your hands.  They haven’t a clue. They’re the restauranteurs who make menu choices based on something their mother-in-law saw on TV or they choose equipment without having a menu defined (um…you bought a 72 inch griddle but use it only for toasting hamburger buns?..oh!  but you got a great deal on it…I see).  If you’re a landlord, you don’t want to talk to this guy because you’ll only get your rent through litigation which hangs on the strength of your prenup.  Move on.  Decline future meetings.  Run! If you’re selling the property, double the price…you might get it.

If you want to open a restaurant, define your geography “box” (the 25 square mile area where you hope to find a location), then develop your concept FULLY …including financials…no, ESPECIALLY financials.  THEN look for the space.  As the variables pour in while on your search for the perfect location, you’ll amend your model to suit the area and amend your area to suit your model.  It’s an organic process but the rule of thumb that gives you your best shot at opening a successful restaurant is simple: Occupancy Costs <= 6% of Net Sales.  When you’re not under pressure to hit a 28% Food Cost, you can make better decisions for your customers…decisions that increase guest count not ones that focus on squeezing profitability through marginalizing quality.  When a restaurant gives me 16 oz of Pastrami on my sandwich for the same price that the guy down the street gets for half the meat, I’m thrilled…because I know the owner is in control of their overhead and is making decisions to keep me coming back.

Let’s face it; the restaurant business is hard work.  The Chef’s job is particularly difficult as they are accountable for commodity procurement & receiving, end product retailing and final consumer use.  In our business, “Work smart, not hard” has become the mantra for the last thirty years but far too many have latched onto technological advances to tackle the “smart” part. What I see lately is an over-reliance on function-bloated software.  “Reduce Food Cost 5%.” “Let hand held bar coders streamline the inventory process!” “POS to [Costing Software] Sales Interfaces for automatic reordering!”

I have not run across too many chefs out there who will disagree with me (and I run across a LOT of chefs) when I say:

When it comes to running systems in a professional kitchen, there is no substitute for a no. 2 pencil and a clipboard.

Food is not a widget and cannot be wholly predicted…but a good chef develops a relationship with food that can tell him more than any spreadsheet or performance metric.

Treating food like a non-perishable commodity won’t yield results with your customers or your bottom line.  At Best Buy, the DVD player is either on the shelf or it isn’t.  It comes in the back door at one price, moves out the front door at another price and the delta between what should have been earned versus what was actually earned is called shrink .  In a restaurant the difference between shrink and a varying yield% is not always easy to see.

Your employees feel entitled to your raw products.  They’ll concoct unimaginable noshes with your raw products or nibble on bits and pieces from your finished products…and when they’re full, they’ll cash in on your meal benefit by proudly assembling dinner-to-go in one of your .$75 Bio Pak containers and a $.78 handled bag (to make it easier to carry home, don’tcha know).  Strictly controlling “theft” is difficult…primarily because popping the unusable end of a cucumber into your mouth versus throwing it in the trash or storing on the “use first” shelf is both hard to catch and hard to explain.  Remember, they’re not “stealing”…it’s food and they’re only taking a little bit…and you’re gonna throw it away anyway right? (Stay tuned for a whole ‘nuther discussion on  controlling employee benefits!…not today though.)  Try that with a CD or pack of batteries at Best Buy and black helicopters will come out of the sky and take you away. For that matter, in what other industry do their employees feel entitled to consume component parts AND finished sellables?

What about yield?  There’s no such thing as “yield” with the DVD player on the shelf at Best Buy because the manufacturing plant is in not the same as the retail facility.  When the DVD manufacturer uses a CAD program and laser cutter to mass produce the DVD player’s spring door, they know precisely how much plastic is used to produce the door and how much is wasted…accurate to withing a fraction of a gram.  In a restaurant, perishable commodities come in the back door.. not plastic sheets or metal bolts.  Beef tenderloin yield is at the mercy of a cow’s DNA, the butcher that trims it, the house that packs it (how much blood do you get for your money?), the prep cook that trims/portions it, the ovens that cook it (calibration vs. protein water release rates at varying temps) and the skill of the line cook that prepares it for the table. How about pasta? Cook 40 lbs of Penne for an extra 30 seconds and the extra water absorbed in the pasta can alters the dish’s cost value .  Heck, any variance in straining practices and the sub-recipe for “Cooked Pasta” is shot!

A chef can use software to come up with “ballpark” or “industry standard” yields that are very helpful for planning. However, relying on your shiny new food costing software to tell you how much pasta or tenderloin you’re SUPPOSED to have on hand and your automatic reordering system and theoretical food cost calculators will read false positive for “chef error” triggering a “FIND IT!” frenzy.  Bake in things like shelf life, knife skills, storage and rotation, cross contamination, grazing employees and your fancy software is costing you money, demoralizing your chef, and sending your accountant on a witch hunt. Hey!  Wasn’t this software supposed to save you money?  Like it or not, your chef has to monitor every stage of production of every commodity, every day, all day.  Stuff them in the office behind a computer and tell me how the French Onion Soup turns out because a he didn’t catch the prep cook eye-balling the Worcestershire sauce.

I’m NOT saying that food costing software, theoretical cost analysis, automatic production forecasting, critical meat & seafood count spreadsheets, auto-populating inventory programs, automatic reordering systems and receiving-to-purchase-order systems don’t have their place.  They do.  They can (and should) be layered on as tools to enhance a chef’s heuristic capacity…but only AFTER the chef is fluent with updating their inventory sheets weekly, trimming their own tenderloins and calculating yield, manually jiving meat usage with quantity sold, collaborating with GM weekly and daily to forecast production to sales, and knowing precisely why his food tastes good or why it doesn’t.

Too many companies today are trying to build the machine so they can hire that kid from Stride Rite who was fitting Buster Browns to my 8 year old last week to be their “chefs”.  “It’ll save $23,457.23 per year in labor!” Until our customers develop a taste for Soylent Green, we’re in the food business.

Cooking is a SKILLED profession.  As long as food comes from the Earth, it will take an organic mind to manipulate it effectively.  Clothing fashion from the 60’s and 70’s was choked with synthetics (chemically engineered fabrics) in the name of “improvement”…not because they made better products but because their proud zealot creators successfully dethroned cotton to get rich…and we bought it because it was shiny and new.  Today cotton is back on top…oh…and it’s from the Earth.  She/He who knows WHEN to introduce technology and HOW MUCH to introduce will be the victor.   As I grow older, I’m less inclined to use the word NEVER…but I have no fear using it here: We will NEVER see the day when a program or a machine or a robot or a calculator will completely replace the talented Chef when it comes to delivering food cost, a compelling menu, and an enjoyable dinner out.  If you want to crush your competitors, quietly put away that software program, buy some clipboards and no. 2 pencils, and let your chef get back in the kitchen…with the food.