How to Turn a Good Restaurant into a Great Business (3)

Operating a Restaurant From a CEO's Perspective

Every restaurant has three major areas that must function well to achieve its potential for success.

• Operations. Operations include all those functions that are necessary to prepare and serve your products to your customers. It includes all those activities that take place every day in the kitchen, dining room and bar.
• Financial. Financial functions deals with safeguarding cash, accounting, cash management, cost control as well as operational and financial reporting.
• Marketing. Marketing is getting the word out about the restaurant and positioning it correctly in the minds of the public. It includes public relations, community involvement, advertising, promotions and projecting the right image.

Now, think about how successful your restaurant could be if you regularly gave competent attention to each of these three areas. Imagine that operations was capable of consistently providing products and service in a manner that meets your high standards.

Imagine that your financial, accounting and reporting functions were organized and efficient, and provided you with timely information so that you knew exactly how the restaurant was performing and how your marketing efforts were paying off. Imagine that your marketing received the attention it deserves with the result being well-conceived and well-executed promotional activities, events and communicating to your database of regular customers.

Do you think your restaurant would be more successful if you had that level of organization and attention in each of these three areas of your business? Sure. Well, what's the problem?

The problem in most independent restaurants is that the only one around to set up, organize or perform those functions is who? You guessed it, the owner. And the owner is already working 70 hours a week or more running the restaurant.

Most independent operators are to some degree buried in operations, doing whatever it takes to make it through the day. So what happens to the systems that needed in operations and the financial information to know how the restaurant is doing and the planning for the next promotion? Unfortunately, it often doesn't get done, or at least those areas don't get the attention they need and deserve for the business to thrive.

Let's look at an owner's role and involvement in the restaurant visually. Notice in the image below that we have the three key areas in a restaurant: operations, financial and marketing.

Notice the line that separates the three functional areas and the owner. This is meant to delineate the owner's direct, day-to-day involvement in these functions. Here the owner of the restaurant, who we will call in this case a chief executive owner (CEO), is overseeing and directing the operations, financial and marketing activities, but is not directly involved in the ongoing daily work in these areas; the employees are.

This is a highly advantageous position for not only the owner but also the business. Now the owner can turn his or her attention away from the daily functions of running the restaurant to the equally important "strategic" functions of planning and taking actions that will affect the business not today but in the future.

Strategic functions include those things that don't necessarily have to be done today but must be considered or planned in the present to have a shot at having a better business tomorrow. Strategic functions in a restaurant could include planning your next menu, starting a catering program, developing a new marketing strategy or creating a business plan to grow your business. It's very difficult for an owner to take on these types of projects when he is buried in operations. Here's a visual of what it looks like when the owner is below the line involved in the daily functions and activities of running the restaurant.

In this scenario the owner is too involved in running the restaurant to function as a CEO and is more of an "employee owner" (EO). It's easy to see that restaurants with EOs have a problem, there's nobody above the line doing the CEO or strategic work. When the owner is constantly running the restaurant, there is little or no time to spend on strategic activities like developing systems, coming up with a better marketing plan or taking advantage of new business opportunities like catering. While this may not affect the success of the restaurant today or next week, eventually it will.

The first step in turning a below-the-line EO into an above-the-line CEO is by developing and putting in place a system. In the restaurant business a system is a set of detailed operating procedures and is often referred to as an "operating manual."

Development of a detailed and documented operating manual of how a restaurant is to function will give the owner the best possible shot at reducing the need for his or her constant, daily, ongoing involvement in the restaurant. In addition, and just as important, developing a system will help you create one of the most important assets of any restaurant: consistency — a uniform and predictable experience for your guests. 

in the fourth of the series we'll look at the steps necessary to review your restaurant performance and ensure your good restaurant will run well with out you.