Cooking up a profit with the right control and management systems
Many restaurant businesses that do so well at the beginning of their lifecycle gradually fail due to a combination of operational inconsistencies and stakeholders’ disengagement from daily operations.
Although operational standards do exist in some cases, their monitoring and controlling levels fizzle out due to weak enforcement, leading to employee complacency.
To reduce the risks of failure associated with the above problem and ensure that business thrives, two key strategies are found extremely effective. Firstly, the owner/manager must have an efficient and effective control system overseeing the restaurant’s operational systems. Second, a competent foodservice manager and team are essential to handle the restaurant’s operations from a tactical and strategic perspective.
To have an efficient and effective control system overseeing the restaurant’s operational systems, it is recommended that the owner, through a 3rd party industry expert/company, conduct a 360-degree assessment on the restaurant operation. This could cost some money but the investment is well worth it if the restaurant plans to grow and thrive in the market. Such an assessment would provide the restaurant owner/manager the opportunity to stand out, in an ever-competing industry. Following the assessment, it’s time to prioritize the risks (i.e. the gaps found in the assessment) based on each risk’s probability and impact on the restaurant’s operation. Once the risk prioritization is completed, the promoters must get a cost estimate from a financial and human resource perspective to mitigate/eliminate the highlighted risks. They must also take steps to secure the required resources. The strategy also includes devising an action plan and executing it, based on a timeline and clear deliverables.
The deliverables should result in the creation of an efficient and effective control system that incorporates four techniques: Accounting and Financial Analysis, Internal Audits, Observation, and Survey Method.
It is also important for the owner/manager to create awareness and buy-in among employees, about the newly developed control system.
The final stage of this part of the strategy involves the actual roll-out of the new control policies and procedures. Furthermore, it is crucial to continuously monitor and update/enhance the control system.
In the second component of the strategy, which involves placement of a competent foodservice manager and team to handle the restaurant’s operations from a tactical and strategic perspective, there are a few ground rules to be kept in mind. First of all, a competent restaurant manager would be technically sound with the right experience to efficiently and effectively deploy the restaurant’s resources. In addition to experience, the manager should possess the passion, commitment to excel and achieve the desired quality standards, pro-active attitude, clear understanding of the vision and mission of the food concept, good understanding of the target market and competition, and good communication skills to ensure a successful operation.
On their part, the owner/ HR need to have a proper interviewing and personnel selection system in place. They also need to conduct background checks to validate historical experiences of prospective employees. The owner/HR also need to put in place individual development plans with a set of time-lined goals, for their personnel. Equally important, is the need to account and invest in training programs, to improve personnel competencies.
To ensure successful execution of the strategy, key personnel need to develop standard operating procedures (SOPs) and associate it with a proper control system to monitor operations. The owner and manager, are expected to delegate responsibilities and promote accountability. Similarly, the owner or HR are required to implement a proper rewarding system that is based on performance (SMART goals).
For successful implementation, it is desirable that the owner/manager should possess the competency to efficiently and effectively plan, organize, direct, and control restaurant resources to achieve the desired goals profitably. It is also recommended that 360-degree personnel evaluations be implemented along with establishment of a balanced scorecard system to align business activities to the vision and strategy of the organization. And finally, the owner/manager must constantly make improvements to the restaurant’s operational system.
An efficient and effective control system overseeing the restaurant’s operational systems, will immensely benefit the owner/manager in several ways. For instance, the 360 Degree Assessment Report highlights potential gaps in the restaurant’s operational systems and recommends appropriate solutions based on industry’s good practices. It also helps to generate daily, weekly, and monthly reports for performance measurement, and to flag inconsistencies/discrepancies. With the right control system in place, it becomes easy to measure its impact on the restaurant’s net profitability, update and document changes in policies and procedures. It needs to be noted here that continuous monitoring and updating/enhancement of the control system is required.
Similarly, a competent foodservice manager and team need to be in place to handle the restaurant’s operations from a tactical and strategic perspective to ensure a thriving business. To achieve this, they must regularly analyze the balance scorecard to adapt and steer the business in the right direction. The manager and his team must actively involve themselves in the development of the SOPs. They must update and document changes in policies and procedures, measure impact on restaurant’s net profitability, and continuously monitor and update/enhance the operating systems.