Too many successful multi-unit restaurant companies budget like people who go to the grocery store and take a list of what they ate last week without any thought for what they might enjoy in the future.
The result? They get good things, but not great things — nothing new, interesting, or life changing.
Many companies like yours update budgets by looking at the current year, assigning an increase in sales for the coming year, and tweaking expense categories — protecting a healthy profit stream but never stopping to think how to aggressively grow their business, raise sales by 5% or 10%, or significantly build profit and net worth.
Strategy Creates Breakthrough Results
Planning for your business is the same as planning that trip to the store. If you don’t consider strategy and resource deployment, you end up just rehashing the past.
I spend a lot of time creating strategy with my clients. Strategy is what gets you from where you are to where you want to go; without it, you act randomly.
I will never forget a lunch I had with a very successful restaurateur. Through our conversation it suddenly dawned on him that his multi-unit restaurant company had no strategy. In an endearing moment of self-deprecation, he laughed at himself so hard he nearly fell off his chair.
The moral of the story? His company was doing well, but he could have been doing great!
Before budgeting, think about strategy — where you want to go. That’s what drives great budgets.
Three Most Important Things to Consider
- What do you want to accomplish with your guests, employees, profit, and revenue next year?
- What major initiatives are you going to focus on next year — and what will they yield?
- What are your competitors doing that you have not incorporated into your company? What should you add?
I had one client who, every year, refused to put energy into budgeting. He figured he knew the numbers and could track what was going on just by looking at his statements.
In contrast, I could see how much money that cost him, compared to all my other clients who had a thoughtful budget. How he was missing out on one or two points of profit that were available to him if he only had a disciplined budget and managed costs.
Without a budget, he could not track how all initiatives could combine into progress — or even focus with accountability on those initiatives. He was not realizing the profit, revenue, and net worth gains my other clients do.
That outlook cost him a lot.