Conventional wisdom that isn’t either.

think againConventional wisdom often spouts off about razor-thin margins in the restaurant business. Our industry is perennially found on the list of the least profitable businesses, and media accounts are filled with information on how unprofitable restaurants are compared to say, law firms.

In their 2015 Issues and Advocacy Agenda,  the National Restaurant Association leads with this, saying, “Restaurants are largely small business operators, with razor-thin margins.”

But “razor thin margins” can be used as an excuse, like telling yourself how hard the business is over and over again. That can easily become self-fulfilling prophecy, and victim talk. If you have that mindset, you are not going to reach your full potential.  However, if you believe you can collect the resources and knowledge to support a very successful business, and then proceed along that path, you are going to say to yourself, “Razor-thin margins? Not at my restaurant!”

Razor-thin margin talk comes from analyzing an average of all restaurant numbers.  But people don’t start businesses to be average.  Regrettably, some end up being average, or below average, but nobody has that intention. In an industry where there is a low barrier to entry, the best businesses, professionally managed restaurants, are not responsible for everybody else.

So . . . do you think that razor-thin margins, negative cash flow or declining profits occur at restaurants that:

  • have great guest relationships?
  • are managed professionally?
  • set goals and hold themselves accountable?
  • update offerings with the latest craveable food and drink?
  • select great locations where are highly visible?
  • recruit employees they are proud of, treat them well  and earn their loyalty?
  • have timely information about key performance indicators?

Those restaurants, like our best clients, have growing and strengthening and increasing profit, cash flow and margins.

What do you want your margins to look like?