We’re used to talking to management teams about store-level profit, restaurant profit, restaurant operation profit, or whatever term we use.
You know, the number before occupancy, A&G, depreciation, and amortization.
It’s what these people master, your bonus program may be based on, and something they can understand.
And it is the wrong thing to do.
An open-book company, where key people see the whole P&L, gives you a superior result.
Your senior team, your general managers, and many of your managers perform better when they understand the complete financial picture and how their restaurant truly makes money.
Share your financials with these people.
How What You’re Doing Now Offends Your People
I can hear what you’re thinking as you read this—and what you feel: anxiety, fear, worry, sweaty palms. Maybe a little dizzy.
“I am afraid of everyone knowing how much we make. When they find out, they may slack off, resent that, or, even worse, steal from me.”
I hear a rational response. No one wants their employees to feel bitter.
Except, if you don’t show them the whole P&L, what you do makes people feel worse.
Managers who see the line showing profit from restaurant operations—and nothing below it—think profit is much higher than reality.
When you open your books, they learn what it costs to rent the building, pay property taxes, pay credit card fees and a management fee that supports the supervisor who guides them—along with the accounting team that keeps score.
They have a more realistic view of what it costs to run a restaurant.
That will motivate them to take action.
Overcome Your Fear and Help Your Team Excel
I get it: As a successful owner of a multi-unit restaurant company, you consider money a sensitive subject.
One of my clients bought an expensive sports car. He keeps it in his garage and never drives it to work.
Another has a great catering division but would never allow his company to cater an event at his large home in a prominent neighborhood.
Today I met someone who had downgraded his car to a type his staff would more likely drive.
They all feel this way for a reason. They don’t want employees to believe they’re not getting paid enough.
In an open book company, you transmute umbrage into trust with key people.
This has both personal and financial benefits.
A great concern that you can’t show your numbers to multi-unit people or GMs, and key managers, means you have the wrong people in place.
Over to you. Who in your organization should see the whole picture?