Eliminate Decision-Making Waste in Your Restaurant

Hey there restaurant pros. It’s David Scott Peters and welcome to episode 82 of the restaurant prosperity formula. I’ve been coaching restaurant owners since 2003. And the restaurant property formulas based on what the most successful restaurant owners I’ve worked with doing a daily basis to achieve their success.

The basic premise of the formula centers around achieving prosperity, freedom of your restaurant and the financial freedom you deserve. To achieve prosperity you have to follow a very specific formula made up of leadership systems training, accountability, and taking action. Today I want to talk about a silent morale and profit killer in your restaurant that more often than not is overlooked and that killer is decision making waste. Stay tuned I will not only help you identify decision making waste challenges but also how you can easily overcome them, ultimately moving your restaurant towards prosperity.

Let’s get started. Let’s tackle the topic that many restaurant owners may not even realize is affecting their bottom line. And that’s the topic of decision making waste decision making waste in your restaurant is a silent profit killer that can slowly erode margins without restaurant owners even noticing. For example decision that take too long to make are like a leaky faucet.

That little drip drip drip may not seem like a big deal, but can leave 1000s of gallons of water over time right in front of you. Addressing decision making waste is not just about cutting costs, but also about creating a more efficient, effective and prosperous business. It’s about achieving the freedom and financial stability that every restaurant owner dreams of. By the end of this episode, you’ll have a clearer understanding of what decision making waste is, how it manifests in your restaurant, and, most importantly, how to eliminate it.

So grab a notepad have it ready, right handy, or get your phone in your hand and make sure you jot down the key takeaways. Let’s get started. I believe that there are five major reasons for decision making waste and they are analysis paralysis, lack of clarity and inadequate information, bureaucratic delays, lack of accountability and emotion decisions. And finally, a failure to act let’s get started with reason number one.

What is analysis paralysis? Analysis paralysis is probably exactly what you think it is. It’s the condition where an individual or team becomes so caught up in examining options and data that they’re unable to make timely decisions. While it may not seem like it’s any big deal, like it’s a harmless delay.

In most cases, analysis, paralysis can have real financial implications. For example, if you spend too much time deciding on what food and beverage software you’re ultimately going to go sign up for. Well the delays in getting that done delays. You have an accurate up to date recipe cost cards, which then can delay you in taking accurate weekly inventories.

For every month that goes by, you’re losing 1000s of dollars in costs due to mismanagement of your kitchen when it comes to ordering and production and ultimately 10s of 1000s of dollars in lost profit opportunities because it’s delaying your ability to re engineer your menu. If I were just use reengineering your menu as an example. You got to first understand that you can’t re engineer your menu without accurate up to date recipe costing cards. If I take a $2 million restaurant that does 80% of their sales as food every single year.

A simple change to that menu could reduce your food costs by just 2% Which equates to $32,000 or $32,000. Increase your bottom line in just one year. From each month. By the way, when that process gets pushed off.

We’re delaying that process. We’re delaying the decision. It could cost you just shy of $2,700 a month. That doesn’t include the increase in sales due to maybe any price increases we put in your menu or the reduction in labor costs due to the increased sales.

The impact could be enormous. One of the keys to overcoming analysis paralysis is to be decisive in nature and take action, even if it’s not perfect action. This should sound very familiar to you since it’s well directly from my restaurant prospering formula. To aid in taking action.

You need to set specific deadlines for decision making. For instance, when I work with members on their budget, and I see their food cost is too high, one of the most important strategies is to lower their food cost is what manual engineering. It starts with picking and setting up an appointment to demo software. com forward slash DSP to work with my guy, Bruce URL directly he’s a restaurant Pro.

I do know that when I send people to them, I don’t get a financial kickback. There’s no relationship there that money parts hands. It’s just good software and Bruce is a real pro. com forward slash DSP and you set up a time with Bruce.

Well, let’s say it goes to that. I let my people know you start that process, that you’re not going to recipe cards overnight. It may take you 6100 Or even more hours depending on the size and complexity of your menu. That’s not just their software.

It’s any software. There are so many steps in the process. of just building the items and so on starting with your invoices to batch recipes and so on. It’s just time consuming.

It’s not difficult. So we set a deadline for when they’re gonna do the demo. A deadline for when they’re going to sign up a deadline for when they’re going to start the process. Then we look at their budget and create a reasonable deadline for when the recipe cards are going to be complete.

We then set up a deadline when we get get them on a zoom and reengineer their menu using my menu profitability monitor Google Sheet. We then set up a final deadline when the new menu is going to be decided on the tables and lower their food costs and their budget that month. So not we don’t click our fingers. We have each process step of the wig with a deadline.

We made the decision of what we’re going to do with deadline. This is going to create a sense of urgency for my members and it’s going to help them break the cycle of over analysis. Now I’m going to tell you that sometimes I have members who well, they actually have recipe costing cards, they’re just outdated. And I look at the food costs and let’s say they’re in their 40 to 40% range.

And I go man, we can’t we can’t afford to delay for you to sign up for new software and go through all this we need to make the change right now. So I’m going to have them fall followed basically approach of well the good enough approach. This means that we can make a good enough decision based on the available information we have right now. When I use somebody’s bad information, if you will.

Recipe Cards are out of date, right? They’re gone. They’re done. They’ve done been done accurately, but they’re not up to date.

So the prices are out there. It doesn’t matter if it’s six months, two days a year. I know that when I do the menu analysis, whatever that starting number is what are their ideal food cost should be that’s a bad number because they’re not accurate up to date recipe cost guys are just accurate. By the way when we go through the menu engineering process I know that ending number where we bring their food cost down to that’s a bad number.

We started with bad embed information. We’re going to end with bad information. But even though we know this information is bad, because we had data if we reengineer menu and drop it by three points, the changes we’re going to make what we’re going to merchandise what we’re going to get rid of where we’re going to raise prices. What we’re going to reimagine a dish and the list goes on.

But we dropped their food costs 3% No matter what our starting number was that our ending number was that estimate of 3% Well, that’s going to be the result. So we’re going to see results instead of waiting for a perfect set of data. Or circumstances which often lead to missed opportunities. Sometimes it’s good enough to use the good enough information to make that good enough decision now because that’s better than waiting for the perfect decision that’s made too late.

How about reason number? Two lack of clarity and inadequate information.

Unclear Objectives can lead to inconsistent decision making, while inadequate or incorrect data can result in costly mistakes. These issues can create a domino effect in your restaurant. For example, with the lack of clarity you’re asking your management team to basically make decisions run your business using their common sense and there’s no such thing. They have to interpret what they think you want done on a daily basis based on their own experiences.

This can lead to managers making costly decisions for your restaurant, like keeping your team members too long each shift robbing you of your bottom line because they’re using their gut and their eyes to make cutting decisions. To aid them in making timely and correct decisions. You need to teach them about labor budgets. How do these budgets these numbers are calculated?

Where do these numbers come from? And what systems you want them to follow to control these numbers by giving them all the information all the information they need? And by being clear, not only your will your management team control their labor budget, but they’ll feel confident in doing so. Overall, no matter what challenge you want your team to solve.

Having the right data is imperative. The old adage of garbage in garbage out is extremely accurate in this case. But again remember the good enough principle is sometimes something we need to use, because we need to make a change today instead of delay delay delay. Do understand that your tech stack is an incredible place to start when when it comes to grabbing timely and accurate data.

Think about how much data you can grab from one tool alone. And that’s your point of sale system. Often what I tell people is the most the most important piece of equipment you’ll ever buy in your restaurant because of the data. See, at any point time I go into my POS system I can easily grab timekeeping data to control my labor.

I grabbed my item item sales mix report to calculate my ideal food cost and use that data to re engineer my menu. I can find my average ticket per person to calculate my efficiencies. I can grab my Daily Sales Report to control my cash and populate all my systems, my labor systems and my cost of goods sold systems and so much more. To assist in well overcoming lack of clarity and inadequate information you need to create a culture of informed decision making.

By doing so, you’ll instill a culture where decisions are made based on clear objectives and accurate data. This could involve training programs, regular reviews, or even incentivizing staff for contributing valuable data or insights. Reason number three bureaucratic delays bureaucratic delays or when there are too many people just too many people involved in any decision making process. For example, a bartender wants to rearrange the speed rail because they understand that they need to put their highest moving bottles on either end of that speed rail then this will increase the efficiency.

They understand that by not making that decision, it’s creating a bottleneck at the server well for the server’s who are taking care of the guests in the dining room. But to make the decision to make the change, I shouldn’t say the bartender has to go to the bar manager. The bar manager needs to go to the gym. The general manager needs to go to the owner oh by the way, who only comes in one day a week delay delay delay.

Basically unnecessary delays and decision making to to overcome overly complex or cumbersome processes often involve multiple layers. of approval are often exactly that unnecessary. The hidden costs of bureaucratic delays, can well lead to things like loss revenue from delayed promotions, increased labor costs from inefficient scheduling, or even cost of lost morale among the staff who feel like well their time is being wasted. You need to streamline decision making by empowering your team members to make decisions that don’t need to go all the way up the ladder.

Set up a decision making hierarchy so that everyone on your team knows what they can move on on their own versus asking permission and so on. We’ll talk about this again later. The key to making this happen is to define define team members roles, empower them to make decisions where they have the authority to do so and give your team regular performance reviews where we talk about not only where they make good decisions but about where they need to ask. Reason number four, lack of accountability and emotional decisions.

Lack of accountability is where there’s no clear accountability decisions can be delayed, poorly executed and not made at all emotional decisions on the other hand, are those made on impulse or gut feeling rather than the data or logic. When these occur, it can create a ripple effect leading to inconsistent customer experience poor financial decisions, or even legal complications. For example, emotional decisions and customer service. can lead to negative reviews.

While lack of accountability and inventory management can result in waste and higher cost of goods sold. And after 20 plus years of presenting to and coaching independent restaurants. I can’t even count how many times I’ve gotten the message across to restaurant owners of the importance of having accurate up to date recipe costing cards. And when they’ve gotten home while they they’ve gone in assign the tasks to their management team.

Due to lack of accountability. They never got done costing them 10s of 1000s of dollars and missed opportunity in their bank account. And then there are the people who understand how much money could be lost if they don’t get that project done and get a new menu out. But they decided to redo their menu using without using recipe cost cards seasoning of guff because why minimum wage has gone up because their cost of food has gone up and they feel like I need to move now I need to improve my bottom line right now in my situation and I’m just going to make this decision using my gut and they end up promoting the wrong menu items.

They end up raising the prices too high across the board instead of strategically making decisions based on menu mix. And this results in their driving their sales down because customers will no longer see their food as a value. And oh by the way, sometimes can drive their costs up at the same time because they didn’t use the right data. They acted on impulse.

Now a well trained management team is less likely to make emotional decisions and even you being better trained having the right information. And with strong leadership being crucial to that, again a part of the restaurant prostrating formula. This allows you to establish clear title, clear lines of accountability. Again, themes I talked about a lot.

A practical tip is to create a decision making matrix. Remember, we got to talk about this that outlines who is responsible for what type of decisions that could be a simple well chart based on your organizational chart or a complex tool that integrated into project management software like Asana. Having great training programs that focus on data driven decision making can be crucial to your success with it. This is why I preach what I preach that you need a budget because your budget is your plan for success.

Once you know the systems you want to implement to achieve your budget targets you can train your management team on those systems, helping them make decisions without emotion and ultimately hold your team accountable to those systems and desired results. You see all those strings together. Adding a management bonus program can also incentivize your management team well to take accountability seriously. This could be financial incentives for meeting targets or recognition programs that highlight individuals or team contributions.

Your management bonus program gets your management team to focus on what’s important to you each quarter and make decisions that get you your desired results. Reason number five, failure to act is a big one, right? What is the last piece of the restaurant prosperity formula take action, so failure to act is a big deal to me. Failure to act is pretty self explanatory but let me define it to make sure we’re both on the same page.

Failure to act as the inability or unwillingness to make a decision leading to stagnation, lost opportunities and even business failure.

There are many costs associated associated with failing to act you could have lost revenues because you failed to update your menu. You get a higher cost of goods sold because you failed to implement any number of kitchen controls. You could have higher labor costs because you failed to hire more kitchen people. So your current team is putting in tons of overtime hours costing you 1000s of dollars.

Your sales could suffer because you failed to implement any of those great marketing ideas. And the list goes on and on and on. Failure to act is probably one of the most common mistakes I see restaurant owners make when they first joined my group coaching program. This is why I won’t let anybody join my program unless they can identify an implementer on their team to go through the program with the implementer is the key because they’re the ones who take action.

To aid in you’re taking action. You might set up action triggers, specific conditions or deadlines that well when they’re met, automatically trigger a decision or action. For example, if your inventory levels drop to a particular level, well, you automatically put in at when it hits here we’re going to reorder it’s a trigger that’s automatic. This again is where systems in your restaurant make these kinds of decisions easy because they’re basically a part of your process.

One of the key components to the systems I teach, which includes budgeting and recipe costing cards is that I take you from being a reactive management team to a proactive management team, where you foster a culture where proactivity is the norm you encourage your staff to take initiative and contribute ideas for improvement. From there. They’re invested in the process and they’re going to help you take action. Again, accountability is key.

You need to hold people accountable for their failure to act just as he would be if they’ve made a poor decision. This could involve regular performance reviews that assess not just what actions were taken, but also what opportunities were missed due to inaction. Before I finish I want to share with your great decision making tool called the five ways the five or I’m sorry, the five Why’s the five why’s is a problem solving technique that aims to get to the root cause of a problem by asking the question why five times in succession. The idea of this was well first to get often to the point of from a system or a symptom rather to the underlying issue.

How do I I’ve got this problem but is that a symptom? We keep moving on moving on till we get to the underlying issue? By continuing to ask why you can dig deeper into a problem and uncover the root cause. This technique was originally developed by Saccucci Toyota and was later used within Toyota Motor Corporation as a part of their problem solving training.

Here’s a simplified example to illustrate how it works, particularly in the restaurant, your restaurant. So we start off with why was the customer dissatisfied? We look into it we say oh, it’s because the food got to the table. It was it was cold.

Now saying why was the food cold? Well, because it’s sat in the past too long. So server never gotten it before it got to him right people didn’t deliver it before it died in the window. Why did it sit too long in the past because the server failed to check that the dish was ready.

Why did the server fail to check? Because the food prior we had a good runner that day. They were too busy running somebody else’s orders. So it died.

Why didn’t somebody notify the server because there’s no system in place to ensure that a server is notified as soon as a dish is ready. And they also don’t understand that they’re still ultimately responsible for their table even when the food runners working. So in that example, the root cause of the customer dissatisfaction is not that the food was cold, but that there was no effective system in place to ensure that the server is notified immediately when a dish is ready to be served. Addressing this root cause would likely prevent well similar issues in the future.

The five why’s technique is particularly useful because it’s simple, straightforward, and can be applied quickly in various situations. However, it’s essential to involve the right people in the questioning process, and to be careful not to jump to conclusions or make assumptions. The goal is to identify the root cause so that you can implement a solution that reoccurring and this aids in speeding up your decision making process, virtually eliminating decision making waste in your restaurant. Remember, decision making waste comes from different directions, all different directions, analysis, paralysis, lack of clarity and inadequate information, bureaucratic delays, lack of accountability, emotional decisions, and failure to act.

While the restaurant business is challenging all by itself, especially when it comes to making decisions. You have the power to turn things around in your restaurant. Take the first step no matter how small towards eliminating decision making waste and achieving the prosperity you seek. Again, this kind of change starts with you.

Hey, that was an awesome episode. I want to thank you for taking the time to take action on building a better more prosperous restaurant. Before you go. I want to give you these three thoughts.

One by combining leadership and taking action with systems and training being checked by accountability. You are on your way to creating prosperity for you and your restaurant to have something I need from you. Please leave a review on Apple podcast Spotify or wherever you happen to listen to podcasts by leaving us a review other restaurant pros seeking out this information are able to find it. I read the reviews and hearing how this information has benefited you.

does wonders for me. And three, if you find any of the discussions helpful share them, the more restaurant pros who have access to them, the better we become as an industry. For more restaurant resources or to get in contact with me. com.

Be passionate about what you’re doing. Be persistent, but more importantly become better and help everyone around you become better and your restaurant is going to kick some ass.