Make More Profits NOW with Darren Manzari

Hello and welcome to your first step in understanding and mastering KPIs. Now, before we even get started here, I need every one of you to get excited, and I mean really excited, because in this session, I'm going to begin sharing with you the one secret that's going to change everything. From this point forward, you'll have the initial steps to not only increase the profitability of your restaurant, but also to get your life lifted to the next level. Now, I know these are pretty big claims for a 40 minute session, but trust me, I wouldn't make them if I didn't believe them. You see, my name is Darren Menzeri and KPIs literally changed my life. I started my first business when I was 21 years old. A year earlier I had married my high school sweetheart and we were now expecting our first child. Fast forward 10 years, we now have two children 20 months apart from each other. And we add three locations to our business with roughly 80 plus people working for us. As you can imagine, I kept pretty busy with running all of this. One night my wife said to me, hey, Darren, I want to have a quick talk with you. Well, I could tell there was a bit of seriousness in the way she said it. So I said, sure honey, what's up? And she said, well, for starters, I want to tell you that you're a great husband and you're a great father and you are a wonderful provider to this family. And at that moment, I knew what was coming. That's right, the big but. And sure enough, she continued, but you work a lot of hours and our children are about 10 years old now, and in another 10 years they'll most likely be out of the house. I just don't want you to look back at that time and say, where did the time go? So think of this as a halftime warning. Well, taking this advice seriously, I went into work the next day with the goal of finding a way to begin working less hours. As I began to research, my answer was to find a way to increase the profitability in order to be able to work less hours. And thus my research into KPIs began. As I began to understand KPIs more and more, I also saw the profits in my business skyrocket. In addition to that, I was working less time, I was running the business much more efficiently. And by the end of that first year, I was only going into work roughly one day per month just to see how everything was going and to be able to meet with the leadership teams at each location. As a Matter of fact, my family and I moved to Florida and left all three businesses running as absentee ownership in upstate New York. I would fly up once a month, make unannounced visits just to ensure that everything was running properly. It completely changed my life as I went from working roughly 18 hour days to working roughly 18 hour months. Instead of being at work every day, I was now coaching baseball teams with my kids, I was spending more time with my family, and I was figuring out more ways to increase my already profitable business. And if I could do this with my three businesses, so can you. So with that, let's get started. Okay, now number one, make sure you have something to take notes with, something to write with. I'm going to be going over a lot of information here and it's important that you take notes. Number two, if I ask a question, I want you to answer it as accurately as possible. It's only you watching this video, so there's no reason to exaggerate your answers or feel shy to answer. I need you to be 100% honest with yourself so we can discover exactly where you are and exactly where you should be. Number three, I want you to play full out. If I ask you to do something, please do it 100%. Remember, this is the course that's going to change everything for you and for your restaurant. Okay, then, let's go. Let's begin talking about KPIs. First, what is a KPI? Well, by definition, a KPI is a key performance indicator, or in other words, a quantifiable measurement that allows us to evaluate the performance of a process, a system, a department or other measurable sector of your business to see if we're achieving our objectives or our goals. In reality, however, a KPI is not only the most important tool in your business, but it's also your best friend. It's an indicator that tells you of what action you need to take to before it's too late. It's like the gas gauge in your car. When you see the gauge getting low, what do you do? You take action. You pull over and you get gas. If you don't, you're going to be in trouble. It's also like the alarm on your phone that when it goes off, it reminds you of what you need to be doing. That's what a KPI really is. It's an indicator that alerts us or alerts you of the next action you need to be taking right now. Let me give you an example. At one point in your life, most of you either dreamed of owning your own restaurant, or at least had the thought that owning your own restaurant would be a good idea. And for good reason. Owning your own restaurant would not only allow you to demonstrate your cooking skills, but it would also allow you to share that with the world through your customers. This was my wife's dream at Nona's Kitchen. Being able to share that with everybody. And being an entrepreneur, that's a whole other story. Owning your own restaurant would allow you to have time off whenever you wanted. You'd be financially independent. You'd be so profitable, you wouldn't have to worry about bills anymore. And you'd have more money to buy nicer things, even contribute more. Well, how's that all working out for you? No, seriously. Most people, though, who aren't entrepreneurs think this way. And as you and I both know, they couldn't be more wrong. Trust me, being an entrepreneur, especially in the restaurant industry, is not for the weak at heart. To be an entrepreneur in our industry, you have to be a warrior. But that's for another talk. Let's get back to KPIs. So as we mentioned a moment ago, one thing you thought about when opening your restaurant was being profitable and having a positive cash flow. But as you've learned, even that doesn't come as easy as you thought it would. And for some of you, you may not even be there yet on a consistent basis. Well, don't worry, because by the end of this session, all that's going to change. So being profitable or having a positive cash flow can be measured by a KPI. We could call this KPI cash flow. And most of you already probably look at this in some form or another. The problem with looking at cash flow as a KPI is that there are many other KPIs that contribute to cash flow and we need to look at those as well. Now this begs the question though, which ones? And not only that, how often do I need to look at them? Well, how often are you looking at your cash flow now? Are you looking at it maybe once per year when you're doing your year end with your bookkeeper or your accountant? Or is it at the end of a busy season? Or maybe for some of you, it's monthly, or possibly it could either be weekly or best of yet daily. And if cash flow isn't positive and it's not where we need it to be, why isn't it? So you're probably asking yourself, what's the problem? And why can't I get this KPI consistently positive? I Mean, we have a lot of customers, we serve great food, we take the time to listen to feedback from our customers and the staff. I mean, what is it? What's wrong? Well, this is where we need to look deeper. What are some of the other KPIs that make up cash flow and how can this be affecting this extremely important KPI? So for starters, we could look at your number of guests coming in per day, and we could call this KPI Guests per Day. We could also compare this to our capacity, or better yet, our ideal capacity. Now that's something you should consider. Should I be filling my restaurant to its full capacity, or is there another number that's actually more profitable for me to be at? So here are two more KPIs, capacity and target capacity, whereby target capacity could be our ideal capacity. For instance, in our restaurant, we could seat 70 people, not including the bar. Now, even though I'd like to be able to serve 70 people efficiently, due to the size of our kitchen and the fact that everything we serve here at Nona's is prepared fresh to order, I find that when we have roughly 80% of that number, or about 56 people in the restaurant, everything moves smoother. This allows for quicker service times, less waiting for our customers, and increased table turns. So basically what I'm finding is that we could be more profitable filling the restaurant to only 80% of our seating capacity. Now, we could also look at how much money on average each customer spends in your restaurant, and we could call this KPI Guest Check Average, or gca. Now, how many of you already look at GCA each day? I think most likely all of you do as it prints out on most closed cash reports at the end of each day. But how many of you actually take the time to analyze this metric and figure out how to use it? Magic question. So up till now we've spoken about three standard KPIs and one that I'll save for later. The three standard KPIs we've talked about so far are cash flow, guests per day, Guest check average. These KPIs are what I term industry standard KPIs meaning that they're standard for our industry. Sometimes I may also refer to these as global KPIs. An example of some industry standard KPIs for the restaurant industry are cash flow, daily, guest count, guest check average, sales per labor hour, revenue per available seat hour, prime cost, discounts or comps, and resource utilization. We also have though facility specific KPIs, which sometimes I refer to as local KPIs. Some example of local KPIs may be sales per labor hour for your front dining room or rev pash for your upstairs. We also have entrance throughput for restaurants with multiple entrances. Now, why would I be interested in monitoring entrances? Well, possibly you have a beautiful bar that when customers come in, they have a drink while they're waiting for their table, and the bar is in perfect view that when I come in through the front entrance, I automatically see this and it welcomes me right over to your bar. Yet if I come in through the rear entrance, I don't have that clear view of the bar, nor do I see it from the host stand. So people coming in the rear entrance tend not to wait at the bar, and that costs you valuable sales and revenue. All of this can be measured and optimized if we realize this is happening and if this is monitored as a KPI. Okay, so one last item we need to give a definition to is the term metrics. Now, you've all heard the term metrics before and most likely phrased something like performance metrics. Well, what's the difference between metrics and KPIs? If you try to look it up? There are actually a lot of different definitions out there, and all the explanations may actually over complicate the issue. So let's make this easy to understand right here and right now. When we look at a KPI, the KPI should be three things. It should be definable, it should be measurable, and it should have a time period of evaluation attached to it. For instance, the KPI gca, it's definitely definable, it's certainly measurable. And when we attach a time frame to it, we could say that the GCA is being measured by the day or by the week or by the month or any other time frame that we want to attach to it. Seasonal businesses may choose to look at this seasonally, and for some restaurants, they look at it quarterly. For this example, however, let's just say we're measuring GCA on a monthly basis or as an average running through the month. While GCA per month is the actual KPI, the metrics that make up this KPI are the average ticket sales for the guests coming in each day.

Okay, so here you can see a full KPI analysis chart of a restaurant. And this goes for the whole entire month.

And you could see all the different.

Things we're looking at here as far as guest count, net food sales, labor costs, discounts. And this goes on and on quite a few Numbers in here. Now, all of this isn't user input.

All of this is done through calculations.

That are built into this form and they're just being recorded here. Now, we were talking about Guest Check Average, or gca, and we have a different title for it here, but it says average net sales per guest. This is your guest check average, or GCA right here.

And you can see this whole column.

Here measuring what is that Guest check average for each day of the month, giving us a total guest check average here for the month.

So these would be the metrics, while.

This is the actual KPI. Now, this number here is then populated up to the master sheet where we look at Guest check average here, and this is it month by month. And this is it for the average for the year so far. It's at 25:48. And then this is all populated over here to the dashboard. So when you're looking at KPIs as a restaurant owner, you could really look here at the dashboard, and you don't have to look at all those numbers in the background. You don't have to do all the calculations. We could just look here at the dashboard and say, what's our utilization? What's our cash flow? What is our guest check average? What's our guest per day? Actual verse, what we want, which is the 80% in this case, what is our rev pass, our prime costs, our discounts and comps, and even employee turnover. So we could track anything we want through KPIs and make it very easy to look at through the owner dashboard.

So basically, the metrics are the actual figures being used to derive at the KPI. Simple, right? So let's see, how can we utilize KPIs to help us increase our profits? Now, I know you're probably going to hate this part, but we have to do a little math for this example. Let's say your goal was to have a profit of $120,000 per year or $10,000 per month. Well, the national average profit percentage for restaurants is between 3 and 5%. So let's use 4% profit for this example. If $120,000 per year, profit would have to equal 4% of our gross sales. We would then need $3 million to equal 100% of our gross sales. Now, there are many ways to arrive at that, but a simple way is to take the 100%, divide it by the 4%, and we get 25. We then multiply the $120,000, the 25 to get our $3 million. Now, dividing $3 million of annual sales by 12 months, we would need sales of $250,000 per month in monthly sales. Make sense? Now, if we assumed a GCA of $50 per guest, we would need to serve 5,000 guests a month, or 179 guests per day, using 28 days per month as an average. I like to use 28 days when calculating monthly numbers and as it tells me what I need to do each week for four weeks to achieve my goal. Again, we arrived at that number by dividing the $250,000 by $50 GCA. We then arrived at our 5,000 guests. We then divided our 5,000 guests by 28 days and arrived at 179 guests per day. Well, let's say at the end of the first month, we don't really hit these goals. We. We end up with an average of 150 guests per day, short by only 29 guests. With a monthly GCA of $48, this would total gross sales for the month of $201,600 or $48,000 short of our goal. Well, you might say that. Well, you know what, Darren? That's not so bad. We would still make 4% of that money. So we'd end up with around $8,000. Well, not exactly. As our fixed expenses, our labor costs and possibly our food costs were still the same or close as we had planned for the 179 guests. So in reality, we're most likely in a loss this month of roughly $38,000. Even if you did adjust your labor costs and your food costs along the way, you're still most likely in a loss that would exceed $20,000. This is why looking at KPIs daily and not just monthly is so important. I want you to think about when you drive somewhere and you use your GPS to navigate to your destination. If you had planned a trip that would take an hour and you make a wrong turn, does your GPS wait for the full hour to pass before it tells you you went off course and you're now far from your destination? Of course not. That would be insane. Your GPS tells you as soon as you get off the wrong exit or as soon as you make a wrong turn. And when that happens, what does it do? It doesn't say to you, oh, no, now what? Of course not. It just recalculates your trip, plans a new route, and takes you to your destination. But sometimes on a different course, it doesn't always have. You just turn around. This is what understanding KPIs can do for us. Understanding KPIs can allow us to make course corrections in our planning day by day. So during the month, even if our customer count is down or our GCA is off, we can readjust along the way and still remain profitable. Now, one thing you may be asking yourself is. Wait a minute, Darren. I don't have time to look at all these KPIs and formulate new plans every day as is. I'm working as many hours as I can. I completely agree with you and don't worry about that. We have the answer. Let's continue with KPIs just a bit more. Now, some KPIs are what we call lagging KPIs. These are KPIs that already happened and they're measured for our review. An example of a lagging KPI may be your GCA at the end of the day, the week, or the month. This is a number that comes out on a report and once it's there, we can't go back and change it. Now, we also have what we call leading KPIs. Leading KPIs basically set targets for us and they lead us to where we want to go. An example of a leading KPI may be your target gca. This is the GCA that we're looking to achieve, not the GCA that already took place. Using the above examples, we may want to track delta KPIs, which measures the difference or the delta between those two numbers. In this case, we could track the delta GCA, which could be a percent difference between the actual and the target. Our goal may be to keep this number under 10% or as close to zero as possible. Now, personally, I like to look at Delta KPIs. I do this because as long as the delta is within the range I want it to be, I don't have to look at the other two. I know I'm on course. It's only when this number goes out of range that I then have to look at the other two, and possibly many more, to analyze what's happening and make my course corrections Again. You can think of this like the GPS in your car. Once it recognizes that you're off course, it then has to look at where you are, where you're heading, and then calculate the best route to get you there. Now, years ago, we used to do this by looking at a map. But today, however, the GPS in your car takes into account not only the route that used to be on the map, but also the weather, the terrain, the traffic the road construction, the time of day in cities where it anticipates rush hour traffic, and more. Basically, it's looking at many other variables or KPIs in order to make the best decision possible to get you back on track to the destination you desired. This is where the analysis of KPIs comes in. You see, just knowing what the KPIs are and then tracking them is, is not enough. It's actually in the analysis of the KPIs where the magic takes place. It's not understanding that your GCA is too low, it's understanding what factors are making it too low and being able to analyze and formulate a plan to increase it. You know, I've been studying KPIs for over 25 years now. And not only do I understand them well, but I also understand the interpretation and, and the analysis of them for many different industries. But when my wife and I decided to open a restaurant, one of the first things I did was to make a plan as to what KPIs I needed to look at. And I began to understand what each one of them meant and how to analyze and interpret their readings. But doing that wasn't enough. I still needed to take it a step further. And I decided the best course of action was to hire an expert in the field. Someone that could review what I had done already and advise me as to what KPIs I might have missed and to help me further understand the interpretation of each one. This is how I met Donald Burns, the restaurant coach. And together we were able to take KPI analysis to a whole entire new level. You see, one of the things that I've done with KPIs in other industries was to create KPI analysis charts whereby clients of mine could just enter in simple data each day and the charts would do the rest in calculating the information they needed to see. In addition to that, I could also see the data. And I would help them each month with the interpretation and the analysis, and then help them form an action plan for the upcoming month as to what steps they needed to take. By taking small, specific action steps each month, we would continually get them closer and closer to their targets. This worked great, but as I developed customers in over 20 countries, my time began to fall short, limiting the amount of clients I could take on. I came to realize that if I could just automate this part of the process, I'd be able to help an unlimited amount of companies worldwide, which is exactly what I did. When I showed this to Donald. We realized that we could modify this program to fit within the restaurant industry. And restaurant KPI mastery was born. Sa. Now, one of the things you might be saying to yourself is, Darren, this all sounds excellent. And I never knew there were so many KPIs to track and monitor. But honestly, my restaurant is already running profitable and it's efficient without taking the time to monitor all these KPIs. You know something? You may be right. And probably the first thing we should do is find out. So let me ask you a quick question. How many people watching this talk right now think their restaurant is running at a utilization rate of 50% or higher? If so, put your hand up now. Come on. I know you're sitting there alone and this feels a little bit weird, but remember in the beginning of this, you said you were going to play full out, so here we go. So if you think your restaurant is running at 50% utilization or higher, put your hand up and keep it there for a minute. Okay, good. Now keeping your hands up. If you think your restaurant is running at 60% or higher, keep your hands up. Everyone else, put your hands down. Okay, so you put your hand down and you put your hand down and you. That's right. I can see you. Okay. Now keeping your hands up. If you think your restaurant is running at 70% or higher, keep your hand up. Everyone else, put your hands down. Next, 80%. 80% or higher, keep your hands up. And finally, anyone at 90% utilization or higher, keep your hand up. Now, if you still have your hands up, congratulations, as your restaurant may actually be running at a very high level of efficiency and utilization. Okay, great. Everyone put your hands down. Now, for the next part, I want you to write down whatever that number was. Where do you think your restaurant was running in terms of utilization? Was it 50%, 70% or 90%? Whatever it was, write that number down. Now, next, after I finish explaining, I'm going to have everyone go to a website called kpimastery.com youm could either click on the link below or just type it into your browser. Now, when you get there, you're going to click on the link that says KPI Challenge. And it's going to ask you a few quick questions about your restaurant. So what I'm going to do here is I'm going to do it first right in front of you so you can see exactly what those questions are and exactly what it's calculating. So for my example, I'm going to use my restaurant here in Spearfish, South Dakota. It's called Nona's Kitchen. So watch me do it first, and then you could enter in your information. So here we go. My name is Darren Menzeri. My email address is darrenonaskitchensd.com I have 70 seats in my restaurant, not including the bar. I'm open six and a half days a week. I don't serve breakfast. I do serve lunch, and I do serve dinner. My average ticket price is $24, and my monthly revenue is 125,000. That's it. Now, when you're finished, you click the button that says, calculate revenue Potential. And while you go to the site and enter in this information, I want you to pause this video. You could continue playing it after you've completed the questions. And when we come back at that time, I'll also show you the results for Nona's Kitchen. I'll see you in a few moments. Okay. So how did you do? How did your numbers match up to what you thought you were doing? I can tell you that in most cases, we overestimate our reality and we underestimate what's really needed. Now, one thing about this program is that it's capped at 80% utilization. In the restaurant industry, it's actually very hard to get your facility above 80% on your own. It's not impossible, though. And if you are at 80% and want to try to get to 90% or even 100%, please call us and we'll see where we may be able to help you. So here are the results for Nona's Kitchen. And you can see that we're currently running at about 75% utilization, and we're still missing over $87,000 in untapped revenue. This is because restaurant optimization takes time to increase. I always tell my clients that a 2% increase per month is sustainable as it allows us to put processes in place that will work and will hold. But for the vast majority of restaurant owners, you're probably averaging 50% or less utilization. And if you are, I can tell you that you're working too hard and making far too little profits. You see, most owners equate working harder with making more money. It's completely not true. Working harder will only get you more tired. It will reduce your efficiency, and it'll make the problem worse. We need you to work smarter, learning to track and monitor your KPIs and understanding how and where to put your efforts into improving your business. This is where KPI mastery comes in. I want you to think of it like another tool in your arsenal, like Your chef knives. You know the value of a good knife and you rely on it every day to keep things moving quickly and safely for you in the kitchen. Well, how about your businesses profitability? Isn't that more important? Of course it is. If your business isn't profitable, you don't have a business. You have a hobby. And a very expensive hobby. As Donald would say, you're not only working harder than you need to be, but the results are stealing your life from you as you're working far too many hours trying to keep things together. I know this because I did the same thing myself. For over 10 years. I equated working more hours with making more money. And I couldn't have been more wrong. Once I started focusing on the power and understanding of managing my KPIs, my profits and my life completely changed. I want to thank you for joining me here and taking the time in your first step in understanding KPIs. I hope that it helped you clear up some misunderstandings and put you on the path to greater comprehension of this subject and increased profits for your business. I recommend that you continue your studies in learning how to optimize KPIs within your business. This will help you to not only increase your profitability, but it would also get your business back under control. If you'd like help with this, I suggest you go to kpimastery.com and sign up. Take advantage of our 30 day free trial offer. For the past 30 plus years, Donald and I have helped businesses all around the world improve their effectiveness, increase their profits and helped owners get control of their lives. Trust me, we can help you too. Especially in these unprecedented times. Because of the coronavirus, it's more important now than ever before and it's critical that you gain full control over your finances in your restaurant. Leaving this to chance will be guaranteeing you failure. By reaching out to us for help, you'll have nothing to lose and you will have everything to gain. Sa.