The Framework that Changed My Restaurant & Double Restaurant Profits

Have you ever felt like trying to solve the secret to restaurant success was like trying to figure out this giant Rubik's Cube? Well, sit down and buckle up because this is going to be a wild video I'm going to share with you for the first time. Well, since last Friday, the framework that changed my restaurant and doubled my restaurant profits. Hey, Donald Burns, the restaurant coach and author of the your restaurant sucks trilogy. Now, I'm sure I have said this 10,000 plus times. All business problems are people problems. Now, I want to share with you some challenges that I faced back in the 90s when I opened my first restaurant. Now, up until that point, 1995, I've been in the restaurant industry for 15 years. It's really hard to believe I'm coming up on 43 years in the restaurant industry. Yes, I know I'm a little older than you. That's okay. Now, I thought I had the experience required to open and operate a successful restaurant. On the surface, I did have a lot of skills that a restaurant owner really needs. Back then, I thought that knowing how to run a restaurant was all I needed. Now, looking back over the four decades I've been in this crazy industry, I truly see the errors of my thinking. Having experienced work ethic and knowledge of how a restaurant operates is just 20% of what it takes. You see, I knew how to run a restaurant, but I did not know how to build a property profitable brand that would give me the freedom that I really crave deep down. Think back to why you opened a restaurant. Was it to have a job or was it to have financial independence and freedom? Instead of becoming the owner, I gave myself six jobs instead. Chef, general manager, bookkeeper, HR director, chief marketing officer, janitor, and beverage director. It sucks so bad. And the sad thing is my restaurant didn't take off as I expected. And I wasn't sure why. I mean, come on. I worked in Santa Fe, New Mexico as a chef for years before opening my first restaurant. I had won awards, I was praised in the media. I just thought that opening a restaurant was going to be a slam dunk, right? Oh, no, no, far from it. In fact, really brutal wake up call. I was thinking, like many restaurant owners, that I just had to work harder to get ahead. Now I can look back and I describe it kind of like falling in quicksand. And what happens when you fall in quicksand? Your first instinct is to fight harder and escape the quicksand. But you don't realize that the harder you fight or the more you work, the Faster you sink. And they always say that when the student is ready, the teacher will appear. I was just about to go under when my mentor appeared. Now, Peter was a well known and highly respected local businessman who built his fortune, I think at the time around $65 million from a fire truck company. Yes, he built fire trucks. And we sat down one evening and he shared his story, which was remarkably like mine. He had an over inflated sense of confidence that he had a product that few offered. And he thought he'd be a huge success overnight just by offering his fire trucks to the world. He said he didn't realize at the time that fire truck sales are more about government contracts and relationships and. And he openly shared that his first two years were really extremely lean and many times his accountant told him to close the company. But Peter knew that sometimes when you find yourself hitting your head against the wall, you gotta stop. He decided to stop hitting his head against the wall, reassess the situation and take a new approach. Peter confided in me that he knew things had to change, that he had to change. And he stood back and realized that the solution was wasn't what he thought it should be. And he said honestly that his ego and pride kept him stuck in the loop of getting the same results, which were low sales and even lower profits. He said when I changed my mindset and my approach to the situation by not thinking what I thought was best, but getting outside feedback and applying it, everything shifted in the right direction. He said he started to focus more on building relationships, not just closing sales. And that was the door that opened up that gave him what he had today. Peter also offered to be my business mentor for a year. And it was during this time that he first introduced me to what's known as the 3P framework. He told me that this framework is what really turned around his company. And if I applied the same process map to my restaurant, it could save me as well. Now, originally, the way he taught it to me was people process product. Now for restaurants, I've switched to order round to people product process. The reason I changed it is because I feel that when people and process are working together and supporting each other, they kind of bookend and protect the product. Now, over the last 14 years, I've had the honor of working with over 2,500 independent restaurants. And this process has proven to be the most effective way to really build long term success. And I often refer to it as like the combination of restaurant success. Think about like this, if I gave you a three digit Combination lock. And I said, hey, open the lock. Could you do it without knowing the combination? And now, just so you understand the statistics, in a three digit combination lock, there's over 1,000 possible combinations that could open the lock. But what if I gave you the three numbers and I told you the order they go in? You'll open the lock every time. The 3P framework is the combination to help you focus on the right things at the right time. That's the key. By putting the numbers in order to open the lock anytime you want to. That's a lesson I learned the hard way. The things I thought were keys to restaurant success were not the things that actually created long term success. And when you take shortcuts, you find some immediate results. But I can also say with 100% confidence that they're not sustainable long term. The 3P framework is quite simple on the surface, and yet it has lots of layers of complexities that are well worth exploring. So at this time, what I want to do is I want to take you down one level at a time into the people product process framework. Think of it like you're building a house. And when you're building a house, the foundation is everything. I mean, honestly, would you build a multi story building on a weak foundation and then move your family into the top floor? Hopefully you say, hell no. So why compromise and create a culture that won't allow you to have the restaurant that you want? So the foundation is people, which equals culture plus team. People is having not only the right people, but it's also having them in the right position on the team. The people part, the foundation is about cultivating a culture that will allow your brand to grow and operate without you. If you don't get the culture right, nothing else is going to fall into place and you will be constantly chasing your tail. I hate to tell you this, but culture is more important than you realize. I've had clients that had a toxic culture and describe it as just like running on a giant hamster wheel every single day. And then like a lot of people, they get an opportunity to expand their brand to another location without fixing their culture first. And what they get is not just another location, they get a lot bigger hamster wheel to run on. Write this shit down. Without the right culture, you're always going to be stuck working in your restaurant. Culture first starts off with understanding what's known as the triad. The triad is your mission, core values and vision, and then you got to bring them to life every day within your four walls. 80% of restaurants talk a good game when they talk about core values, but few have the courage to live them through their actions that they and their team take daily. I want you to be in the 20% that actually walk their talk. Hiring is the gatekeeper that protects that culture. And when you take shortcuts and don't conduct a solid interview, you're going to let in people that might damage your culture. And believe me, it only takes one bad apple to ruin culture forever. Training systems are another critical element to the foundation that many people don't give the respect it deserves. In my coaching programs, we follow the 702010 methodology for training, also known as blended learning. 70% of your training is hands on. It's the same stuff you're doing now, the shadow training. It's also known as kinesthetic learning. 20% is active feedback or mentoring. This uses what's known as auditory visual modalities. And the final 10% is reinforced learning via online training videos and quizzes. Now, after you have the foundation set, what do you do up next on your house? You build the framework. And the framework is product, which equals menu and marketing. Now, only after you have a solid foundation is it time to really focus on the product part, the framework. You have two products that work in unison with each other, your menu and your marketing. I call this the M squared coefficient. Now, when you're building a house, remember a solid frame can withstand harsh weather. So when you have your product solid, your restaurant brand will be able to manage the economic storms that will come and do come quite often. Now. Once again, I moved the traditional process product frame around for one reason. While 100% of restaurants have a menu and do some posting or advertising, 80% sadly do not have their menu costed out or know how to market effectively. Not knowing the cost of everything on your menu is the number two sin I see in the restaurant industry. And in case you're wondering, the number one sin is mediocrity. The framework modules I teach are a little bit harder than the process work. See, when owners see the process part, they immediately see that thing they want. They want to focus on that thing. They think I want the systems, I want the profitability. I know that if you don't have the people in the product phases solid, none of the process stuff is going to matter. So product is not just about having a menu. It's understanding the business side of that menu and knowing your theoretical food cost. Speaking from personal experience of being a chef and a restaurant owner, I loved the creative part of the culinary piece, getting in the kitchen and and playing in with food. That was my flow state. I would lose track of time when cooking. Now the owner of me love connecting and talking to guests. And I'll admit it was little ego stroke to get rave compliments on the food. But my mentor Peter quickly point out that you can't deposit positive reviews. You put dollars in the bank and if your numbers are not set up correctly from the start, you're going to go out of business very quickly. We all know a lot of four or five star restaurants that have gone out of business right recently. And sadly, it's estimated that 20,000 new restaurants open each year in the United States. But in just three years, 10,000 of those half are going to close their doors for good. See, no amount of hard work can save a restaurant concept that doesn't know their cost. I also must come clean and confess that when I opened my first restaurant, I did not cast out my menu and I did not do an inventory. And for years as a chef when I worked for others, I was told to do those things because it was part of my job. And when I became a restaurant owner, honestly, I didn't think I had to do those things. It probably would have been better if I just walked around with a giant S on my shirt. Not an S for Superman, but an S for stupid. Peter told me that I can't be blind or avoid the business side of my restaurant. And he was right. And until then I was just making excuses when the reality is I avoided it because I didn't like that side of the business. Hashtag, write this shit down. You will not like every job you have to do as an owner, but you must trust and respect the process or it will bite you in the ass. Now, in the product phase, we also tackle that elephant in the room right away, which is the hardest part of my coaching program. And it's the food cost part. Now, unless you're the kind of person who loves numbers and spreadsheets, this stuff is going to test your patience and at times it's going to question if you really want to do this kind of stuff. Let me stop you right here and say yes, you have to cost out your menu. I mean, it's an amazing thing. Once we swallow our pride and stop kicking and screaming about doing the costing thing, we actually move on to creating a menu that increases sales and profits. And contrary to the advice of your professional graphic designer, who made your menu look, I mean, amazing, it is riddled with so many FA PAs that it's hurting your sales. I mean, I truly appreciate and respect the skills of graphic artists. They just need to incorporate the elements of menu psychology to elevate the ordinary into extraordinary. Now after your menu is solid and profitable, now we can talk about effective marketing. All right, let's get this out of the way. Every restaurant posts are advertising. Only 20% of restaurants truly market their brand where they get a return on their investment. The other 80% throw massive amounts of money and time down the drain doing things that are bantimetrics such as likes and views. Honestly, I have a lot of friends who have over 100k followers on Instagram, yet they struggle to make a decent living from it. Followers doesn't mean you have the right followers. A well designed marketing program is going to show how to identify your ideal guest. It's going to show you how to tap into emotions. It's going to show you how to share your mission, your core values and your vision to the world. You're going to learn how to take people with you on a journey or a story through video and when that happens, they become raving fans. Posting is easy. Marketing that matters and has an impact on your brand takes a plan and consistency. Now only after we have a rock solid foundation and framework on our house do we ever install the walls and place the roof on top and our final stage is the process or the walls and the roof which basically equals systems plus strategy plus sustainability. Now when you get to this phase, the process phase, all the pieces start to fit together really seamlessly. We start by putting up the walls by implementing a module I call is the system stabilizer. Now every restaurant has some systems in place. 80% don't have all the systems they need or they can't get their staff to use the systems properly. Now looking back over to 3P framework, if you did the people phase properly, this doesn't become an issue for you at this point. Culture, accountability and training should be embedded into your restaurant by now. So this part is more about giving them the proper tools to make them even more effective. If your team's more effective and self sufficient, they don't rely on you to be there as much. Do you see? This is the start of where you start working less in your restaurant. Systems need to be ccte, clear, concise, trainable and enforceable. The key word when installing systems is accountability. Without it, the systems will never be utilized to their potential. Many clipboards with checklists that are never followed hang on the walls in average restaurants. What you need to make sure you're doing is you need to explain the standard and expectation for every task on the checklist or else the staff will make their own standard. And trust me, their standards are typically a lot lower than your standards. Now, once we get the systems or the walls up and secured to the framework, now it's time to start working on the roof. Your roof is your strategic plan. There's a famous quote by Benjamin Franklin. It goes, if you fail to plan, then you're planning to fail. And it's true. 80% of restaurants, they have a plan of, let's open the doors and hope we have some business. Write this shit down. Hope is not a strategy. It breaks my heart to see good restaurants that have untapped potential just wait for things to happen. I know because that was me. When I opened my first restaurant. I thought I could get by on my reputation and my culinary skills. And yeah, lesson learned the hard way. Don't make the mistakes I made. Now, to help you avoid those mistakes, I'm going to take you through my strategic planning system called strap maps. These tools have allowed my clients to focus on growth and really puts them in a position where they're ready to take advantage of opportunities when they do come up. Oh, and a little byproduct of implementing the 3P framework is that you're going to rise to the top of your market and be recognized as a driver in your market. And then business opportunities are going to start coming out of nowhere and you're going to be very tempted to jump on them right away. Hold off until you have all the plan in place. You want to wait just a little bit longer until we finish the 3P framework. You're getting close to having it all and you're easily going to be lured away by the sound of opportunity. Let me warn you that jumping on other opportunities or projects before you finish getting the entire 3P framework in place, it's kind of like getting ill taking an antibiotic. And just when you start to feel a little bit better, you stop taking the antibiotic before you take all the pills. And what happens when you don't finish the prescription? The illness comes back twice as hard and kicks your ass. Let's not do that now. For strategic planning, you need to look at six different views of your restaurant. You gotta have a five year plan, a one year plan, a quarterly plan, a monthly plan, a weekly plan, and a daily plan. I know it seems like a lot, but once you get the habit of doing this, it becomes really fast to maintain. Just like any new habit, you Got to hit a learning curve. And that's usually the first 66 days. And that's the hardest part. Once you get through that uncomfortable zone and break through, it's easy sailing. Now, once our roof is secure, now it's time to insulate and seal it or basically make it leak proof. This is where you dig into those KPIs or key performance indicators that really drive profits. Now, honestly, there's probably around 40 KPIs that you could look at. However, not all KPIs are created equal. In the restaurant world. There's only seven that really, really matter. That's prime cost, guest check, average ref pass, discounts and comps, employee turnover, profitability and cash flow. And you're also going to need a few key financial tools to fight for profitability. Your P L profit loss statement and your budgets, they become your engine and steering wheel that you refer to daily. I mean, think about it. How far would your car go with the check engine light on? Or if you were leaking steering wheel fluid, not very far. Now, once you have all these components in place, you have a house that you can move into with confidence that the weather is not going to be a factor. And you could be able to handle any kind of storms that come your way. Recessions, market shifts, supply chain shortages, shallow labor pools, ultra competitive markets, all these things hit the restaurant industry frequently. And depending on your location, these things could hit you more often than other locations. The 3P framework also becomes a tool for making decisions and staying on the right track. Distraction is a constant battle for most restaurant owners. And just like having that three digit combination lock I mentioned before, you need all three numbers in the right sequence to open a lock. Once you understand the combination, you can open a lock whenever you want to. Now allow me to share a little kind of bonus and give you a key to scaling your restaurant brand. Now, I'm not sure what your long term goals are for your brand. I have a lot of restaurateurs that want to grow their brand beyond one location. If that's you, then this is something that you should realize. The 3P framework is the secret that restaurant groups use to scale. I saw this proven when I sold my restaurants and became a chef with Wolfgang Puck. Wolf has a large restaurant portfolio that includes, I mean catering, casual concepts, airport restaurants, prepared food products, and of course his fine dining restaurant group. He set up his brand using the 3P framework. The people part, the culture at all Wolfgang Puck restaurants is the same. We had the same core values, we had the same mission. We had Wolf's vision. We also had the same hiring, onboarding and training systems. The process part was also the same all across the brand. We took inventory the same way. We had the same checklist. We followed the same P and L format. We tracked the same KPIs. We did our budgets the same way. You could easily take someone from one concept and plug them into another Wolfgang Puck brand. And really all they had to learn was the product part. It was easy to move our people around as needed because the people and the process part were all the same. That's the true power of the 3P framework. Now, I want to invite you to a free training series that I have that's going to go a little bit deeper into this 3P framework. It's called the three frames to thrive series. And you can get the training by going over to www.threeframestothrive.com. in my next video, I'm going to answer a question that has probably crossed your mind. As a restaurant, should you stay open or should you close your restaurant?