Education is a foundation. Statistical analytical approaches are common. So common that they often don't work and often fail miserably in a generic manner...because they fail so often.
Do you have to know the numbers by the book?
Do they always guide you in every decision?
The restaurant business is very instinctual. Risk/reward. You cannot lock in to counting beans and have total control of a business that is a spontaneous creative art at the same time.
CCinNJ, the thing I find of concern in your responses is that you try to give the impression that the financial management of a business using widely proven financial tools and analysis is not worthwhile ... maybe even contemptible.
You are doing a *tremendous* disservice to anyone you convince of that.
Sound analytic approaches are UNcommon ... not “common” as you state. And the “statistical” component of business analysis that you note is a very minority part. If you understand the process then you know this.
If financial management and analysis “fail so often” as you claim, it is because someone doesn’t know what they’re doing.
Having been in the restaurant business since the mid 70's; coming from a family of restaurateurs going back over 70 years, and having previously been a Restaurant Consultant providing a full range of services ... concept, start-up, operations, turnaround - I've seen a lot of operations ... and I can tell you that a majority of restaurants are run without any comprehensive analysis whatsoever ... mainly because it can be incredibly time consuming, for both the learning curve as well as the analysis itself in an already time-intensive business.
This is a big part of the reason so many restaurants don't make it.
Most restaurants fly by the seat of their pants. ... by that I mean they do some of the numbers but they don’t utilize a coordinated, structured process to draw conclusions period over period, to take structured actions to improve profitability, to make operational corrections, or for long-range planning.
Most operations significantly guess.
You wrote: “Do numbers guide you in every decision? ... No”
“Every” is a loaded word. There are always outliers to every axiom. So “every”? ... No. Of course not.
However nearly every decision you make in your restaurant is in the service of it as a business ... and that means earnings, dollars, profitability ... all numbers.
The overwhelming vast majority of all your decisions *are* reflected in and based on numbers.
Maybe not where you hang a piece of art ... but whether you put a couch under it. Maybe not the style of chair you purchase ... but how many of them you purchase.
Bottom line ... if there is any aspect to a decision that warrants a broader examination of it’s affects on your business’s results ... then it is worth understanding that relationship ... including in numbers.
You state: “The restaurant business is very instinctual. Risk/reward.”
Yup, it is ... and in fact *All* business is instinctual and has dynamics of risk/reward.
And taking risks does have a sizable component of instinct in the decision process.
I'm not saying don’t go with your instincts ... I'm saying don't do things which you have not bothered to think through, that includes instinctive or “gut” decisions. Menu pricing was the original example on this thread.
Now, sometimes in the absence of concrete factors to make a decision, your instincts are the best way to go.
And the character of your restaurant ... the character that “makes” your restaurant to your patrons ... has to do with things other than numbers. But behind all of it, it has to hold water financially ... that means not making poorly-thought decisions.
You state: “You cannot lock in to counting beans and have total control of a business that is a spontaneous creative art at the same time.”
I would add the word “just” ... “you cannot *just* lock in to counting beans ...”
And “Lock” into??? Your desire to see this all as one-sided is curious. This or that. Yes or no. Black or white. Life is not like that ... nor is business.
And as far as beans? ... if you don’t “count beans” ... you will eventually have none.
That’s it for me on this. As this thread was originally about menu pricing, it’s kinda gotten hijacked. Not my intention.
(Sheesh, and I’d promised myself I wouldn’t make a novel out of this ... <sigh> ;-)
post edited by Sonny Funzio - 2010/01/15 04:01:16