Leadership, Employee Satisfaction & Marketing for Bar Owners with Monte Silva

You know you have to . How you treat people , how you pay people , and then you become well known in that city for being that company .

Convertly , if you yell at your people , you micromanage them , you don't respect them , try to cut their hours back , try to underpay them , you're not creating a symbiotic relationship with them and it doesn't take very long for the entire city to know that .

Before we get started , a quick thank you to our sponsors , spot On , who provide a great modern POS solution for the bar and restaurant industry , and Starfish , who use AI to turn your books into actual steps to increase profits . Today we are joined by Monty Silva . Monty is someone who has spent his entire life in the trenches .

He has over 30 years experience in the hospitality industry and has really done pretty much everything from not to say lower end but more casual establishments to fine dining , from behind the kitchen line to behind the bar , and started as a dishwasher and worked his way up to managing one of the highest grossing bars in restaurants , I should say , in the country ,

the country .

And Monty has shifted his focus post-COVID from working as an operator to coaching operators and as part of that he wrote a wonderful new book which is called Shift Happens , and in that book there are seven false beliefs that we're going to get into here today , because there are seven things that a lot of people think are true about the restaurant and bar industry

that really aren't and there's some nuance there that we'll get into but definitely there are a lot of things people believe that are not true , and so we're going to tackle that today . But before we start with that , monty , thank you for being here today , really appreciate your time , and I know we kind of just went over a quick overview of your background .

Is there anything you'd like to add ?

I think there's a lot of synergy in what we do and how we help people and I think we have a lot of similar beliefs and I'm excited I'm always excited to talk to people that have similar beliefs as me , but also to talk to people that have a slightly different belief , because I believe none of us are as smart as all of us and when we have this

opportunity , even if we're hearing a different perspective , it gives us an opportunity to grow in our own personal thoughts .

So you and I might say the exact same thing , but we say it differently and it'll react in people's brains differently , which is why I love having these conversations .

Now , before we get into the seven false beliefs in your book , I know with your coaching you focus on five pillars , so I wanted to kind of break that down to give everybody a really good understanding of where you're coming from . And those five pillars are people , process , purchases , product and profit . If I got that right , you did so .

Can you talk us through that real quick ?

You know , sometimes we get so sidetracked or forced through the trees because there's millions of things going on in a restaurant , right , if you , if you think of what are the you know , if you know statistics and you talk about I'm trying to remember what that , that uh , statistical topic is . But , um , statistical topic is .

But if you look at the different things that could happen , you know you've got somebody could call out sick , right , but that changes exponentially when somebody else also is late . And that changes exponentially when the 10 top that's supposed to be there at 1130 shows up right when you open the doors , right . So there are these statistical ?

I forgot what the formula was , but basically , or what the statistical theory is . But we take these parameters right and put them all together . There's millions of things that could go wrong , and so if we think that way , then we can easily get overwhelmed .

But the solution always is in one of these five things right , the solution to fix whatever's going on is always in one of those five . So quickly , just to kind of run through them people can include your guests . It can include your employees . It can include your management team . It can include your guests . It can include your employees .

It can include your management team . It can include your vendors . It can include your home life and it can include your community , right ? So you know , if you are getting bombarded with calls at home on your day off , then your spouse is not going to be super happy . Spouse is not going to be super happy .

And then when she's mad at you and you sleep on the couch , you go to work the next day and you are now carrying the junk from home into work . And so every aspect of that people , those people categories can affect your business With processes , those are systems that you put in place . Every issue that comes up .

That's an opportunity to correct is going to be either a people issue or a process issue . Either you don't have the right process in place , or you haven't had the right training process to get that person up to speed to do that process , or that person is just not equipped to do that process or doesn't care about doing that process .

So it's usually one of those two things . Then you've got . You've got product . I mean , obviously , product quality is very important . Product can include your , your supply chain and other things like that that affect your business . And then purchases really fall into two categories . There's your purchases . What are you buying when you have an opportunity ?

Sometimes it's better if you've got a certain amount of money you can spend on your liquor . Sometimes it's better to shrink your choices a little bit and be able to buy bulk to get your pricing down . Sometimes , with food , you can get into a GPO where you're doing some group purchasing power . So there's purchases for you .

But then we also include purchases of the guests . You know what's the check average . Is there an opportunity to upsell ? What are you charging for your food item when you're selling them , things like that merchandise , selling t-shirts , and then there's profit . So one reason why I said purchases is one .

It affects what you purchase as well as what the guests purchase . But also I wanted to keep it five piece . I didn't want to have a sales in there , so I involved that category . And then profit .

You know how do we look at profit and you and I had a conversation earlier in the week about you know our viewpoints on profit and how to increase that profit margin . I'm actually going to be speaking on that at Bar and Restaurant Expo in San Antonio this Monday , on maximizing profits .

And then you said maybe they don't want to do it . And I think for a lot of folks in this industry we get that backwards a lot of times . We assume malintent when actually we've failed our team Absolutely .

And I think that when restaurant employees move up , a server becomes a service manager , a bartender becomes a bar manager , a manager becomes a GM . I think what happens is skill set wise . They're very equipped , right . They're the best bartender , right .

So when you're the best bartender , you have a certain set of skills that you can bring with you when you're elevated to a management position . The problem is there's very little leadership development and what's really lacking is not the skill set but the mindset , the soft skills to be able to lead other people .

The other thing I find a lot and I wonder if you find this too with your clients there are educational things people need when they move forward and often we're just terrible about giving it to them . Specifically because I work with financial stuff a lot , we don't most managers .

No one ever teaches them how to read a piano&O and then we hold them accountable to metrics and they don't even know really what we're talking about .

You know , we think that it's some secret , that you know , we're afraid the IRS is going to come around or you know , whatever the reason is , people are very secretive about their numbers , and so one of the things we have to get away from is thinking that our people can run the P&L without seeing the P&L or being trained on the P&L .

So that's something that was interesting to me . The last operational position I had was the managing partner of a restaurant , and my bar manager and my service manager couldn't tell me what the equation was for food cost or liquor cost . Was for food cost or liquor cost ? They didn't know .

You know ending inventory plus purchases minus , or beginning inventory plus purchases minus . Ending inventory divided by sales is your cost of goods , and so I had to teach that to them . Right ? But to your earlier point if someone doesn't know how to do something , whose fault is it ?

You know it falls on the leader to , and maybe that leader wasn't trained on how to lead . You know GM may have gotten worked their way up . I know I did . I went from . I went from hourly positions in the front and the back to a management position as service manager , assistant , km , bar manager and then kitchen manager and then GM .

Even as the GM I hadn't learned the leadership skills that I needed , I just learned the functional skill set things right . So I had to then go work on myself as a leader and read books and grow , and I've had a couple of really great mentors that have helped me along the way .

But most of that was self-taught , you know , through trial and error , which I talk about a lot in the book .

What is it like to be a restaurant owner Probably all of these come up on the first page of Google and they're all I agree with you just completely false when you dig into it .

So let's start with the first false belief you lay out in the book , which is underpaying your people equals profits , which , okay , I don't know about you , but this is like the most annoying false belief , I think , in the entire industry . False belief , I think in the entire industry .

It's something that I feel like a lot of us beat our heads against the wall and go okay , well , if you just pay people a few dollars an hour more , it doesn't cost you more , you'll have better employees . But why do you think , as an industry , this is such a struggle for us ?

Are you going to look for AI and robotic to offset some of that ? Absolutely . Is that going to diminish the guest experience ? Absolutely Right .

So I think that , from an owner standpoint , we have this mindset where we have limited funds and so we are going to try to diminish our overhead , and so labor and cost of goods are the two largest areas , and so they get attacked first . When it comes to P&L management , right . So that's the first thing .

Or , an owner , as a manager , percentages are beaten into your head . We understood this philosophy and I'll talk about it later in a false belief that we have to hit the prime cost and we have to hit this controllable cost and we have to hit this non-controllable cost if we're going to be profitable , and I'll get to that later . In the false belief .

But I think , because we look at that , we think of our employees as a liability on the P&O and I think if we start to look at them as an asset on a balance sheet , then we look at them differently . You can grow an asset . Growing a liability is not a good thing , right . You're increasing your output , but increasing your asset .

If you buy a stock and it's valued at 10 bucks a share and it goes up to 15 , that's a good value , right ? You've got a great return on your money and I think we need to look at our employees that way .

If we're willing to pay them a little bit more and there's other things involved with that showing them the proper respect and caring about them and all that affects that as well but what you end up doing is , when you value them more , you're going to understand that as a human being , they've got to pay their bills and they've got to make a certain amount of

money or they're going to leave . If people feel undervalued , they tend to underperform and so by showing that you care and you value them , they're going to outperform and you're going to get an ROI on that return of investment .

One of the things that we tried during COVID of the things that we tried during COVID and it was very unsuccessful was creating these , um , these opportunities where we paid signing bonuses to hourly employees right , 200 bucks , join our team . It's kind of like Groupon . It does not create loyalty . Right , you're going to go to the next .

As soon as you fulfill whatever obligation to keep your 200 bucks , you're going to go to the next deal . Hey , I can get another 200 , 500 if I go work here . Conversely , what are you telling your existing employees ? It's like when Verizon offers some great deal to to new customers , but they don't to . You know they understand this principle .

If you under , if you offer something to a new , a new user that you don't also offer to your existing user , then you create this negative loyalty from the people that have been there , and so what you don't want to do is go . Hey , I value this new person more than I value you . Instead , pay that person an extra .

So let's say it's let's say it's a $500 bonus . If you paid that person an extra dollar an hour to start , it would take 500 hours for you to have put that $500 . Actually , less than that with employment tax and all that . But let's just for ease of conversation , 500 hours . So let's say it's 300 hours . That's 40 hours a week .

You're going to get about two months worth of work out of them before they've earned that money and you have an opportunity to evaluate them . Are they worth the money we're paying , as opposed to putting it out there from day one ? And now there's no incentive for them to stay because they've already been paid .

When we start to look at our employees as assets on a balance sheet , then we start to look at how can I grow this asset , how can I care for them so I get a better output of productivity and how can I increase the loyalty of them sticking around so that I'm not having to rehire that position in a month , two months , three months .

And then the other thing is think about the mistakes that people make . I'll give you one example , and I take some responsibility for this , even though I trained my people better than this I had an employee that somebody ordered a less expensive bottle of Penfolds . The guy brought a bottle of Grange to the table , which was , you know , $1,000 versus 40 .

Because he didn't when he showed it to the guest , he didn't read the label off and get the guy's attention and he's like , yeah , yeah , yeah . And then we poured a $1,000 bottle . And then he gets the check and he goes I didn't , I didn't want that bottle , right . So , through proper training , and we did train them to read the label and he just chose .

He didn't do it , but let's say we didn't train them . Hey , we have three different pen folds on the list . Please be careful . Please don't make this mistake , because it could be very costly . Well , if we properly train them , we would have just saved $960 , right ? And so we have to look at our people as an asset that we can grow .

That requires treating them right , paying them right and then training them correctly and rewarding them for their efforts .

is not . All marketing is traditional marketing . But what I love is a story you tell and that's part of the book where it's kind of old school . You're talking about dealing with a car dealership and selling them $100 gift certificates for $50 , which , by the time you do all the math on food costs and COGS , really cost you about $30 .

So you're not losing money and you're gaining business , and so in that I mean obviously marketing . They're not expensive at all . But what are some ways that story or others where we can look at marketing as not being expensive and providing a great benefit for the time and money we're putting into it ?

That was a great hipster restaurant , really good lobster , blt pizza . We sold a lot of PBR and Jack and Cokes and Tito Red Bulls , but the owner wanted to scale it to a full service , upscale restaurant and this was actually , interestingly enough , this was in 2010, .

You know , within a couple of years from the market crash , when everybody else is going cheaper to get more guests in the building .

We were going more expensive , um , so we elevated the product , brought in a great chef , um , I changed I , I put together an incredible wine list , we created a craft cocktail program and then we and then we kind of changed what our restaurant was going to be , but we kind of did it gradually so we didn't lose the current clientele while we built the new

following . But one of the things that would just really piss me off because , while I value colleagues and I build strong relationships with what a lot of people consider competitors . I still am a little bit competitive and want to be the best right .

So a friend of mine , giovanni , owned an Italian restaurant next door called Giovanni's and we shared a valet , and every time a Lexus , bmw , mercedes , range Rover , rolls Royce , whatever pulled up , they always went into Gio's .

And it was because , you know , they had already established themselves as an upscale restaurant , and so one of the things I wanted to do was to change the perspective of our community as we elevated the experience in Boundary .

I wanted to change the perception of the restaurant as quickly as possible and I thought I need to get some of those people pulling up and coming into my restaurant . So Russell Stover , not the chocolate guy , he was the GM of Nashville BMW and we worked out this deal . Like you said , $100 gift card for 50 bucks Cost me 30 , still made a little profit .

But , more importantly , bmw people tend to have a little bit more money right than the average person , so the check for two people was always over a hundred . So I got some extra sale . That's the first thing . So that's the immediate payoff . The second and giving it out is for everyone that bought a car in December . So when are they using it ?

They're using it in January , our slowest month of the year . It's driving sales . So that was part of the strategy . The more important part from a marketing perspective was as these BMWs pulled up and the guy behind them in the Lexus or the Mercedes said hey , joe , are you coming into Geo's ? And they said no , no , we're actually going to Boundary .

And they're like you're going into the Boundary , oh yeah , it's the whole new restaurant . You're going into the boundary , oh yeah , it's a whole new restaurant . And they started becoming the mavens and the people that would drive traffic Next thing . I know it's not just BMWs walking into my restaurant , it's the Range Rover drivers and everybody else .

So that was the example that you were talking about . That I used in the book , one of the examples . The other one was the chips and salsa example and balloons .

But so kind of going back into the history of marketing , we used to pay billboards , you know , ads on bus benches , radio ads , tv ads , newspaper ads , and it was very , very , very expensive and so only the top , highest grossing revenue restaurants or the chains could really afford to do that kind of marketing .

Because you can afford to do that to promote a brand . You can't do that to promote an individual restaurant .

So that was kind of the first level no-transcript and so you know so I used a lot of guerrilla marketing techniques back in the 90s and early 2000s , but as soon as social media hit I added well prior to social media in the midst of social media I also started going to hotels and meeting with concierges .

Now picture this a concierge's job is to get somebody into some place , right ? Hey , can you get me into ? You know , can you get me into Nobu ? And then they pick up the phone in front of the guest , call the restaurant , try to make a reservation . It's mud in the face when they can't get that person in .

So I developed relationships with concierges in the city , said look , here's my cell phone . I will never tell you , no , just call me , we'll get them in . Call me , we'll get them in . I didn't have to pay money to the concierge because when they would send the people in I would go over and I'd say Mr Johnson , thank you so much for coming in .

Sally from the Renaissance called me personally , asked me to make sure you have a great experience . Here's my card . If there's anything I can do for you tonight , please let me know . Have a wonderful time . And then I might send them an amuse-bouche or , you know , some sparkling or something like that .

Then Mr Johnson would go back to the hotel and tip Sally a bunch of money and say how fantastic she is . Right . Now Sally's going to go . Hey , I like that . I'm going to keep sending people to that restaurant .

So those , along with some of the guerrilla marketing is really how joining the Chamber of Commerce , getting to know people not just joining but going to the events , getting to know people face-to-face right , giving people your contact information , getting to know people face-to-face right , giving people your contact information so those were really from 2020 or 2000 to

2015 was my major focus of marketing . And that really didn't cost anything . And then , lastly , social media really took off , and so I tend to use kind of a combination of guerrilla marketing .

And then social media really took off , and so I tend to use kind of a combination of guerrilla marketing and then social media to promote restaurants , and both of those are very relatively inexpensive .

I'm working with a client , I work with the brand as a client , and then they have two licensed restaurants and I work with each a licensed client as well , separately , and so the conversations are different when I'm talking to the brand . Okay , what marketing are we going to put in place ?

That it's not necessarily going to drive traffic today to that restaurant , but it's going to build the overall awareness . You know golden arches .

If you see the golden arches , you don't automatically pull in to McDonald's every single time , but you recognize it and subconsciously , if you want a mediocre burger four days later , you're going to remember McDonald's right ? Absolutely Sorry , I probably I say too much about McDonald's , but that's an example of a successful brand .

It's a great example , necessarily capitalizing on an amazing product , right , but they're consistent .

The brand is consistent , whereas if a restaurant wants to drive traffic to an individual restaurant , that's a different marketing plan , a different marketing budget and your goal , whether it's geofencing or whatever form you're using , that's to drive specific traffic to a specific restaurant , and every restaurant really needs both .

How do I grow the brand , you know awareness and then how do I drive traffic ?

So I think it's one of the biggest misconceptions , and you go a lot into the book before you get to the false beliefs about your personal story working too hard , dealing with burnout and overcoming it , and that is probably one of the hardest things for owners to do . So how do you approach that ? How do you even begin to go ?

I'm working 70 hours a week and I need to work less , yeah , so you know , you alluded to

my story .

business . Yes , there are moments of sprinting you get around New Year's , you got to sprint . Get around Mother's Day , you got to sprint . Get around Valentine's Day , you got to sprint . But it doesn't have to be that way the majority of the time .

And so I think what happens with owners and it's more owners than executives right , executives , especially at the corporate level , might only work Monday through Friday , unless you're a director of ops , so a little different , because you're not getting called on the weekend , when you're off .

But for restaurant owners , your one-man show a lot of the time or a one-woman show , the book stops with you . So if something happens , if you haven't developed your people to be able to handle these emergencies , then you're going to be called to put out fires all day , every day . So you've got to really be able to do a couple of things .

First thing you have to do is you have to be able to manage your own time . You have to understand there are three main focuses of your time that are profitable and show that you're accomplishing something right .

There is working on the business , working in the business and then having time to replenish emotionally , physically , mentally so that you can jump back into the fire again . So you've got to get a hold of your schedule .

There's a great tool to use called time chunking , where you basically account for every hour of the day , whether it's your own private time with your family or going to the gym or personal stuff . How much time am I going to put into working on the business ? How much time am I going to work on working in the business ?

So , as I built my consulting and coaching practice in the beginning , I had to figure out okay , what am I going to offer ? What's my avatar client ? How am I going to help ? Then , once I had that done , the majority of my time was working on the business to go get clients .

As I got clients , working in the business began to be taking care of my clients , working with my clients . That's working in my business , because it's what I do , but I still work on my business , and so I think , for a restaurant owner , they've got to get away from the forest and the trees .

They got to be able to , you know , stop sprinting freestyle in the ocean against the tide and look up every now and then and see where you are right and and catch your breath .

So , um , I think that time chunking , getting real control of your schedule , figuring out how to do both work in your business and on your business , and then you've got to use the simple principle of urgent and important , urgent not important , important not urgent .

And you have to look at it as a restaurant owner of okay , what is the most important or urgent thing that I need to do right now ? What is the second ? Or still urgent but not . Or still important but not as urgent ? Okay , that's what I'm going to do next . Okay , what's urgent but maybe less important ? Let's find somebody else that can do that .

Right , and it falls to the whole . Stephen Covey's big rocks . You do the big rocks that make the biggest impact for your business first .

So it's really about time management and then figuring out who in your organization can do certain things , making sure they're trained and up to speed on them so that you clearly communicate the expectations with you know dates of completion or times of completion , and then you delegate and you get out of their way and you let them do their thing , and then you

just follow up and everyone says you know it's going to take me an hour to show someone how to do that , but it only takes me 15 minutes . Okay , great , what if you could spend the hour teaching them how to do it and then you never had to do that again ? By the fourth time ? You have not had to do it . Now you're even on your ROI for your time .

Now you've saved yourself an hour that cost you an hour , but now , every time they do it after that , there's an ROI on the time you invested in training that person and we all get into that rut Like it's just easier if I do it myself and restaurant owners just have to get out of that mindset .

You have to learn not to be in control at all times , to develop your people and trust them to make decisions . When somebody would call me at home and say , hey , I'm not sure what to do on this , I go okay . Look , I think to myself . Okay , they're already bothering me on my day off , they're interrupting my time with my family .

So let me make this as useful as possible . So then I say well , what would you do ? Well , I think we should do this , and either I say that's absolutely right , great job , you already knew what to do . Or , if it's not quite right , I would handle it differently . I go well , you know , I think you're pretty close , but I would tweak it .

I'd probably do it this way . Either way , they're either getting more confidence in their own decision-making or they're being trained and developed to make better decisions , and at some point they stopped calling you for the things that aren't urgent and important . And I got to a point where it's like look , if something is important , shoot me an email .

I don't have alert on my phone , so I will get to it when it's convenient for me , right ? When it makes sense to check emails . If it is pretty urgent , pretty important , shoot me a text . If there's a fire in the building or there's a thousand dollars missing in the safe , or someone just fell off the ladder or a guest got hurt , call me .

And it's amazing little your time off is interrupted when you develop your people that way . So the first thing is training yourself to manage your own time and then developing your people and tasking them with things and allowing them to make decisions that are not going to destroy your business without you .

That's how I manage and I ran four restaurants working 50 hours a week in .

The other thing I wanted to mention out of all that and this was a little bit earlier in the conversation you mentioned it where you're talking about working on your business , not working in your business , and one thing that always strikes me is sometimes people are working on , they think they're working on it , but they're really working in it , and you have to

be careful there , right , because there's a fine line between doing someone's job and pretending that you're doing more than you're doing and actually working to improve your bar restaurant overall .

. So think about this our industry , we all go . You know most people go drinking after work . There's a watering hole that everyone goes to , and usually it's not just your employees there , it's employees from the restaurant down the street , it's employees from other restaurants right and so um , they talk oh man , my boss was an asshole Really .

Oh well , my boss is awesome , you should come work at our restaurant , right ? And so we want to treat our employees so well that they are proud to work there and they will tell others how great working there is .

And they want other great people to work with them , because they don't want to surround themselves with people that are going to bring down the organization . And so you have to become the employer of choice . You know how you treat people , how you pay people , and then you become well-known in that city for being that company .

Convertibly , if you yell at your people , you micromanage them , you don't respect them , try to cut their hours back , try to underpay them , you're not creating a symbiotic relationship with them and it doesn't take very long for the entire city to know that .

And so I , even in the midst of COVID , because I actually , from 2020 until 2023 , november last year , I ran a restaurant and I was building my business . So it's not that you know , and I've always been able to find good people . It's not that , oh , I was always able to find good people , but I didn't look for them during COVID .

No , I still ran restaurants during COVID I still ran restaurants , through the elevated minimum wage and all the things that have transpired and you know , through the process of , hey , let's pay someone 500 bucks , come join our team . I've never done that and I've never had a difficult time finding people .

But I think the other thing is lastly I know we have a couple more points but always be looking for great people . Looking for great people , absolutely . Don't just run an ad when somebody quit on you and you're already now short a player and you're going to scramble to hire the next person that walks in . Always be looking for great people .

Somebody great walks in . You know the Yankees did this right . They had Jeter and then A-Rod came along and they're like , yeah , we'll take both of you . They didn't go . We already have shortstop . Same thing with the Tampa Bay Bucs . They've always had a quarterback . They've always had a position , but when Tom Brady came along , they took him right .

Now we have another great quarterback that came from Cleveland , and so it's like , okay , don't hire a position , hire people . And so just because you don't need that position doesn't mean you don't need that great employee , and when you are proactively looking for great people , you will never have a problem finding great people .

within two miles , because they all drank at my bar , they all liked it and they all wanted to work for me , and so as a bar , you have an even greater opportunity sometimes to get these people if they're already your regulars .

Yeah , now , moving on to to false belief number five , you're in the food and beverage business , and I love this , because everybody acts like we sell food and booze , which we do , and a lot of times we spend a lot of effort and put a lot of very artistic touches to how we do it , but that's not why guests come in .

So break that down for us a little bit .

Absolutely , it is very , very significant , because we realized that the guest experience is far better when someone feels cared for and special and they'll go back for that , even if the food is mediocre . But they won't go to a restaurant with great food that has mediocre service or they'll go to it less . They're less likely to go to it .

And so those that understand that principle are very , very successful . They properly staff the restaurant for that special guest experience . The problem is then we have things like the Food Channel , the Food Network , or you know that come out . And all they do is talk about the product right .

It's a chef show , it's a chef competition show and it's all about creating the dish and what . People gravitate to that and they think , okay , I just have to have a great menu . Yeah , that's important , that's your product . That's one of the five things we talked about . But we're not in the food and beverage business anymore , we're in the hospitality business .

It's like and understanding that you know who your avatar is . You know if you're an upscale restaurant . If you're an upscale restaurant , your guests aren't just coming to feed their face because they can do that at a fast food restaurant or Applebee's or whatever right . They're coming for an experience . It's just like the story of two guys on a plane .

They start talking . One guy said what do you do ? And he said I work for Rolex and he said I work for Timex . We're both in the time business . And the Rolex guy says no , I'm in the luxury business Like he understands what business he's in , and so we understand we're in the people business , not the product business .

The product is an extension of what we provide , but it is not our business . And so those that understand , that are wildly successful and those that don't don't last very long .

Absolutely , what's the only real difference is the service and the environment and the culture and all of that that we're actually giving our guests , and I'll go one further .

Chris Schneider , or Sally the bartender , or Steve the food server , or , you know , john the dishwasher , right ? Only , that's the only thing you can't replicate . You can replicate any commodity , the only thing you can't replicate . You can replicate any commodity .

You can replicate menus , tables , ambiance , music , every other thing except the individual , and that's why understanding that we're in the people business is so important .

We sell off fear and we say well , you know , there are these studies that say 80% of restaurants fail within five years . A , I can't find that study . The Ohio State study says 62% , but B . I feel like we are guilty to people looking to get into the industry sometimes of making it seem harder than it is .

Yes , it's one of the hardest things to do , but it's not a bad investment . You can make money in this business , yeah .

That doesn't allow success and there's going to be probably some controversy in this conversation and you and I , while we agree , you know , on the tangibles of this , I think semantically we had a little different conversation previously .

You got to run wine 30-ish 25 to 30 , depending on the restaurant . You got to run your beer around 23 to 25 . Then you got to run labor at this number . This is what your prime costs have to be , which is a combination of those two things . Then you got to run this for your . But you don't take percentages to the bank , right ?

I'd challenge anyone to walk into their bank with the next deposit and go . I'd like to deposit 12% . And because that's been beat into our heads , we have this shrinkage model we shrink , we cut , we cut , we cut , we cut , we cut , we cut . We don't think of our employees as an asset , so we cut their hours .

We don't properly train them because we can't afford to train them for five days , right , we pay them as little as we can . So that model doesn't work for labor because if everybody leaves and you're just constantly rehiring new people .

When you're hiring a new person , not only are you paying that person non-tipped wages during training , but you're probably paying a second person , a higher wage to train them . So we have to stop looking at the P&L based on percentages , because that is a mindset of the glass is half full . If we cut our servers , we cut our salespeople . They are salespeople .

If we cut our line cooks , that's production . You can't grow sales if you cut salespeople and production . It's an impossibility , absolutely . So I think that we have to start looking at the P&L differently and focus more on driving top line as the number one thing we look at .

Yes , we do need to manage our costs , and percentages can be metrics or KPIs that we use . But if your boss or if you as the owner or the director of ops , is solely focused on percentages , you will shrink your business . It's a physical fact that you cannot grow your business if you shrink sales and production .

None of us agree . So we're saying , hey , you need to hit this magical number that we made up based on nothing specific about your restaurant and oh , by the way , none of us can define this term the same way . Yeah , Well , think about this .

Do you think that hourly employees that are predominantly line cook are seven employees on a shift versus 40 ? Mm-hmm . Do you think your labor is going to be the same ? Well , of course not . You think your labor is going to be the same . I think a place that sells beer only is going to have a better liquor cost than someone that sells alcohol as well .

Of course not . So having these numbers , I believe in ranges .

Well , what if let's say that let's say that for every $2,000 , you have to have a server , right , $10,000 , so you have five servers . Okay , how is that different than if you have a policy that no one gets more than four tables and you do that ? 10 grand in three hours . Are you that ? 10 grand in three hours , Are you ?

And so if you have an average , you know , guest count of , you know 40 bucks , how many covers is that and how many tables does that relate to ? And is that more than your four table standard ? So it's not just how many guests are coming in the door , what your sales are , it's when are those people coming ?

And so I think that when we get into these percentage matrix as the end , all be all , as the gospel of successful restaurants , people fail . And earlier you mentioned that it's hard to find these studies . There are several studies , but they're different . One of them will say this percentage of restaurants fail the first year .

This one will say this percentage of sale of restaurants fail within five years of restaurants fail within five years . Right , so they are out there .

I think that what's misleading and misinformation is that we quote nonspecific , you know studies , but they are out there and I just believe that restaurants can be great investments . You can run 20% margin . You know if you're doing things right .

getting a payoff . Maybe , versus I can open a restaurant today and be positive cash today . Now , obviously you got to do everything right to pull that one off , but it's plausible , and in most industries that's not even plausible .

So let's move on to our last false belief , which is a penny saved as a penny earned , and I love this one because it kind of culminates everything that you've been talking about through the other six , because it's basically I mean not to put words in your mouth but if you're cheap and you don't reinvest your money , you probably won't win .

If you put your money in the bank you're saving it right it's going to diminish in value . That's the first thing . Second thing is if I don't spend a $100 bill , it is worth zero . It is a piece of paper until I spend it . Right . As soon as I spend it , it becomes worth whatever I bought with it .

As soon as I spend it , it becomes worth whatever I bought with it . So if I can buy a $100 gift card for $50 , that $50 I just spent was really worth $100 . But until you spend it , it's a piece of paper . If you put it in the bank , it shrinks in value . So penny saved is not a penny earned . It's a fraction of that that's earned .

Once you spend it , then it becomes valuable . Now , if you spend it on a car for yourself , a Lamborghini , that's not really a penny earned right . A penny invested is many pennies earned , and that's the way we need to look at that .

Seven Proven Strategies to Help your Restaurant . Crush the New Economy by Monty Silva . But yeah , you can support me , pick up a copy . You know I can only . I can only coach so many clients and so I have a limp from coaching perspective . I have a limited influence on our industry .

I can help a limited amount of people very much , but I write , I wrote the book and I'm , you know , I have my podcast , restaurant Success Club , and I have my newsletter , restaurant Success Club newsletter , so that I can help a broader amount of people . I speak at conferences so I could help the industry as a whole .

Because I'm very limited , I only take on a certain amount of clients . But if you're interested in working with me , you know some people can reach out to me and book a free call .

I really appreciate your time . I think this was a fantastic conversation . Yeah , for being here . I really appreciate your time .