When Tavistock Restaurants, LLC, first purchased 17 bankrupt restaurants in November 2003, we may have underestimated how tough this turnaround would be. As you might imagine, a company that had been bought and sold twice and went bankrupt in one calendar year definitely had its challenges. With few exceptions, pretty much everything was a mess: servers had up to 12-table stations, there was a serious shortage of qualified management, regional directors were acting as general managers, and so forth. But after relentless hard work, we started to see positive top-line sales trends and bottom-line profitability. After three and one-half years of negative sales trends, we now have 15 consecutive periods of positive year-over-year sales, and 30 percent of our restaurants are up double digits in sales.
Turnarounds aren't for everyone or for every establishment, but they can be highly rewarding. Here are some ideas on how to implement a restaurant turnaround: Hire the right people. Hire on the things you can't teach such as passion, integrity, intellect, and work ethic. You can teach new staff the business and how to make money, but you can’t teach character. We used to focus on “location, location, location!” Now it’s “people, people, people!”
• Your employees want the same things you do. By taking time to listen to them, you will gain their trust and loyalty.
• We conduct weekly conference calls for each brand, host an annual branding “Boot Camp” in Napa Valley for executive management, and involve more people in the decision-making process. It takes longer but produces a better result.
• We practice “single-store economics.” For example, some companies spread certain costs such as worker’s compensation across the company. Our philosophy is that other restaurants shouldn’t be punished economically for another restaurant’s misfortune.
• We use an owner-operator compensation model. We give bonuses based on expected sales and profits and “kicker” bonuses for teams that stretch. Our general managers and executive chefs each earn a percentage of all sales over budget and all profit over budget as well. The program helps our people think big rather than incrementally.
• We measure and expect line-by-line performance. For example, when we measure labor costs, that line item should see improvement. But make sure you’re measuring the right things.
Improve the four-wall experience before marketing to the outside.
• Fix the experience before you manage costs. The restaurant business is about great service, a welcoming atmosphere, and pristine ingredients.
• Be guest-obsessed. Ask the customers what they want and then deliver.
• Involve everyone within the organization in marketing. Each employee, from the dishwasher to the CEO, should know what the brand represents.
• Stop discounting. If you deliver on the above, you don’t have to discount. Discounting is tempting for a short-term solution, but ultimately it hurts the brand.
Stay the course, but change for good reason.
• Overcoming the negatives takes time. Remember, there is no pixie dust.
• There are no sacred cows. Just because some- thing has been done a certain way for a long time doesn’t make it right. As I always say, “If you do what you did, you get what you got.”
• If you make a mistake, acknowledge it and move on. Focus on conflict resolution rather than blame assignment.
• Remember to celebrate with those on your team that work so hard to achieve your goals and objectives.
• Recognize and reward achievement.
• On your way up, celebrate even the little things. People notice.
Photo Credit: "bruised pear" by nuanc