You’d be surprised just how many restaurant owners feel that luck plays a part in the business. It’s a horrible strategy! If you feel like you’re always reacting to situations that are out of your control, I have a quick tip for you on tracking and measuring the right things.
To learn more please either watch the video above, read the transcript or listen to the podcast below.
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Read the Video Transcript by Clicking Here...
There are things I’m sure you know you have complete control over, but the rest I bet you wonder if you really have control over them … like how many customers come through the front door.
Many restaurant owners might say they they don’t really but I’m totally challenging that. If you ask executives of some of the most successful restaurants in the world that question, they’re going to say that they do have a lot of control over that.
I pulled this concept out of the book The Four Disciplines – one of those really thick, great books but it’s super long and detailed, so while I suggest it, know that it’s not sitting on the beach in the summer kind of reading.
LAGGING VS. LEADING INDICATORS
The concept deals with the difference between a leading indicator and a lagging indicator. The author of the book generally says that if luck is playing a large part in your business it’s because you’re spending too much time measuring lagging indicators and not enough measuring leading indicators.
This is something that’s already happened and not something that you can influence. Well, in a way it is, because it can influence what you do in the future, but you can’t do anything about it now.
Something like your profit on something or the revenue on a specific day is considered a lagging indicator because it’s something that’s already happened. The customers have all come through the door and there’s nothing we can do in this moment.
INCENTIVIZE ON THE RIGHT INDICATOR
Profit is something that so many restaurants measure that we’re even rewarding our staff on profits. We’re giving manager bonuses based on profit or revenue. Why not reward them on things that you have more control over … the leading indicators.
Let’s say that you know the best way to increase profits is to upsell – get every single customer through your door to spend a little extra money – and you decide to put together an incentive program for your staff. You tell them that we need to do a certain number of upsells each day and if they hit that goal, they’ll be rewarded with something like a pizza party.
The problem is that your staff will get discouraged quickly because they aren’t 100% in control over the success or failure of the upsell. It might be a bad offer that you put out, it might not be something that people want. Twist it a bit .. what is something your staff CAN control? They can deliver the script (which would be the leading indicator in this situation).
Put together a program to reward your staff and measure it on a scoreboard. Just remember – the program and subsequent reward is based on delivering the script, not the conversion.
If the conversion isn’t meeting your expectation of hitting 1 conversion per 10 scripts then there’s a problem with either the script, the way you train your staff, the way they’re delivering the script, or the actual offer.
None of those are necessarily the employees fault – they delivered the script that you gave them, they did a good job of doing that so that’s what you need to measure and base the reward upon.
Remember, the delivery of the script is the leading indicator, the conversion or dollar value is the lagging indicator.
If you feel out of control in certain areas of the restaurant, if you get stressed out because you hope that something is going to work out, realize it’s simply not a good strategy.
If you’re confused about the concept or you’re stuck trying to figure out if something is a leading or lagging indicator or you want to know just how to measure something, post below so I can help you out!
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