I came across this article in Business Insider and it was just too neat not to share. I stumbled onto this piece: “Why the Restaurant Industry is the Most Important Industry in America” via here which was a good read by the way ended up googling to learn more. I landed on the BI article about an ex-Wall Street trader turned restauranteur, who has a different way of operating his place.
Basically the gist of the article is how he was able to: 1. get rid of tipping 2. raise his employees’ wages and 3. provide benefits — health insurance, paid vacations and shares in his company — with minimal increase to pricing.
And this is how he did it:
Prior to the changes, Fry was spending about 25% of his revenues on labor and another 25% on food costs. His fixed costs, which include rent, account for about 40% of his budget.
Under the new budget, labor costs will increase about 30% to account for 33% of his revenues (which were roughly $1.5 million last year), and the share of food costs will decrease to 20%. Fixed costs will stay the same.
Fry is lowering his food costs by adding new menu items that have higher returns. For example, he is considering removing a $32 porterhouse steak from the menu and replacing it with $32 kan kan pork chuleta. The pork dish has higher returns but is harder to make, requiring a highly skilled kitchen staff — which Fry has — that can butcher a whole pig.
I am alllll about this, as a lot of restaurant prices — especially in the U.S. and London — are absurd. But more importantly, not only are his employees taken care of, but this leads to better experiences for diners as we all know one of the big rules of the service industry: happy employees = better experiences.
Read the entire article here.