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Shelve the Ego

Restaurant Turnaround Expert: Shelve The Ego, Apply Common Sense, Educate Yourself About The Industry
By Morgan Chilson



Mark Moeller went into the restaurant industry 32 years ago, and, while he calls the first five years of his career “pretty brutal,” he also says he hasn’t worked a day in 27 years because he loves what he does.


In 2000, Moeller took his passion and experience and launched The Recipe of Success, a restaurant and food-service consulting company. Whether working with restaurants that are brand-new and in the planning stages or restaurants that have been in business for years, he strives to educate owners about the restaurant industry and help them create solid plans that will make them successful.


Moeller will be in Manhattan next week to speak with members of the Manhattan Area Chamber of Commerce, he said. He also will have time open to meet with local restaurateurs who might be interested in the services his company provides.


As a consultant, Moeller focuses on the fundamental roles of an owner; creating business, financial and marketing plans; determining locations; employee training; and an endless list of what it takes to thrive in a competitive industry.


“I’ve opened nearly 300 restaurant and retail locations in the last 22 years,” Moeller said. “One of the things I love to do is my operational and financial turnarounds. I’m in the middle of two of those and, to put it bluntly, they’re pretty nasty because of how out of control that they’ve been.”


Such turnarounds challenge Moeller to figure out what’s going wrong in a restaurant on multiple fronts. He was spending time this week in one restaurant doing what he called “his version” of forensic accounting. That means tracking the dollars, and in one situation in particular, finding out how a restaurant showing a six-figure profit is leaving the owner broke.


“Where is that going?” Moeller said, adding that he’s already worked with the restaurant to lower his cost-of-goods purchased by 12.5 percent. “Now I have to go through his books and his accounting process and just kind of follow it through.”


In another recent situation, Moeller has a client that he’s worked with off and on for five years. They opened a new location (without using Moeller’s consulting services) and, he said, “it absolutely killed them.”


“They closed it out after eight months and they’re still fighting out of that,” he said.


Every restaurant situation on which he is consulted has shown Moeller one strong principle: “In the restaurant business, you have to be proactive,” he said.


In working with restaurant owners or managers, Moeller finds some consistent issues that need to addressed to run a better business.


Challenge #1

“The first one is ego,” he said. “People forget why they’re actually in business. They think they’re in business for themselves –the glory of owning a restaurant and your friends are coming by. You’re not in business for yourself. You’re not here to stroke your ego. You’re here to make money, period. The only way to do that is to listen to your clientele and help them understand what your concept is, and then you have to hear what they’re asking for.”


“Too many people say ‘I know what I’m doing and I don’t need any help,’ and they go out of business because of that,” Moeller said.


He gave an example of a Manhattan, New York, client who hired him to repackage and revamp a restaurant business with five locations to get it ready to sell. It would have been lucky to sell for $1 million, Moeller said, based on revenue. Two years later, the restaurant revenue was up over $4 million to around $9 million.


During one meeting with the owner, a manager called and said a guest would like to substitute a three-ounce portion of steamed spinach, worth about 18 cents, for 5 cents of brown rice. The owner was going to say no. Moeller pushed him to think of the situation from every angle and when the substitution was made, that new customer started coming in about four times a week.


“Steve, who had an ego, realized that in order to make his business better, he needed to forgo his ego,” Moeller said. “There are different ways of doing things, slight modifications on what they’re doing — if they can get rid of their ego.”



Challenge #2

The second issue Moeller sees in restaurant owners who fail is a lack of common sense, which is not exactly the same as ego, he said. Referring back to restaurateur Steve, Moeller pointed out that that situation overlapped with common sense – give up a few pennies to make a lot more pennies.


He said he sees this all the time – a customer comes in and orders pasta primavera, for example, and asks to add tomatoes. Restaurant managers either say no or want to add a $2 charge for doing so. Another example is offering a gluten-free menu.


“Everybody wants to charge and say ‘it costs me more,’ but just think of the advertising that you have gluten-free products at no additional costs,” Moeller said. “It’s a no-brainer to increase your revenue. Jump on this bandwagon because it’s not a trend. It’s here to stay.”


Challenge #3

A third issue is oftentimes a lack of business knowledge or experience in all areas of the business. A manager may be skilled in one area, but lack understanding of the financial picture, for instance.


“With my turnaround clients, I don’t talk about profit and loss statements. I talk about cash flow summary – how much money is flowing to the bottom line,” Moeller said. He referenced a New York City client who buys chickpeas by the case because he saves $1.50 a can. But the business is only going through one can every six weeks, leaving the remaining cans sitting on the shelf.


“So it’s a few cents more per order, but the difference is now you don’t have the case price of $33.50 in cash sitting on a shelf that you could use to pay another bill,” he said. “When you do that with 10 products, that’s $335 that you have sitting on the shelf, unusable. Then you don’t meet your payroll or you’re falling short just to pay your rent.””


Growing Manhattan


Referencing the boom in new business openings and growth in Manhattan’s economy, Moeller said he’s visiting a friend in the area but also taking the opportunity to introduce himself to people who may need his services.


Nationwide, as in Manhattan, the restaurant industry continues on a steady growth path. In 1970, restaurants had about $42.8 billion (adjusted for current dollars) in annual revenue, according to National Restaurant Association data. In 1980, that jumped to $119.6 billion, 1990 $239.3 billion, 2010, $586.7 billion and is project to hit a record high of $683.4 billion this year.


Moeller attributes the fact that restaurants are busy most nights of the week to several reasons, including the fact that people have more disposable income. “I also find that a lot of people are working longer hours, which means by the time they get done working, they don’t want to go home and cook,” he said. “Here in the Connecticut area, you can go to restaurant on a Tuesday and they’ll be packed.”


What It’s About


But even with bigger revenues and technological changes in the last few decades, the restaurant business, ultimately, comes down to the same thing it always has, Moeller said.


“At the end of the day, it’s just about great service, great food and a great environment,” he said. “People often discount the environment portion of this, but you need to be comfortable wherever you are.”


He feels comfortable knowing that he has job security around those issues, too. “I know that 99 percent of the restaurants today do not train servers,” he pointed out. Then he handed out a tremendous compliment to a local restaurant. When visiting Manhattan previously, Moeller said he ate at Harry’s Restaurant at the Wareham Hotel.


“Harry’s in Manhattan had some of the best service I’ve had in over 10 years,” Moeller said. “Phenomenal. It’s because they understand service, and they fit their building. They fit their menu. I was very pleased.”