In recent years, the practice of "open-book management" has been adopted by restaurants all over the place.
For restaurants, open book management...
- is intended to foster a culture of ownership throughout an entire organization, from business owner to part-time employee.
- hinges upon a business education component that enables everyone to understand the company’s financials and their personal role in the workflow.
- equips employees with budget management skills that are applicable in other aspects of their lives.
In this blog, we'll cover the history of open-book management, what it looks like in restaurants, and how you can start using it in your restaurant.
The Open Book Expert
Anyone who knows Henry Patterson, restaurant consultant and partner at the Delta Group, has likely heard the story of the stonemasons:
Once upon a time there were three stone masons, hammering away at hard pieces of marble out in the hot sun. A bystander stops to watch their work. The bystander asks the workers, “What are you doing?”
The first stonemason, hacking haphazardly at his piece of marble, grumbles a response: “I’m hammering stone in the hot sun. My back hurts and my hands are blistered. I hate this job and I can’t wait to be done at sundown.”
The second stonemason, tired and unenthused, says, “I’m hammering stone in the hot sun, but I need the money in order to feed my family. I don’t enjoy it, but I’m grateful to have a job.”
The third stonemason looks up from his precise and careful work and says, “We’re building a cathedral! It’s going to be beautiful. My work is a small piece, but I’m proud to have a hand in it.”
Patterson loves the story of the stonemasons because it’s a perfect allegory for his mission to transform the restaurant industry.
A 35-year veteran in foodservice, Patterson laments,
"Our industry has long taken for granted a serious flaw in our business model. The vast majority of restaurant staff, the people upon whom foodservice depends, do not have viable jobs - career path jobs that pay a truly livable wage and afford long-term opportunities for learning, growth, and challenge. This means a lost sense of direction and low self-esteem for industry employees, endless turnover expense and distraction for employers, and damage to the quality of the experience for guests."
Employee turnover rate in the restaurant industry is 72.9% (over 20% higher than the private sector average) and has been on the rise since 2010. A significant portion of restaurant employees are also students (28%) and, aside from upper management, restaurant jobs tend to be seen as a stepping stone to bigger and better opportunities. Turnover is expensive for businesses, as recruiting and training new staff is a time-consuming process.
As we all know - time is money.
The solution to this problem, according to Patterson and his colleagues at the Delta Group, is for owners to have a clear vision for their businesses and to involve all employees in every step of the process - including providing visibility into restaurant financials - by implementing the concept of open-book management.
The Restaurant Experiment
Open-book management is a nationwide shift in restaurant management. By encouraging his clients to carefully measure all aspects of their businesses and to be completely transparent with the results, these restaurants are embarking on a great experiment: “We believe that if we take this concept and educate the team about the financial realities of a business and make them more conscious of what makes business profitable, then we all win,” explains Patterson.
Plenty of restaurants have adopted the practice of open book management, including Boston's own Mei Mei and The Paris Creperie.
Mei Mei announced in April their plan for open-book management online, stating "we will be opening our financial books...to educate and empower our team to help make organizational decisions and positively affect our bottom line."
It's not hard to see why Mei Mei has gone down this route. The Paris Creperie launched their open-book program in January 2015. By the end of that year, their net operating profit increased 4x and their staff was getting paid $20/hr.