There are two opposing mindsets in our world. The first is one based on fear: The Scarcity Mindset. The second is based on growth: The Abundance Mindset. Today’s Shift Happens Column excerpt is about why, if you want to run a successful restaurant, you HAVE to develop an Abundance Mindset.

If you have been in the restaurant industry for a long time, like me, you were told you had to hit certain cost percentages. Your restaurant P&L was your report card. Prime costs (Cost of Goods and Labor) had to be 60–65percent. Controllables needed to be around 15 percent and non-controllables needed be 10–15 percent. The closer you were to the lower side of those numbers the closer you were to making a 20 percent profit. The problem was, only the most incredible, rock star restaurateurs could hit those numbers. Hence the reason 75 percent of restaurants go out of business within 5–10 years.

The reality was, managers were fearful that if they didn’t hit those numbers they would be fired. So, what did they do? They cut the quality of product to a level that lowered the guest’s product experience. They lowered prices and offered discounts to drive guest counts. They cut labor and closed sections of the restaurant off from seating guests.

Here is the problem with all of those things. Quality of product and ser-vice and hospitality are lowered to a point where guests are not excited to come back. They tell their friends on social media you are mediocre. When a restaurant cuts its prices, there is always someone else willing to charge less and it’s a race to the bottom. When they close sections of their restaurant off, they have real estate they pay rent for that isn’t generating income. And worse yet, if you do hit those numbers, your bosses now want you to cut even more and everyone is fighting over crumbs. Those managers that don’t succeed are fired and businesses that don’t succeed close.

Those who have an Abundance Mindset understand that sales are not finite. They understand the goal to sustainability is to build a bigger pie. When I took over Acme Feed & Seed in Nashville, the restaurant was doing over $17 million in sales. Most people would have glided in and either maintained what was being done or would have tried to cut to bring more of that to the bottom line. Fortunately for the owner and investors of Acme I have always had an Abundance Mindset. So, when I got to Acme Feed & Seed, I began to scrutinize where we had opportunity to grow the business. Within the first week I realized the opportunity was building sales on the second floor. The first floor and roof top bar did about 80 percent of the sales with the third-floor private events space did about 16 percent of the sales. The remaining 4 percent came from the second floor.

This is what I did:

1. Identified a new guest avatar: All of our business came from tourists and country music fans. We were on Broadway in the heart of Nashville. All of our guests were the same as the Honky Tonks. We offered live music, casual dining, and pedestrian beers and cocktails. So, I decided to make the second floor a place locals would come to get away from the rest of Broadway. We had sushi and a bar on the second floor before my arrival, but no one came up there. We also had comfortable casual lounge type furniture like couches, love seats, etc.

2. We upped our food and beverage game. We added an upscale spirits list (which included some Japanese whiskeys and sakes. We created a fantastic whiskey list of primarily bourbon. This included selecting our own barrels of Woodford, Angel’s Envy, and Blanton’s. We started doing high-end tasting events with the Sazerac company and other spirits distilleries. We offered party platters and we started roping off sections for parties with a guaranteed spend.

3. We increased our staffing levels and training. We then retrained our staff on service, hospitality, and knowledge. This attracted locals that wanted to be able to come downtown, find a comfortable place to sit and have quality food and drink served by service professionals that cared enough about the guest that they offered great hospitality. And it paid off. Our commitment to spending money on improving our food and beverage selections, training and properly scheduling our team increased sales on the second floor by over $1,000,000.

Added Bonus:

We increased our profits significantly and paid off our investors a year early.

No one wants to shrink their business. Having a fearful Scarcity Mindset causes you and your managers to make poor short-term decisions that never ends well. Adopt an Abundance Mindset and grow your profit by building a bigger pie.

All of my current clients are growing their business. They are growing their single unit sales and profits while also scaling their brands to new locations this year. 2024 can be your best year yet for your restaurant. If you are looking to grow and you want to discus how I can help book a FREE call now by clicking the link below. Build a bigger pie and stop fighting over the crumbs #abundance

https://calendly.com/montesilva/free-one-on-one-30-minute-call-with-monte?back=1&month=2024-01

Editor’s note: This is the 27th article in a new column from restaurant expert Monte Silva. More on the series can be found here. The first story, on Why Underpaying Restaurant Employees is a Recipe for Disaster, is here. The second, on Why Marketing is Not Expensive, is here. The third, on people-centric leadership, is here. The fourth, on Why Working 70-Hour Weeks in Your Restaurant is Not the Answer, is here. The fifth, on How to Provide Hospitality in a High-Tech, Low-Touch World, is here. The sixth, on ‘The Convertible Culture’ in Restaurants, is here. The seventh, on Why the Old P&L Model Has Set Restaurants Up for Failure,’ is here. The eighth, on How to Scale Your Restaurant Business When There is Only One of You, is here. The ninth article, The Secret to Finding and Keeping Great Employees is Not Difficult, is here. The 10th, What Culture Do You Really Want at Your Restaurant?, is here. The 11th, on Your Restaurant Should Serve People, Not Product, is here. The 12th, on Don’t Let Shiny New Toys Distract Your Restaurant from What’s Most Important, is here. The the 13th, on Why Restaurant Value Shouldn’t Be Based on Price, is here. The 14th, on The Case for Hyper-Focused Menus, is here. The 15th, This is How Your Restaurant Will Survive Beyond 3 Years, is here. The 16th, on The Difference Between a Restaurant Coach and Consultant, is here. The 17th, What is a Restaurant Tech Stack, and How Do You Know if You Built the Right One? is here. The 18th, You Can’t Make Someone Accountable if You Haven’t Made Them Responsible, is here. The 19th, Memo to Restaurants: Service and Hospitality are Not the Same Thing, is here. The 20th, Why a Penny Saved in a Restaurant is Not Always a Penny Earnedis here. The 21st, on Why You’re Never Too Old for Greatnessis here. The 22nd, Why Consistency is the Only Way to Keep Your Restaurant Openis here. The 23rd, on The Restaurant Industry Doesn’t Have a Labor Shortage—It Has a Leader Shortageis here. And the 24th, Are Restaurant Employees Today Entitled? is here. The 25th, Should Hotels Rethink How They View Restaurants?is here. And the 26th, Five Priorities Operators Must Follow to Successfully Run a Restaurant, is here.

Expert Takes, Feature, Leader Insights