One of the most important things Black people fail to understand is: how businesses actually works financially. We often miss what makes a business “tick,” and how does it make money? Analyzing a business can be fun. But, if you really want to understand business, then manage, work in, or run a restaurant. You can see everything. Working in the food industry is a great learning experience, but unfortunately, the wages are low.
We highly recommend learning about business by working in that business. And our favorite business to learn from is the restaurant business. Everything is out in the open such as pricing, staffing and management, if you are willing to be observant. Go to any restaurant and see what’s going on. See the questionnaire at the bottom of this post for more ideas.
Here at BlackEconomics.com, we love the restaurant business. The concept of running a restaurant is universal and understood by everyone. There are so many business principles your can learn from running a restaurant. Observing a restaurant is the single best way to understand how a business actually works. All of the ideas, principles, and concepts apply to almost every other business.
The Restaurant Business
We want to introduce you to the restaurant business. The restaurant business is familiar to all of us, but we may not know the details. How do they make money? What happens behind the scenes? How do you run a profitable restaurant?
Homework: Read the articles and links, and then read the restaurant questionnaire at the bottom of the story. Then go to your favorite restaurant and look around. You will never be the same.
The best way to learn and understand a business is to look at the profit and loss(P&L) statement for the year.
Here is one of the best P&L’s we have ever seen from Restaurantowner.com. There are two reasons we like this profit and loss statement: 1) it is clear and detailed, 2) it is close to the 30%+30%+30% + 10% percent model common in the restaurant Industry.
30 / 30 / 30 / 10 model
Most restaurants follow a simple model of accounting and profitability.
100 % Sales
– 30% Cost of goods
– 30% Labor
– 30% Other cost and overhead (rent). Indirect.
+ 10 % Profit
Successful restaurants have higher sales or lower costs. But good restaurants work on all three expenses, especially indirect costs.
Restaurant Trade magazines
Another way to learn about an industry like restaurants is to “read the trades” — the trade newspapers in that industry. The restaurant business is huge and includes quick-serve, sit-down, take-out, food trucks, ethnic restaurants, and upscale restaurants. And so do the Trade magazines.
Restaurant News – Restaurant News. The largest newspaper in the restaurant business.
Restaurant Business – Largest magazine publication for restaurant business
QSR Magazine – Quick Serve Restaurant
FSR Magazine – Full Serve Restaurant
FastCasual Magazine – Fast, Casual Restaurants
Modern Restaurant Management –
Restaurant People to Follow
Restaurant Review Checklist
Restaurant MBA Questions
Who dines? What is the traffic? Who visits? What are the demographics ? Was the restaurant full or empty?
Look around the tables. What are people ordering? How much do you think they spent (average check)?
Review the menu and prices. Are they over charging or under charging for different items ?
How was the food? How was the service?
How many tables? How many servers? How many cooks? How many bartenders and how many people are at the bar ?
Finally, How do you think they make money ?