The Insanity of Losses
It’s unbelievable to me, that so many operators still believe you ‘have’ to lose money or that you can only ‘break even’ for any length of time. Some people tell me they think a business will lose money for three years before it has a ‘chance’ to make any money. I just got off the phone with a F&B operator who said he was told that 75% of F&B businesses lose money or just break even (period!) and that F&B is used as a ‘loss leader’. I thought my head was going to explode. This is insane.
Who thinks like that? Who believes thinking like that? Who accepts that level of insanity? Evidently a lot of people. It’s lowest-common-denominator thinking that will get you a lowest-common-denominator business.
Successful operators make money from the 1st guest on the 1st day and every day afterwards. They make money on every plate. They make plans to make profit. It’s by design. I’ve been preaching gross profit margin pricing for four decades. We’ve built it into every menu we have ever designed. Hundreds of brands we have worked with are profitable, and have been profitable since day one because of it.
I don’t know where this crap started but it’s high time we put an end to it. There’s a reason nearly 72% of all food service businesses go out of business within three years (fact not fiction). This level of thinking is part of the reason.
Is it a hard business with extremely low margins? It can be. But it doesn’t mean you have to accept them.
Benjamin Disraeli said “Man is not the creature of circumstances, circumstances are the creatures of men. We are free agents, and man is more powerful than matter.” To which I would add, profits matter. Without them you can’t grow or reward anyone for their hard work or insight. Without them you don’t have a business, you have a very expensive hobby.
Now excuse me while I go help someone else make some money.