Owen: Hi, everyone. My name is Owen McGab Enaohwo and welcome to Process Breakdown where I get on successful entrepreneurs to reveal how exactly they were able to create systems and processes for your businesses that have enabled them to literally run their businesses on auto-pilot without their constant involvement. And today my guest is Misty Young. She’s a Chairman of the Board at Squeeze In Restaurant. So, Misty, welcome.
Misty: Thank you, Owen. It’s so nice to be here. Thanks for having me.
Owen: I’m excited to have you on the show here because during the pre-interview you had mentioned that you and your husband, you basically purchased a struggling restaurant in 2003, a business that was in total chaos, had no systems of any kind and you literally turned it into a completely systematized the entire business, made it profitable and I’m excited to learn how you did that.
Misty: Oh, my gosh. It was an amazing process to start with and frankly it started because we loved the business. So when I think back to those days, it’s 10 years ago now and I think back about all the love that we had for it. It was a restaurant, right? So I would go in the mornings, I would work all day long, waiting tables, serving guests, sweeping floors, doing the drawer, mopping, chopping carrots, doing inventory, all that stuff and then at the end of the day I would get home and the real work would begin and that was the way I saw it. The real work would begin when I got home at the end of the day and I would reflect, “What did I do today? What could I have done better today and what process and system might I be able to employ, create, develop, refine to make this easier tomorrow?” And I literally did a day-by-day process, step-by-step.
Owen: Let’s take it step by step. I want to take those back to the beginning and so that the listener understand you. What exactly does your company doing? What paid you soft for your customers?
Misty: We’re a restaurant so we serve breakfast and lunch 7 days a week, 363 days per year, we’re closed on Christmas and Thanksgiving Day. You know, guests come in, they order omelets which is what we’re known for, that breakfast and lunch. So we serve omelets, regular breakfast stuff, burritos and they come in and they sit down, they get offered fabulous beverages and then we guide them through a very large menu and help them order what they want. We meet them in their need at their moment of hunger and there’s a system to that, a process, right? We’re in business to make money not friends although the way we do it, we make both.
Owen: Awesome. And so I also want to get to know my listeners contexts from someone, what kind of business in terms of size so that they can understand. So how many employees you currently have?
Misty: We have 96 today. We had 12 when we began in 2003. In 2003, when we purchased the business, it was doing just over half a million dollars in sales and it was a single location business. And today just for the sake of discussion, it’s a multi-location, 4 locations and $4.2 million business. So we have really ramp it up and we attribute all of our success to love and systems.
Owen: So it’s like doing annual revenue of $4.2 million. Is that what you’re saying right now?
Owen: Okay. Let’s go back in the day. Everybody talks about restaurants are one of the hardest businesses to run and because of the high failure rate. I’m just curious why exactly you did and your husband decided to buy a struggling restaurant given that fact?
Misty: We just love this particular restaurant. We loved it from the moment we set foot in it a dozen years before we bought it and we would literally lay in bed at night and have this conversation that went something like this, “Sweetie, if we could do anything at all together in the world, what would it be?” And it was never, “Gosh, we’d own a cafe.” or “Gee, we’d own a little restaurant.” We always called it out specifically. We said, “We would own the Squeeze In Restaurant in Truckee, California.” So it was just something about the universe drawing us to that place and we fell in love with it.
Owen: Why did you fall in love with it? Let’s get some more contexts to why you fell in love with it.
Misty: You know it had this wonderful close loving vibe in there. It had great food, it had a fantastic atmosphere. It had this kind of family feeling in it and even as a guest you could sense, as a guest I could sense, “Gosh. There are no systems here.” You know, I could see that, I could recognize it. So I think maybe my strategic brain thought I could do something with this. I was really excited about it.
Owen: And so, when you decided to buy the business, what would you say was the lowest point on the business and describe how bad it got?
Misty: Oh, man. There were so many things. Day 5 of owning the place, the heater completely died. It was the early part of January 2004. It was 9 degrees outside. I called the landlord and I said, “Hi. It’s 9 degrees outside and the heater died today and the Fire Marshall said we had to get closed down until we get the thing fixed.” And I can’t close. I can’t afford to be closed. “What are you suggesting?” he said, “You’ve got to a triple net lease, call a contractor. And so you know, 5 days in, we had our first $5,000 cash bill that had to be paid. That was a bomber. And you know there are a lot of little bumps in the road that you end up with when you’re doing business, things like that. There’s another bomb as well but that was an early one that we had to deal with quickly.
Owen: On the 4th day actually. And you mentioned that when you started there were zero systems.
Owen: Let’s talk about that.
Misty: There were no tickets. There were tickets too to give to guest but there was no system of accountability. You know, when you go to a restaurant and they still do handwritten tickets, the tickets typically, they have little numbers on them right? No numbers… actually they had numbers on them but no one reported anything.
So in my early period of doing recon on the business, I went in there completely anonymously and I would see the host and the servers literally talks to someone about you know, “Gee, I’ll buy you a breakfast if you’ll give me a pair of snow shoes for my son.” Yes, so those kinds of things. I mean, I immediately said, “Gee, we’ve got to have accountability on the tickets. We have to have accountability for how long it takes for an order to come out of that window when it’s put into the system.” Where’s our inventory process? We don’t have an inventory process. The guy just comes in and he just decides what we need, he just delivers it. And I was like, “This is not right.”
Owen: You even mentioned that at the time, was it right that they didn’t have a way to take credit cards too?
Misty: Right, exactly. I mean, it was a cash only business. And you know, I’m not disparaging anyone who worked in the restaurant at that time but I know there are many businesses. When they’re cash only, it’s literally one for the company, one for me, right? So that was a challenge. We had credit cards up and running in the business within about 6 weeks. I mean, it took me longer than I wanted it to but it immediately changed the level of appreciation by our guests because they could then come in and sit down and not be told when their money was on the table, “We don’t take credit cards.” That’s not a great way to do business. So we had to put that system in place so we could take credit cards. Ended up, the amount of money people would spend in the restaurant right away, just like that.
Owen: So you mentioned that when you came in, you really have a style of from the bottom up and you know, walking into the different aspects of the business and start documenting. Let’s go back as to where did you start from? What were the first aspects of the business you start with the documentation and walk me through the process of how you did it?
Misty: Okay. We just very quickly took an inventory. What were the things that were happening that we could improve on? You know, there’s a question I’d like to ask every single day which is, “What could I do better or different or how could I make this better?” And this sounds crazy but it’s a great story. There was a payphone in the hall way when the guest would call in to find out, “Hey. What are your hours? Can I order something to go?” The servers would run from the floor to the hallway to answer the payphone. That was the incoming phone number and there was a little window cut out of the kitchen so that the cooks could reach through the window and grab the payphone and answer the phone. So there were little things like that. You know, trying to figure out what’s being done that could be done better.
Once we identified those things, credit cards, the telephone system. Sodas were still served in cans and guests don’t really like that. Guests by 2003 and 2004 were well accustomed to getting large servings of soda and refills for free. So those were just little things that we did and we literally made lists of what needed to be a changed, adjusted, refined and then it just started going through the process. Okay, if we’re going to get a soda machine system, what has to happen for that? And then we’re just, “One, two, three, four, write down the list,” literally making list and check list. That is physically what we did.
Owen: So you actually told me during the pre-interview, some different aspects of the business. If I can remind you, maybe I can jug your memory. Let’s talk about sales targets to inform scheduling. What system do you create around that?
Misty: If you know that this first Saturday in December for example is a Santa Christmas Breakfast at the local elementary school. You then take that information and you say, “Gosh. On the first Saturday in December, we don’t need to have 6 people out on the floor and 4 cooks in the kitchen.” And that took me a little while to figure that kind of stuff out. In other words you’re using your sales data. Week-on-week, year-on-year to say, “What’s our expected sales for this time period and how many people do we need to schedule in order to meet the guest demand?” And then you might have to add to that. In addition, what specific marketing promotions are we offering at this time that might drive revenues further? For example right now, the last 2 days of the month are typically, fairly busy days no matter what day of the year it is or what month of the year it is because we have a lot of promotions that expire on the last day of the month. So we ramp up our scheduling on the last days because we know that’s going to happen.
Owen: Another thing you mentioned was, you’re taking regular inventory. Mentioned how the guy who brings in the food or the goods or the vegetables or the meat and all that just drops stuff up. So you saw that as a problem. How did you create system on that?
Misty: We created what we call “par values” and so we looked into based on anticipated sales and revenues and guest counts, how much food would we need to have on-hand literally down to the ounce to serve let’s say 238 guests in a day? So when you do that, you really have to look at all of your systems. You have to look out what you normally sell, what are your highest volume items and how many of those do you sell? And then from that, you build your list. You kind of work it backwards. You say, “What do we normally sell? What do we expect to sell? And how much do we have on-hand?” Not how many physical roast beefs but how many slices of roast beef per ounce to make 15 sandwiches.
Owen: Awesome. So basically you look at it from the end product or the amount of end product in terms of the sales, what do you need to sell and then you’re back into, “Okay. How much inventory do you need to have in place to make that happen?”
Misty: Right. Exactly. And actually that’s such a great point to raise, Owen because it really fits with my entire philosophy of doing business and I always ask and answer this question, “What does success look like?” And that’s how I developed systems. I start by saying, “What does success look like?” To me, success looks like happy guests who got exactly what they wanted without any of my associates or myself having to say, “Oh. I’m sorry. We ran out of that.” First of all, a restaurant should never run out of anything, right? A restaurant should sell out something. But needed our business, never to sell out or run out because we systematize and plan for what would success look like and that’s a really important question to ask everyday in the business in person’s mind.
Owen: What issues did you also have with schedule because he said, literally people just only knew when they had to come to work. So how did you solve that problem?
Misty: It was crazy. They just knew when to work, right? They would just show up. I didn’t know. There was no posted schedule, there was nothing. It was like, “Where’s Pam?” “She doesn’t work today.” “Who does work today?” Pamela always works today or Peggy always works today. They just knew. The cooks just knew. So I mean, we put a schedule on the wall and we started talking about not just putting schedules on the walls but what time would you start and what time would you finish. You know, because in any business, in the restaurant business especially but in any business, minutes are money and you cannot afford to say, “This person’s shift starts at 8:00.” But it’s okay if they clock in at 7:44 a.m. No it’s not okay if they clock in 16 minutes early. And if their shift ends at 1:00, it is not okay if they’re clocking out at 1:32. You’ve just added 45 minutes to your day and minutes are money. You’ve got to watch it like a hawk.
Owen: So how did you solve the problem though? I mean, I understand the problems with minutes are money but how did you solve it? What system do you create to solve that problem?
Misty: You know it sounds crazy but we’ve put in a time clock. You know, and then we monitored it. So you can’t just put in the time clock and say, “System is there. Now it’s all solved.” You have to actually monitor it. You then have to hold people accountable and I think in most cases that are the big ticket issue that most business people have. They’re not necessarily good at holding other people or themselves accountable. So if you build a system, be ready to hold yourself accountable to it and hold all of your associates accountable as well. That was the next big step in the process.
Owen: So another thing you mentioned was that, I think you broken down the different aspects of your business. It’s at the leadership, operations, financials and I guess that’s accounting, and the products and services and of course marketing. And what else we’re trying to do during this call is to see how you know you create systems for each of the different aspects of the business. So let’s start with leadership for instance. What issues do we have with leadership initially and how do you create systems for it?
Misty: You know, one of the things our company really scaled and grew quickly. So just to go back in time a little bit to set this up. We bought the company in 2003, took over on January 1, 2004, opened our second location on February 1st, 2008 and then we’ve opened 2 locations each year, well, 2011 our 3rd location and just last year, 2012 our fourth location, our next location next year in San Diego. So we moved quickly and as we did what we realized was training would be crucial. I could no longer serve every guest. My husband could no longer serve every guest. Our daughter and son-in-law who are now our business partners could no longer serve every guest.
So we’ve realized the value and the importance of training systems and we created multi-media blended training systems that could teach people from videos, manuals, check lists, quizzes, live in-person training, auditions and to building to the leadership component. We realized and we had this diagram where we talked about, we’re elevating which we have to elevate the managers which then they had to elevate their associates and staff people and that each elevation we had required reading for example.
Owen: What does that mean? Elevation from your standpoint because the listeners don’t understand what you meant.
Misty: I appreciate that. It means going from you know, just sort of being an automaton showing up and just, “I follow the steps.” to be someone who was creative and ingenuity and creative ability and their approach to their work. So we wanted them to feel like they were, and to know that they were decision-makers and that they could rely on their own creativity, resources and ingenuity to make decisions on the fly. So let’s see, you walked up through a table and I’ve seen this happen. It’s an unfortunate thing but it’s a restaurant. If it happens you walk up to the table, you’re delivering the salad and, “Oops. The whole thing slides off on to the guest lap.” That happens sometimes. Does the manager say, “I don’t know what to do.” No. The manager says, “I’m awfully sorry that happened to you. I apologize. I will take care of your entire lunch and your dry cleaning bill and I’m going to take care of your guest lunch today too. I’m so sorry.” The manager has that autonomy because we’ve trained them. We’ve elevated them to the place of making decision on their own.
Owen: Is it kind of like, you give them a framework or guideline of what to do but then leave the actual implementation of how to do it up to them. Is that the kind of situation with the managers?
Misty: Yes, in some cases. There are some aspects that we say, “Absolutely, positively, this is how you’re going to do it.” And then in other places, we say, “Use your resources. Use your mind. Think like a guest.” And we actually have gone so far as to develop you know things do go right in the restaurant business, right? So we’ve even gone so far as to develop something called the Latte Method.
Owen: Latte. Starbucks?
Misty: Kind of, kind of the Starbucks. So the Latte Method is “listen”. Listen to the guest first. “Acknolwedgize” or apologize and acknowledge. Acknowledge what happened and apologize, acknowledgize. “Thank the guest for bringing it to your attention.” We know that if we don’t hear about these things, we can’t improve. Listen, acknowledgize, thank, “take action,” right in there on the spot, take action and then finally “evolve”. Take that opportunity to retrain, regroup, rethink and let’s make sure that doesn’t happen again in the future.
Owen: So every time there’s an issue, it’s an opportunity to go back to the system and say, “Okay. What caused that issue and how can we put something, a measure or step into the system so it doesn’t happen again.”
Misty: Exactly. And that I think is the mark of a truly good system. It’s one that always has this feedback loop coming right back to the beginning. How can we make it better? I often say if we’re not refining or declining. And so, there are times when my associates are you know, there are times when they roll eyes. They are like, “We’re not getting more instruction on that, are we?” And I’m like, “Yes. We are getting more instruction on that.” Because if we’re not refining or declining, and I want to be in business for decades to come and not for a few more weeks or months—years and years and years and years.
Owen: And so you mentioned you’ve shown me how you created some systems on the leadership side and on the managing side. But on the operation side, give the listeners as to what systems you put in place for the operations of your restaurant?
Misty: This kind of stuff always sounds so basic and so easy, right? But what did mom always teach all of us? I think everybody has heard the old expression, “A place for everything and everything in its place.” If you don’t have it set up that way in the restaurant, then in the middle of the mayhem, when the cooking line and the kitchen runs out of something and someone has to run back into the Walk-In to grab it but they can’t find it. You’ve slowed up the process and you damaged the guest’s experience.
So, it’s everything as simple as a place for everything and everything in its place. It’s as simple as the concept that, if it’s not on the list, it doesn’t exist. So we’ve made list, we’ve made check list, we put up clip boards and each of our kitchen, there are six clipboards. There’s a schedule clip board, there’s an inventory clipboard, there’s a catering and special events clipboard, there’s a clipboard for preventive maintenance, there is two other clipboards that are slipping my mind up the top of my head. But each of them has a specific purpose to help keep things front and centered, top of mind awareness so that everything can run smoothly.
You know, it all comes down in the restaurant to two things—the guest having a fabulous experience and the associate having a fabulous experience. In my opinion and in my restaurants, we put the guest and the associate at the center of everything we do. We know that if the associate is having a sucky experience, the guest is going to have a sucky experience and we don’t want that. People want to do a good job when they come to work and we have found that adequate training more than adequate training, above and beyond excellent training is a way to keep people happy and engaged at work.
Owen: So that the listeners have something concrete to back what you just mentioned about the systems you created for the operation side, give us a concrete example to make it clear in the minds of the listeners.
Misty: Well you know you go to a restaurant. Let’s say you go to McDonald’s. You know, it’s a great example. You got to McDonald’s and you order a Big Mac. It looks exactly like the Big Mac you had in Atlanta or Boston or Los Angeles or Portland, Oregon. You know, you go to any of those places, that Big Mac, that Happy Meal, the entire product is going to look exactly the same. And in the restaurant, in our little restaurant, we strive to do the same thing.
So systematizing meant, you couldn’t just have a recipe that said, “A handful of this and a handful of that.” We had to specify out the recipes and you’ve got to think about it. You know, “One person’s handful is this big and another person’s handful is this big.” It’s not consistent. So literally, we went to the point of actually putting little cups in every single thing, right? Measuring, portioning, portion controlling and that helped not only for the consistency of presentation and the guest experience, it also helps control cost. When you know you want to serve 2 ounces of cheese and your recipe cost and your menu cost is based on that, then you serve 2 ounces of cheese, not 2.5, not 5 ounces of cheese.
Owen: I like how you made that concrete. And then let’s talk about systems that you put in place in the finances. I guess it more has to do with accounting, the accounting department.
Owen: Share with us what kind of a system you put in place on that.
Misty: You know, when we first bought the company you know it had no credit cards and no system for monitoring guest checks and it was an incredibly expensive proposition to put in a Point of Sale System throughout the restaurant. But it was crucial that we did so. And once we did, we were able to take product information, inventory information, sales data, labor data, all of that and generate very sophisticated and comprehensive financial reports to help us better in scheduling in the menu mix and the product mix.
Here’s a great concrete example. We’ve been able to look out our product listing and find out that an omelet that we thought was very popular sells less than 1% of the time. Now if you ask our staff, “How often do you think the Double-barrel Shoot Them Down Cowgirl Char Omelet… that is actually the name of it.
Owen: Wow, a mouthful.
Misty: [23:16]. And the staff would say, “Oh. They guest love that. I sell tons of those.” But when we did the math, we found out they were less than 1% of our sales all together. I apologize to that.
Owen: That’s okay. We’re live at the show.
Misty: Thank you. And so we pulled it off the menu. You know, it helped us be able to hone our products, our offerings by knowing what wasn’t selling and by knowing what was selling we were able to better highlight those items on our menu as well.
Owen: So you put a Point of Sales System where everything goes into it and you basically can come back on the back and then look at the numbers and then just got-feeling you have literally the numbers to match everything. What point of sales system is that? Is that in-house? If someone who is listening that maybe has a restaurant or something.
Misty: Sure. We use a product called Win-EZ and Win-EZ is available nationwide and it’s completely customizable to any restaurant environment and our menu is huge and complex. So we were really thrilled to find something that could scale to the size that we needed. It’s a great program.
Owen: Awesome. And let me just beat the whole thing off, the financial and the accounting. So give another example in the Accounting Department what you did to systematize besides just the point of sale part.
Misty: Well you know I wish we could have done this earlier but we didn’t. We actually hired and outsourced CFO, a Chief Financial Officer to come in and what I would say the process they did was to institutionalize our books. I’m embarrassed to tell you that when we took over the company, I personally took on doing the books. Now I’m pretty talented, I’m pretty smart but I’m not that smart, you know. And every time QuickBooks would say, “Do you want to create an account for this?” I said, “That sounds good, yes.” And then it would say, “Do you want to create account for this?” Sure that sounds great. So it didn’t take too long before our books were a little bit disorganized, always honest but a little disorganized.
So we have to go back and clean them up and as we scaled and group from 1 to 2 to 3 to 4 and now coming up on 5 locations, we really needed sophistication so that we could look at and understand a balance sheet, a statement of cash flows, a PNL, you know the profit in law statement. I think most small businesses that failed because they don’t have a rock solid understanding of financials and how they are important to their business, I believe as I told you in the pre-interview that there are 5 crucial areas that what I call the 5 Irrefutable Laws of small business success and they are leadership operations, financials, those are the two firm foundations, operations and financials and then products and services and then marketing. So if you’re not standing on a firm foundation of operations and financials, you’re destined for struggle.
Owen: And we didn’t even talked about the systems because you mentioned leaderships, operations, financials, products, service and marketing. We didn’t even talked about the systems you created for products and services and also marketing. So let’s talk about those right now starting with products and services.
Misty: Here’s a great example of systematizing and the idea that minutes are money, right? Or not minutes are money but product is money. So restaurant owners particularly have a really great tool and it’s called their bus tray and their trash can. And going and looking at what’s in the bus tray, what the guest are getting rid of at the end of the meal and looking in the trash can is incredibly instructional. When I noticed how much butter was being thrown away, butter comes in a little 1 ounce thing, right? It’s a little 1 ounce soup plain cup that gets put on the side of the pancakes and the buttercup was towering over with butter and the guest would scoop up the top section of it and put it on the pancakes and then the whole rest of buttercup, a whole ounce of butter gets thrown away.
Well, butter at my cost runs 13 cents an ounce, times four restaurants, times 23 people a day throwing it away ends up being thousands of dollars. So just by looking at what your waste is, you can really trim up your operations. So on products and services, that’s one way. Another thing is, “How long does it take a guest to move through the restaurant experience?” Literally from the moment they walk in depending if it’s very, very busy, it could be an hour, an hour and 15 minutes wait for breakfast.
Now that hurts my feelings that somebody is going to wait an hour and 15 minutes for breakfast because they haven’t eaten yet today, they’re hungry. They’re not in the best mood and they’re not usually drinking cocktails at that time of the day. It’s a mellow out there mood a little bit. So when they sit down at the table, I want to make sure that someone is at that table within 60 seconds. How would I know that if I didn’t have a system to track it, to monitor it, to hold my associates accountable? 60 seconds, I want someone at that table saying, “Good afternoon. I’m so glad you’re here. Thank you for being at the Squeeze In, may I bring you a Bloody Mary? Would you like to start with a Mimosa today or an orange juice?” And then I want the moment that those menus are down no longer than 30 seconds. You know, how long have you seen people sitting you know, they’re staring at their menus and then boom, the menu goes down and then this is what they do.
Owen: Yeah. I would just live with a red lobster. I love red lobster but the weight sometimes is just ridiculous.
Misty: All right. And so if there’s a system in place to assure that that guest is going to get addressed and welcomed and get their beverages in a certain amount of time and get that food into their table. So get a ticket in a certain amount of time, get it into the kitchen in a certain amount of time. Within 12 minutes, that food is back into their table depending on which day of the week it is. Mother’s Day, all bets are off. You know, you’re going to be lucky if we can get it out to 20 minutes on Mother’s Day. And that’s the other part of it. You know, in systematizing, you would set up the structure and the boundaries and you want to give some flexibility as well. That’s where the leadership comes in. Can we teach leadership not only to our managers, general managers, kitchen managers and assistant managers, everyone in our organization is encouraged, invited and handheld through a leadership development process. Self-development, self-leadership, the hardest type of leadership there is.
Owen: What I love about what you’re sharing so far is that we as business owners have to look at our business from the standpoint of “Okay we have customers who we want to deliver results for them but what is it going to take for us to get that results through them that’s always going to keep them, “Wow.” Okay, that are the angle and now let’s break it down. Okay, there are departments that handle different things. Okay, let’s break it down a little bit with other people inside the department. What are they specifically going to do? It’s like a conveyor belt and your job is to fill in the missing pieces and systematizing it and filling it out and then also giving your employees the time and you say, “Okay. I’ve created a ground work or the framework for you guys. This is what you should follow. I want you guys to take it to the next level and I’m empowering you to improve this thing as we go.” That’s what I’m kind of getting from this.
Misty: Yes. I love the conveyor belt idea because it really is true if you think about it, the guest kind of sits on a conveyor belt of sort. I’m taking that language and I’m going to use that in the future. They sort of sit in a conveyor belt, right, they come in to the restaurant and they’re moving through this process. They get greeted, seated, beverage, bus, take payment, clean, start over. I mean, we literally have this mantra for our host for example that is literally that, greet, sit, beverage, bus, take payment, clean, start over. It’s a system. It tells them what to do and then I’m known to walk in to a restaurant which I don’t work in any of them anymore and sometimes when I walk in, it’s the greatest thing in the world.
Someone will say, “Hi. Welcome to the Squeeze In. Are you here for lunch?” And I’m like, “This is beautiful. Thank you. I’m one of the owners.” You know, and I felt… That happens, yeah. But you know, I’m known to walk into them and say, “Thank you so much for that.” “Great. Welcome. I appreciate it.” Do you know the host mantra and they’ll tumble for second, “Yeah, it’s greet, sit, beverage, bus, take payment, clean, start over.” Yes. That’s it. And I know if they’ve gone so far. It’s 7 words, it’s 7 steps, it’s not that hard. If I know that they have taken the step to learn all of that then I know they’re committed to my company and my guest moving them through the process.
Now, why is that important, the conveyor belt idea? Because on Fridays, Saturdays, Sundays and Mondays, the restaurants are extremely busy. Tuesday, Wednesday, Thursday, come in, sit down, stay as long as you like, whip out your laptop, hang on to the free Wi-Fi, it’s all good. Don’t try that on Saturday or Sunday. You know, on Saturday or Sunday, we’re moving through real quick because there’s a 45-minute wait at the door. So we’re known to even have a system to go up to the table and if they’ve been camping at the table for a long time, their food is done, their beverages are done, they’ve been sitting and chatting and gabbing it up, they have started the restroom rotation, right? Seven people at the table, this one gets up and go as well, everybody waits and then gets up while everybody waits. That’s so rude to do that especially when there are 35 people waiting to come in. So we’ve got a system. You come up to the table, you’re quite, you get down low right to the table level and you say, “Gee. Guys, I’m awfully sorry to do this.” And you don’t even have to say the rest. They immediately say, “Oh, gosh. There is waiting. I’m sorry.” Bam, they’re out, just like that. We could do that because the conveyor belt is saying there’s work to be done and there’s money to be made and there’s guest to be served, let’s go.
Owen: And there’s a marketing part of the business and so let’s talk about how you created systems for that too because we’ve not talked about that yet.
Misty: One of the best things we ever did was we created a Birthday Club. We heard about a great program, we created a Birthday Club and it was the development of the Birthday Club that let us realize that a huge portion of our business was coming from the market that was only 30 miles away. So this was when we were in just one location, merely Tahoe, California. We saw that it was over 60% of the people were coming from Reno.
Now conceptually, we had thought they were coming from the Sacramento area but when we saw the data, that was systematized right and we realized they were coming from Reno, we realized that would be the place most likely suited for our growth. So, the Birthday Club helped us do that. We then went ahead and signed on for a full-fledged, completely customized loyalty program, points based loyalty program. We call it the Eggy Head Breakfast Club. There is plenty of information about it on my website. But the Eggy Head Breakfast Club gives us an opportunity to capture data from people. I have 65,852 individuals in my database.
Now that seems outrageous, right? It’s a mom and pop restaurant, it’s 4 locations, 65,852 people are in there. They have all opted in to hear from us. And it’s completely automated system and I’m telling you we do newsletters, we do e-mails, we do points administration, I personally write a mail, handwritten thank you cards because the database allows me to segment out my guest. I can look at it and say, “Gee. These people have been in every weekend, the last 8 weekends in a row. I’m going to send them a personal thank you card. It blows their mind every time and I love to do it.
Owen: I’ll kind of stop you on that. So you just basically said you have a database I guess a CRM (Customer Relationship Management).
Owen: You have all the information of your guest but then you said something about, when they come in, you’ll also know when they come and so your tool is also tracking each time they come and is that the case?
Misty: Right. Absolutely. It’s tracking when they come in, it’s tracking how much they spend and we can combine the information from the loyalty program to the point of sale system to literally drill down and find out what they ate. So yeah, I know, right?
Owen: What tool is this?
Misty: It’s called Royalty Rewards. There’s full information about it on my website.
Owen: And so basically, it’s the Royalty Rewards integrates with the point of sale system, right? And what else does it integrate with? So my audience understands how this is working.
Misty: Your audience would be blown away to use it.
Owen: I’m blown away.
Misty: Yeah. It is incredibly sophisticated and I’ve been using it now for almost 6 years and I’m still blown away by it. It’s just incredibly robust and it’s a valuable tool. It helps me track every single dollar and I don’t spend money on marketing. I invest money in marketing.
Owen: I love the fact you said that.
Misty: Yeah. I think marketing is one of the most critical components of business success which is why I say it’s one of the 5 irrefutable laws of small business success, right? It’s leadership, operations, financials, products and services and marketing. You can’t leave that out. It’s just an amazing program. It’s too complex I think to get into all the gory details but if I suppose to say this, our guest loves it. They swipe their cards on every visit. They get birthday presents, newsletters, they get a bottle of champagne for their anniversary and when it comes time for us to do special promotions or special offers, it’s those people that get hooked up that never goes in the newspaper. We don’t even do any news paper advertising. We do no other marketing except our loyalty program.
Owen: And I’m curious. What would you say is the single, most effective marketing or you know, tactic that you are using that works the best? I’m just curious so as my audience can…
Misty: Yeah, loyalty marketing without a doubt. So opt-in marketing is huge. And then you know there’s all the ancillary components to marketing and that you have to do social media. You have to find people where they are and they’re on their phones, they’re on their laptops, people use desktops anywhere, they’re on their tablets. And they’re on Facebook, they’re on Instagram, YouTube, Pinterest, they’re on Twitter. That’s where you have to find people and meet with them and interact with them. You have to pay attention to where they are and what they’re doing and you have to be integrated in their daily conversations because that’s the difference now.
Marketing used to be big business talking to the masses, right? They would take their big message, put it down into one point and then distribute it out to everybody. But now business has to talk to you, you personally. And we’re all in the business now everyday documenting our lives, right? “Here’s my doggy taking a nap. Here’s my little girl eating her breakfast. Here’s my grandchild doing whatever.” We all do that and then we also say, “Here’s the great food I had at the Squeeze In” and then “Here’s the terrible burger I had at… name the place.”So as marketers, we have to pay attention on what people are saying in the market place and respond in a timely matter.
Owen: And I like the fact that you know, marketing from your standpoint also is you are literally engineering how the marketing should be. Also it’s still a conveyor belt, you know, coming to your system. What are you going to do to get them from one point in the funnel until they literally come in and buy something and often come back again. So I like the fact that you’re sticking at systematic approach marketing. There’s one thing you also mentioned that to me, I never know about this but it’s something Prime Cost Management. I guess this is a restaurant related term. What is that?
Misty: Right. Prime Cost is your cost of goods sold plus your labor with burden. So it’s your cost of good, total all of your meats, cheeses, dairy products, vegetables, all of that plus your cost of labor, not just the raw cost but the taxes, the disability insurance, the Medicare. So it’s your labor with burden plus cost of goods sold in a ratio against your gross sales. So it’s a percentage of your gross sales.
So in a healthy restaurant, that Prime Cost range… this is shocking. It can range anywhere from 50% of your gross sales to 75% which to me, 75% seems crazy. We ran closer to the 55%, 54% margin on Prime Cost. And some restaurants can go even lower than that. What starts to make a difference are, you might have higher labor cost and you might have high, extremely high volume. So let’s say you’ve got very high Prime Cost. Let’s say your Prime Cost is running 70% but you’re doing $5,000,000 a year, you’re just running a super high volume, you can deal with that kind of an adjustment plus restaurants need to run in the 55% to 65% at the highest. 55% is a real sweet spot.
Owen: You know what I love about this number is like, you know… Just to the listener, listen to this. You might not be in the restaurant business but what essentially this number does is gives you a number that kind of like tells you the heartbeat of your business, the pulse if you’re doing…
Owen: That’s right, right?
Misty: Yeah. I totally agree with you. In fact you should know, I mean as a part of our systems, I didn’t talk about our financial systems in this level of detail but part of our daily reporting is not just the daily sales report but the prime cost is calculated every single day. In fact, our managers are monitoring Prime Cost on an all day basis. So, they’ve got some sense at any point in the day what their cost of Goods Sold is and they’re always measuring their labor all day long against their sales. So in the restaurant business, it’s very common to cut the floor. So if it’s just after the lunch rush and it was a little slower than you might have anticipated, little slower than you’re scheduled for, you’re going to cut the floor, you send someone home or call someone in if you need to or look at it and say, “Here’s an opportunity for our Prime Cost to be extra low if you can still give the great level of service that the guest expect and that we desire to give.
Owen: Awesome. And so, we’ve been talking about how you create a system that their always has to be friction as well as challenges with it. So when you started the process of creating systems, what are the challenges that you experience initially. I’m just curious.
Misty: Well, they were not only bumps, they were actual bruises, you know. There were a few people that were not real happy about the system on systematizing that we did. There were sort of, “Why do we need to put a schedule on the wall?” Everybody knows when they’re supposed to work. You know, why do we need to take inventory? You can walk back there and see if we’ve got onions or not. They didn’t really realize it. And I think that you know change is always difficult, right? Not always, in most cases I think people fear change. It’s different, it’s kind of scary.
So, for us our goal was to say, “Here’s what we’re doing and here’s why we are doing it and here is how it benefits you.” So we made our business to show our associates how it helped them to be systematized. We’ll go back to the idea of the butter, right? And seeing how much butter was in the bus tray. Once we could show our associates, “Look. If we saved $2,300 this year on butter that would normally be thrown away, we could give you a holiday bonus.” I love this butters savings, right?
Owen: I like that. So basically, you. It’s not just doing it because I’m telling you to do it. Do it because it benefits you and one way or the other. So you always have to spin it so they benefit them I guess.
Misty: Exactly.We ask our associates to be our partners in performance and our partners in building a stronger company to the benefit of everyone.
Owen: So let’s dive into you know, because you’ve been telling me how your employees know exactly what to do. So let’s dive into that. One of the things you said, you’ve started with the operations manual that was the first thing you built. What was that?
Misty: It started out as just check list literally. I mean, as I said I would go in and work all day in the restaurant and then go home at the end of the day and say, now the real work begins. You know, how do you make a pot of coffee? I know that sounds so crazy, right? How do you make a pot of coffee while you take a scoop and you drop it and then you put in the water? How much coffee is in the scoop? How much water goes in? At what point do you take the coffee that’s in this thing and throw it away? Do you have this much coffee to throw away or this much coffee to throw away? So, we literally went through them. We tried to say, “If there’s a possibility of a question, let’s answer it.” Because I had more fun of the house experience then back at the house, I started in the front of the house. How to do the drawer? How to clean the restaurant? How to do all of the side work where the check lists were? How many things I wanted to have in backup on each?
So if we had 12 tables in the restaurant, we had 12 sets of salt and pepper shakers, how many extra salt and pepper shakers that I want ready to go right now in case something fell or broke. So, really nailing it down. How many bottles of orange juice do I want in the fridge at the beginning of the shift on the front of the house and how many do I need in the back of the house on a Friday versus a Saturday versus a Tuesday? So, we literally just started chunking down the process in the front of the house and then we built the back of the house and then we built the administrative and the financial and the training. The training is my pride and joy. I love the training aspect.
Owen: And so, after the operations manual that you said, the next thing was the individual positions training. I’m just curious as to what’s the difference now with this one?
Misty: Job descriptions. You know, what’s the difference between a host and a server? What’s the difference between a line cook and a prep cook, a dishwasher and a prep cook? And can they be crossed trained and if we were going to do that, how would we do it? What did that looked like? Was there a pay differential? Was there a shift differential? And we literally went through the process. We created job descriptions for every single position in the restaurant and we put in minimums and we made them smart right there. They’re strategic, they’re measurable, they’re accountable, they’re realistic, they’re timely and they’re very specific individual and they have accountability built right in. So it doesn’t say… For example, it doesn’t say, “Seat the guest.” It says, “Seat the guest within 2 minutes of their arrival unless they’re on the wait list.” It doesn’t say, “Offer beverages.” It says, “Offer upgraded beverages, offer Mimosas or Bloody Marys.”
We don’t offer coffee in our restaurant because it’s a breakfast place. You’re going to buy your coffee whether I offer it or not. I want to offer you a $6.49 Bloody Mary or a $4.99 Mimosa and how many people said, “Oh, I’d love a Mimosa and a cup of coffee,” right? So, we very specifically told them exactly what to do and made it accountable and so we could come back later and say, “Justina, you sat those guests. It was 5 minutes and you didn’t offer them a Bloody Mary or Mimosa. How can I help you do better next time? What do you need? Did you not remember that part from your training? How can I serve you better?”
Owen: And also you mentioned something about custom training videos as well as checklist and clipboards. I’m wondering, you said you had this whole multi-media thing. What were you using? Because we want to understand the kind of engine you use to build all these procedures and all that. What were you using exactly?
Misty: I don’t want any of your listeners to think it was difficult. So here are the things that we did—checklist and clipboards, right? Those are so easy. You could literally write one by hand and post it. It’s better looking if you put it on a computer document and then you have it for future reference. This is another great tool.
You take a video with this and post it on YouTube and send it to all of your associates. In 3 minutes, you can do a personal custom video in 1 minute. You can all the little tic-tic-tic-tic-tics to get it to YouTube and in 3 minutes you can have an e-mail out saying, “Hey. There’s some new information I need you to look at.” And one of the things that we use and I really love this, we just created this a couple of years ago is a private closed Facebook page. We call it The Tribe.
Misty: And The Tribe is really a place for, I don’t think it’s as much for training as it is for culture. And we think culture is really important in our company. It’s a place for people who can let their hair down, they can ask questions, they can feel free to interact with themselves, with each other, with the owners, the managers in a way that it’s just easy and they really love it. They’re very active with The Tribe.
Owen: And one of the things you also mentioned is how you know, creating all these systems and all that is good because it allows them to follow instruction. But if you don’t measure it, then how can you improve something you don’t measure? But you went to different stand of it.
Owen: Explain what you do with measuring and tracking?
Misty: You know, it’s Drucker 101, right. Anything measured improves. But we’d like to say anything measured that reported improves even faster. So, here’s a great example. If you’ve got 3 servers working in the same restaurant and you’ve got a sophisticated Point of Sale System or you’re doing it by hand, it doesn’t matter. You can at the end of the day and we do, we determine server A, B and C. Server A served guests and all their guest averages, the guest average for today might be $14.32. Server B might be $11.32. And Server C might be $12 even.
So what’s the difference? Why did one server do $3 more per guest than the other? In my mind I’m thinking the person who did $3 less lost a lot of money that day. So a couple of issues come up. Number one, how can I train that person better? And number two, how can I use the numbers to make the determination? What we figured out was a lot of times it came down to the beverages. How many times, Owen, have you gone to a restaurant where you sit down and the server comes in and says, “Hi. How you’re doing? Great to see you, is water okay for you today?” “Huh? Are you kidding? No, it isn’t okay. Not in my restaurant. And that costs me money to serve you, you know?”
And it’s not that I’m greedy, I’m not a money grabber. I love my guests. I love my associates. I love what I do for a living but I can’t do it. I can’t serve my communities. I can’t give generously. I can’t be in active part of community involvement if I lose money and I love to give money. In fact there’s a number here on the front of my computer. This is one of my all time goals in life and someday in the future, I’d love to come back and tell you when I reach this goal. The number says $2,739.72.
Owen: What is that?
Misty: That’s a million dollars divided by everyday of the year. In my life, I would love to be able to give away a million dollars a year. Give away, not pay, give away.
Misty: And I can’t do that if my people are just throwing butter away or serving lemon with water and not offering Mimosas, you know.
Owen: I think one of the things you mentioned and said you do, you track sales so that the audience know what you share with us. You track sales, you track guest satisfactions through the surveys that you give to guests. And also take your time and basically how fast after we’ve got a ticket and goes seated and all that, right? Is that what you’re tracking on there?
Owen: And also cost analysis. So basically, the point with that is creating systems is great but you have to track it, quite of means to track everything as you go.
Owen: The audience can definitely tell that you know, you’re not literally in the business working in at all the time. So I mean each week, do you have an idea in terms of like an average of how long you’re walking to your business now?
Misty: I don’t work in the restaurant at all anymore.
Misty: And that was really intentional. I mean, as much as I love my restaurants, I’m not really good at working in the restaurant. I’m not real patient. I’m very kind. I’m very compassionate. I love my desk and I love my associates but I don’t like when things go all right. And I’m not real good at that. What I’m really good at doing is planning, strategy, systems development, training. I’m really good at seeing the big picture, living at the 30,000 foot view and doing what I call sorties. You know, “Whack, we need to do that, whack, we need to do this.” And I will receive that.
So, I play to my strength and my strength is really in systems development. That is not to say that there are people working in their own businesses that can’t do systems development. Anyone can do it. And here’s the number one thing to do. Get one of these and one of these and start writing. That’s it, start writing. And then get one of these, turn it into a manual, turn it into a book, make it into usable information that you can share, building accountability into it so that you can say to Server A, Server B and Server C, “I’m really glad that you took such great care of our guests. Thank you, Server A. Server B, you missed the opportunity to provide beverages to 31 of your guests today. Please do better on that. Server C, thank you so much you did a good job. Here’s 3 ways you can improve based on our analysis of your sales today.”
So have your numbers, get them in your head, get them on paper, have agreement with everyone that they’re going to know their number and you’re going to hold them accountable and then hold your own self accountable and actually follow up. Remember, anything measured improves, anything measured and reported improves even faster. How is that?
Owen: Awesome. And so what I get from that is basically that now, you spend most of your time really working on the business as opposed to in the business. Basically you’re trying to identify places that are in any bottom or whatever that needs to be fixed because it’s a system. That’s what you are doing right now, it’s building out the system more and more.
Misty: Yeah. That’s true. And you know, ultimately for us, the very exciting thing is, if you think about what our franchises, they’re just plugged and play systems, right? So, what we’ve done is we built ourselves the level of sophistication in our systems again in all those five areas, leadership, operations, financials, product services and marketing that were now in discussion. We’re not even in discussion, we’re moving down the path way, retained a national firm, we’ll be offering franchises by the end of this year because we’re so well systematized that’s plugged and play, yeah. I’m really excited about it.
Owen: I just have to lead the listener know what you just said. Basically you’re going to the work of creating systems for your entire business. Now you had a point where literally you can hand over the business to someone else which is what is happening and surrounded by someone. But now we’re talking about franchising, we’re talking about McDonald’s stuff up, the big burger stuff.
Misty: Right? Exactly. So you know what’s really cool is when I was showing you earlier that you know we had this hand thing, right? We’re like we’re going to elevate, we’re going to elevate and we’re going to elevate. We elevated so that I was no longer working in the business. Boom, elevate, trained our daughter and son-in-law to run the business and then we elevated one more where we moved completely out of the business and our daughter and son-in-law then run all aspects of the business and they elevated their managers and top their managers. And now, the whole system is elevating so that we will teach owners how to own a company. So yeah, it’s a great thing. It’s the true entrepreneurial dream I think. It’s very exciting. We’re so excited and thrilled and happy to be able to do it.
Owen: Systematization, you basically figured out your replacement, figured out and build a business that doesn’t need you. I love that. Go ahead.
Misty: I was just going to say, you know, I’d love the climb the ladder but I didn’t be a ladder climber, I was a ladder builder. My goal was to build the ladder and make it so that the people behind me could also climb it and that’s really now where we’re headed to the top of that ladder.
Owen: Awesome. My listeners always want to hear from guest is, “If you’re always away from your business, what’s the longest time you’ve been away from your business?”
Misty: I don’t even live in the same state as any of my businesses anymore. I live in Oregon and the businesses are in California and in Nevada. Sometimes I’m not there for 3 or 4 months at a time. Here’s a great example. Last Sunday was August 18th. It was the 1 year anniversary of our 4th restaurant. I went in there for my 6th time since the restaurant has been opened. So in a whole year, I’ve been in that restaurant 6 times.
Owen: That’s the Holy Grail right there.
Misty: That is the Holy Grail my friend and that’s the testament to systems.
Owen: Wow. And so you know, we’ve come in to the end of the interview and just for the listener listens so far, what’s that one thing that you want to leave with them to inspire them to move forward with systematizing their businesses? What’s the first step they might have to take? Go ahead.
Misty: This is the part that gives me Goosebumps. Fall in love with your business. You know, you’re in business because you loved it at some point. And it gets to be a grind, it gets exhausting, at some point you may have had ideas of freedom and financial freedom and the ability to go do what you wanted to do and then it got to be a grind and it became a job. Fall back in love with your business, see it with new eyes, treat it like a lover, be gentle and kind and warm and welcoming to it and find ways to serve your business like you would on your relationship and develop the systems to help it grow and that’s the secret to success.
Owen: That’s awesome. And so my listeners are always asking me, there was always that’s been something that must have influenced you to come to this point where you are all about systems. What books could have influenced you and why? What books you want to recommend to the listeners to check out?
Misty: Three things right off the bat. Think and Grow Rich, the all time, ultimate classic by Napoleon Hill. The E-Myth Revisited by Michael Gerber and one that you might not think that is in this category but the Go Giver by Bob Burg and John David Mann. All three are fabulous books and all really helped sharpen my thinking. And again, you know, I’m all about leadership first and if what’s on your night stand. Is it helping your business? Then it’s hurting it. You know, take the time to read those books and the Go Giver among the top of them. It was a great book. It still lives.
Owen: I’m actually kind of surprised that you mentioned the Go Giver because I listen to a lot of books myself. Why is that on the list?
Misty: I just love the approach that it’s about being giving. It’s a powerful business idea, right? That’s the whole subtitle of the book and the book really is telling you to look at your business to go make money. You’re supposed to make a profit. But you’re supposed to do it in a loving and giving way and you’re supposed to do it by helping others and reaching out and adding value. And I think that’s the part.
You know, when we started this conversation I said there are two people at the center of everything we do. It’s our guests and our associates. We know it’s important to add value to our associates. They want to do a good job at work and the Go Giver strategies, the ideas and the 5 stratosphere and laws of success tell you, help other people. You’re going to get what you want to. So it sounds like a great way to go.
Owen: I’m glad to ask that question because you clarified it and [58:42] actually check on that book. And so, what’s the best way for the listener to connect with you and thank you for doing this interview so far.
Misty: They can connect with me on my website which is www.MistyYoung.com. They could e-mail me straight, straight up at misty@SqueezeIn.com. And they could just search me. I’m all over the web. They won’t have any difficulty finding me and I’d love to share my ideas with them. I sort of like to think of myself as an open source person. I love to give, I love to share, I love to see other business people being successful. I think there’s plenty of business to go around. So competitors even, welcome. Come on, bring it.
Owen: And also, you forgot to mention your book.
Misty: Oh, my gosh. How can I forget that I wrote this book? From Rags to Restaurants: The Secret Recipe. It’s been a fabulous journey to write a book. You know, I always knew I had a book in me and a couple of months ago, my daughter or a year and a half ago, my daughter wrote a little tribute to me and then she said, “My mom has a true from rags to restaurant story.” It is really true, Owen, that 26 years ago, right now, I was on food stamps. So I have gone from food stamps to franchising and this book From Rags to Restaurants tells that whole story but it’s an irrefutable business book with a back story. It’s not a personal sub story with maybe a couple of business tips. It’s a great business book. It really talks about the 5 irrefutable laws of restaurant success which are attributable to any small business.
Owen: That’s awesome. And so is there any question that during this interview and you know what topics about you wished I did asked you. What would that question have been?
Misty: Has it been worth it? Do we have to ask that question? I think the question I’d like to answer would be, “What it’s like to work in a family business?” And I would say to that, yes there are bumps and bruises in a family business but if you keep centered on love, whether or not it’s a family business or a partnership business or you’re in it as a solopreneur, stay focused on the love. And so the question would be, “Why is the love important?” If you don’t stay centered on love, you have a much more difficult time being successful in life in general and in business particularly. So why the love? Why not?
Owen: Wow. Thank you very much. And so, you’ve been listening to this interview so far and I know you probably found that if you stayed this long. Probably you’re finding it very useful. So please do this favor to us. Share this interview with another entrepreneur who you know needs to systematize their business or even needs help systematizing their business so they can take ideas from us.
And also, if you know any other entrepreneur who has successfully systematized the entire business, please send them my ways so I could interview them and you know, get them on a show like this. And final point, if you are in the point of your business where you have to systematize and literally get things out of your head and document step-by-step just like how Misty did in our business, document it step by step how exactly you gets stuff done so that your employees know exactly how to ask them correctly. Well, sign up for a free 14-day trial of sweet process. We all have systemization and we literally we build the tool that will allow you to do that. So Misty, I want to thank you for doing this interview. It’s been awesome to interview you. I really appreciate it.
Misty: Thank you, Owen. I’m so glad to be here and I hope I’ve added value to your listeners and to you. Thank you.
Owen: Thank you very much. And we’re done.
Misty: All right.
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