Opinions And Ramblings By Adam Kmiec On All Things

Category Archives: Business Lessons

Navigating COVID as a Restaurant Owner

Food - Credit Consumer Reports

Let me open with, I’ve never owned a restaurant, bar, eatery, or food truck. Also, other than a very brief stop working at a Dairy Queen when I was 13, I’ve never worked in the food industry. That said, I’ve eaten out a lot, I love food, and the one thing I do know really well – economics.

There’s no doubt that the shelter in place policies that have been enacted by local leaders to help combat COVID-19 are crushing the restaurant industry. Some places are getting crushed because they were already in a poor economic place. Others because they relied on seasonal foot traffic; think of all the places that surround ballparks. There are others that didn’t embrace digital channels fast enough or at all – there are restaurants that are still cash only, for example.

For a guy that’s never been involved in the food industry, I sure do have a lot of friends and colleagues that own, partially own, or are part of family-owned eateries and bars. I’ve had some thought-provoking conversations with many of them and I’ve observed a lot of their decisions/actions to position their businesses to survive COVID-19 measures.

I’ve found the conversations and observations to be riveting. They’ve been a really nice break from the things I normally ponder, consider, and get involved with. Based on the collection of all the wisdom, I set my brain to work with a hypothetical scenario – what would I do if I owned a restaurant? How would I try to survive and thrive on the other side of the COVID-19 measures that are currently in place across the country?

To start with, the problem that exists for most restaurants is fairly simple to articulate, but no simple to solve. The monthly fixed costs for owning a restaurant can be marginally reduced, but for the most part exist in whole, despite not having the appropriate monthly revenue needed to offset those costs. Let’s use some round numbers to work with. The fixed costs are loosely:

  • Bank Loan
  • Rent
  • Food
  • Labor
  • Taxes
  • Utilities

You can reduce the food, labor, and utilities, but it’s really hard to reduce the bank loan, rent, and taxes.

Let’s say our goal is to break even, not generate profit – over the months that COVID-19 measures are in place. For the purposes of this post, let’s assume 6 months of fixed costs on the annual revenue of $1M is roughly $200K. This post has some great details on startup and ongoing costs for restaurants. Said differently, we need to solve for $200K.

The real question is how can we create revenue that’s not tied to costs (e.g. labor). We don’t want to simply pull forward revenue. For example, if I buy a $100 gift card now, but it’s only usable in 6 months, the $100 looks like short-term revenue, but it’s actually debt and will eventually need to convert into a real cost (e.g. food and labor) when presented.

Here’s my thoughts on what I’d do:

  1. Naming Rights: “Norm!!!!” The iconic bellowing in Cheers was indicative of, in fact, everyone knowing his name, but also everyone knew which seat was Norm’s. If I had a place, I’d look to sell the “rights” to specific elements. For example, “Adam’s” parking spot – as the owner, this costs me nothing, but it carries with it, some perceived value. What about a specific bar seat? Maybe, we’re a sports bar and I have jerseys on the wall, do you want your jersey on the wall? Cool, I’m happy to sell the space.
  2. Menu Management: You’ve eaten at a place before where you’ve thought, here’s how I would make this item better. I’ve always had this concept of a “fair” strategy for restaurants. When you get a burger, it comes with lettuce, tomato, onion, and pickle. If I want bacon or cheese, it costs me more. That makes sense. But, it doesn’t cost me any less if I subtract the lettuce. Fair would mean, I should pay less when I subtract. But, I digress. What if you sold slots on the menu. For example, If Lisa wanted her burger on the menu, great! There would be a slotting fee, she’d pay. BUT – I’d return a % of the profits back to her, for each burger sold after we re-open. After all, it was her idea and her menu item.
  3. Shares: We’re not going public, but we’re going to take a page out of the Green Bay Packers playbook and sell shares in our restaurant. The shares cost money and while they don’t offer you controlling rights, maybe they offer you the ability to vote on decisions, receive 1 free meal a quarter, or be part of special events (e.g. a tasting).

I’m not the expert. I don’t know the first thing about running a restaurant. The people who do own them are doing their very best to take care of their team members, customers, family, and community. Knowing so many of them personally, it really is something admirable to watch.

Hopefully, my out of the box ideas offer some additional help to the wide assortment of recommendations, options, and actions they’re already considering. As an avid eater and fan of many local eateries, I’d sign up for all of the above if offered.

If you’ve read this far, let me make an ask of you. Do what you can do to support your favorite local eateries. Where you can, call them directly and cut out the Grubhub, Door Dash, and other platforms. While they give you a bit of convenience, they take a significant amount of money out of the pockets of those local restaurants. Take the extra step and order direct, where you can.

Smart, Nice, and Effective – Pick 2

Good. Fast. Cheap

For as I long as I can recall, the “pick 2” joke has been referenced as a shining of example of what you can’t have. I spent the first half of my career working for ad agencies and nearly every client I have ever had believed they could get something good, fast, AND cheap. But, alas, we all know, you must pick 2.

There’s a leader version of this that probably isn’t as well known. Smart, nice, and invested, pick 2. The internet is filled with stories and lists about bad bosses. I’m not going to cover the ground that’s well worn. But, for a second, think about the best and worst leaders you’ve worked for. How many of them have been:

  • Smart: They’re knowledgeable, not just in their craft, but they’ve seen enough to know enough about how to help you navigate the myriad of landmines and situations you’re going to encounter. Their subject matter expertise gives them credibility and how they approach even the most challenging situations, makes you believe they must be able to see the future. Smart leaders don’t create work to show activity, they focus on the work that drives accomplishment. It’s a subtle nuance, but invaluable.
  • Nice: This characteristic seems to be high in demand, but hard to find. I mentor and coach ~10 early career men and women each year. At the top of their list for counsel is often something to the effect of, my boss is just mean, how do I deal with that? I don’t think there’s an expectation that our managers are our best friends. But, I also don’t think it’s unreasonable to expect your leaders to be nice. Here’s the thing about “nice”, the opposite isn’t mean. The opposite can be everything from vindictive to abusive and condescending to accusatory. There’s a range. I tend to think nice is far more about the “how” someone goes about things. To find someone that’s genuinely nice, today, well, that is a rarity.
  • Effective: I was placed into an accelerated leadership program for future Sr. leaders of Walgreens. I learned a lot. On day 1, the facilitator asked the room to think about the traits of good leaders. Then we were asked to share them. The facilitator wrote them down on a whiteboard. At the tail end of the session, the facilitator read the list and then asked, what’s missing? We were left scratching our heads. After all, words like smart, nice, kind, compassionate, honest, efficient, etc. were on the board. The facilitator then said, what about “effective” – if a leader is all the things on the board, but they aren’t effective, are they actually a good leader?

Over 20 years, I’ve seen just about every type of leader. I’ve worked for leaders that were very nice, but not very smart or effective. Think, Jimmy Carter. I’ve worked for leaders that were smart and effective, but not particularly nice. Think General Patton. Of course, there were those that were smart and nice, but not particularly effective. This was someone like Ron Johnson.

Leaders come in all flavors. I’ve tried to be one that’s smart, nice, and effective. Without using those words, they’re characteristics I try to impart on my leaders.

I’ve also been fortunate to work for a handful of leaders that are smart, nice, and effective. Those are the leaders I still call in for advice. They’re the ones who offer me helpful constructive feedback. They’re the ones I’d work for again.

Smart, nice and effective – pick 2.

When The Fireman Is The Fire Starter

Image Source, Digital Spy

How often have you seen it or heard it – “thank you for moving so quickly, you and/or your team adapted, were nimble, and incredibly agile”? Or maybe, it was something like, “wow, I can’t say enough about you rallied, took on more, stepped up, and quickly pivoted!”

On the surface, these accolades, that praise, and those words sound great. And often, they are demonstrative of true outlier moments, where extraordinary feats are necessary.

However, more often than you’d think, the acknowledgment of speed should never have happened. Not because gratitude isn’t important. But, because the reasons speed is often required are some combination of lack of planning, a self-created fire drill, an over-promised arbitrary milestone/timeline.

Without realizing it, we often perceive the best firemen as the people who start the fires. Think about this for a second. How often have you seen a person’s:

  • Poor decision making
  • Missed deadline
  • Inaction
  • Bad planning
  • Over-promising

create a “fire” – only for them to spin up a bunch of resources, workstreams, and actions to successfully put out the fire? Those firemen are then recognized as leaders who marshaled resources, pointed them in a focused direction, and then…well, like I said, put out the fire. We’re actually rewarding the people who create the fires.

Activity does not equal accomplishment. And, accomplishments are not necessarily something we should celebrate. 

We need to stop praising the fire starters. They aren’t saviors. They’re the chaos creators. That teams move expeditiously to resolve the poor management of chaos creators, says more about the gaps that exist in process, planning, and leadership, than it does about heroism.

An Inch, or a Mile

There are two styles of leadership. Ok – there are a nearly infinite number of styles, philosophies, models, and approaches. However, there’s one aspect that I’ve only seen leaders take one of two approaches – trust and management.

  1. An Inch: You will earn every single inch, starting from zero. At the beginning, there is no trust. Make a recommendation? Better come with data, endorsements, research, etc. You’ll spend 80% of the time justifying the recommendation and 20% of them time putting it together. You could call this group, micromanagers. They will feel overbearing and you’ll feel smothered. Why did they make you a leader, give you a team, set forth objectives, and offer a scope, if every thing you want to do, requires expressed written or verbal approval? When you earn an inch, instead of feeling exuberance at such an accomplishment, or even relief, you’ll instead feel empty. It’s a hollow accomplishment.
  2. A Mile: The opposite of leaders who manage by inches, are leaders who put their faith in you from the beginning. You’re given a mile of road on day 1. The saying, “hire smart people and then get out of their way” will ring true. When you make a mistake, and you will make them, instead of immediately losing an inch, you’ll partner to dissect what went wrong so that you don’t repeat the error.

I’ve worked for both types of leaders. I can tell you with 100% certainty, I would run through walls for the leaders who unconditionally gave me a mile. I can also tell you with 100% certainty, that while I will always try to bring my A-game, every day, the apathy created by those wanting you to earn every inch, made every day less than satisfying.

To be clear, there’s nothing wrong with being asked to execute proper due diligence. In fact, it’s part of the trust. But, there’s a difference between trusting that you’ve done the hard work that few see and making you review that work line by line, including the footnotes.

Good leaders pick up traits from the good and adopt traits that address the experiences they’ve had with bad leaders. In that regard, I’m guilty. My leadership style is very shaped by the experiences I’ve had over the past 20+ years.

I’ve generally tried to identify large mountains to climb, but then defer to my team on how to get there. I trust them to offer me proper visibility when need, and to bypass me when appropriate. No, I don’t need to see and approve every job description. But, yeah, if we’re looking to exit someone from the organization, we should talk about it.

Want to spends $X within your budget to help us climb that mountain? Sure, after all, I assume you’ve crunched the numbers, done the math, and know we can afford to spend $X. However, if you want to go above budget, which happens on occasion, we should discuss why, how much, when, and to what end.

Ultimately, it’s about judgement. I trust my leaders will apply the right decision making skills, because I trust them. I trust them, because they know my four P’s: Priorities, Philosophy, Pace, and Pulse. I trust them to fail. I trust them to overcome obstacles. I trust them to lead and be leaders.

If you’ve found yourself unfairly having to earn every inch, every day – ask yourself, are you inspired and happy? If not, start looking for someone who will trust you with a mile.

Throw In The Floor Mats

Image Credit: elektrek

Over the years my dad imparted an incredible amount of wisdom on me. But, none was more sticky than “throw in the floor mats”.

He found a tremendous amount of pride in always negotiating a “free” set of winter/rubber mats…in addition to the fabric mats they give you with a new car. The cost of the mats are cheap. I think on average they’re about $95. But, my dad took such pride in spending $35K on a new car and somehow saving $95 on a second set of mats.

For years, I thought he was crazy. Every car I ever purchased, there he was reminding me in reality and in spirit, “make sure you ask them to throw in the floor mats!”

Well – crazy, until at the end of 2018 when purchased my Tesla Model 3. Try as I might, I could not inspire Tesla to throw in the floor mats. I tried every which way I could, but no dice.

I think the point of what my dad was trying to teach me, was that no one would ever want to lose a sizable sale over $95. For years I always believed it only applied to the seller. But, after my Tesla experience, it’s clear that his advice was for both parties.

In truth, I actually don’t know if that was point. I really wish he were still on this Earth, so I could ask him. But, I’d like to believe it was his aim.

It’s a valuable lesson in life and business. Don’t let the small things stand in front of the big things.

Also…if you don’t ask, you don’t get…but just because you ask, doesn’t mean you get.

Partnerships, Tough Decisions And Non-Negotiables

Come Together

It took me about 12 years into my career, to realize 3 critical things that would help shape the past 8 years and ultimately, make me a much better leader.

  1. You will get more done, go further, move quicker and have higher performing teams if you’re willing to partner. I think a lot of people think they’re good partners or are willing partners, but in fact are only doing it half-way. I was guilty of this too. What made all the difference was a willingness to give up, in order to get. Trying to protect your scope, build a wall around your function or restraining / controlling your team will only get you so far. But, if you’re willing to operate with blurry lines, give up control and realize you don’t need to own it to make it a success, you’ll be all the more successful for it.
  2. There is no joy that comes in making tough decisions, but joy and satisfaction can be found in making them. Too often what goes unsaid are the most important things. When someone asks for your honest opinion, you owe it to them, your team and yourself to say it…and say it with impact, in plain language.
  3. Some things simply matter more. Think about buying a car. You might want that car to be grey in color, have 4 doors, be blessed with heated seats, include a moonroof, etc. But, when push comes to shove, some of them are nice to have and some of them are mandatory. Those mandatory features are the non-negotiables. They’re the ones you can’t live without, no matter what else is thrown in. Knowing those non-negotiables upfront makes for better outcomes, faster decision making, and clearer expectations.

In 2012, Michael Eisner, the former CEO of Disney published a book titled, “Working Together, Why Great Partnerships Succeed” – It’s a great read, with each chapter highlighting different seminal moments in his career, where it was clear, partnerships lead to better outcomes.

The best passage, for me, and the one that hits on all 3 of the lessons I’ve learned, is in the first chapter. In it, Eisner tells the story about what happened when he was offered the job of Co-CEO at Disney. As Co-CEO, he would have shared the CEO title and responsibility with Frank Wells.

This is the passage:

“You and Frank,” Stanley summarized, “will be co-CEOs. You will share power at the top of the company, and together report to the board of directors. You’ll handle the creative side. He’ll handle the business side. But you’ll be equals.”

“I really don’t want to do this unless I’m the sole CEO,” I heard myself saying. “I’m extremely flattered, of course, but I just don’t think that arrangement makes sense.”

There was an utter quiet in the room. As I would tell Jane that night, I couldn’t believe what I had just said. Sure, I believed what I was saying, but still: the most storied entertainment company in the world was offering me a parachute away from what threatened to become for me a Hollywood dungeon, and I was telling them their plan wouldn’t fly.

Maybe, though, I had an instinct. Even if I was overplaying my hand, maybe, just maybe, it might work.

Less than three seconds later, Frank Wells broke the silence. “Okay,” he said. “You can be chairman and CEO, and I’ll be president and COO.”

If I had stunned myself by blurting out my own demand, I was, silently, at least doubly shocked by Frank’s reply. After all, he had set up the plan that they proposed. Fortunately, I had learned early in my career to take yes for an answer. Too many times a person is told okay, and then says, “Really? You must be kidding. I can do that?” I knew when to say yes. So I simply said, “Great. I’m in.”

But in the days and weeks ahead, I found myself wondering about Frank. What kind of person would spend his life so successfully climbing his way up the corporate ladder and then, at the very top, step aside for someone else—and someone else, for that matter, he didn’t know very well? I had spent the previous twenty years working in a terrific partnership alongside Barry Diller, one of the most brilliant executives the entertainment world has ever seen, but now, this Frank Wells appeared to be a different sort of animal: an executive who could cede power just like that, and be as comfortable as a number two as he was as a number one. Could that really be true?

I was about to find out. Frank and I got the jobs, just as we had defined them that day on the terrace at Stanley Gold’s house. We were headed into the toughest challenge of our professional lives, together. For the next ten years, that journey would be as exciting, enjoyable, rewarding, and triumphant as either of us could have dared to hope. From our first day in the office that fall, my partnership with Frank Wells taught me what it was like to work with somebody who not only protected the organization but protected me, advised me, supported me, and did it all completely selflessly. I’d like to think I did the same for Frank, as well as the company. We grew together, learned together, and discovered together how to turn what was in retrospect a small business into indeed a very big business.

We learned that one plus one adds up to a lot more than two. We learned just how rewarding working together can be.

I’ve referenced that book and this story before. It’s a book I refer back to quite often. That story always sticks out. But, it’s incredibly telling not only about the type of leader Eisner was, but also the type of leader Frank Wells was. While the story is from Eisner’s point of view, I would love to have heard it from Wells’ as well. I suspect it would have been something to the effect of:

In that moment, I realized that having the title of sole CEO was Michael’s non-negotiable. I couldn’t care less about my title. Disney was big enough for both of us to be busy, inspired and impactful. What I did know is that there was no way I’d be successful without someone like Michael as a partner. For me, the decision was easy. I would take the role of COO, Michael could be CEO and we’d accomplish more together than apart. I’d have to give up the title of CEO to get something much more valuable; the success for Disney that we both craved and the board demanded.

Maybe not 100% what he would have said, but I suspect, pretty close. It’s also the approach I’ve taken of late and I couldn’t be more satisfied.