SS&G does an annual benchmarking survey of the restaurant industry, and I was struck by how similar the issues they encountered were to the experiences I had in a past life. Prior to founding Maddox Ungar Silberstein, PLLC, I worked for 4 years in the ready-mixed concrete industry, and I still am a member of the National Ready Mixed Concrete Association. For several years, I was on the committee that did the annual benchmarking survey of concrete producers - financial results and various operating statistics.
The industries are very different, yet the issues were the same:
- How do you normalize for excess owner compensation in privately held industries?
- How do you make sure you are looking at apples and apples - in concrete where are the benefits for the loader operator going - variable or fixed costs? And in restaurants, where is all the expense for paper that touches the product going? Same, but different.
- And more.
Both industries are focused on controlling costs. Restaurants and concrete companies generally have fixed pricing for their products - restaurants sell based on menu price, and concrete generally sells based on fairly standard pricing for the different mixes. Keeping an eye on your costs is critical as improvements in costs essentially drop right to the bottom line.
Intuitively, I knew this, but it took this seminar to make it clear.