Hobart’s says it has secret ingredient for all Kawartha Lakes’ restaurants’ well-being: data

Wesley Found, of Hobart’s Steakhouse in Lindsay and Peterborough, says he has a new, data-driven approach to his family’s business that he thinks will help all local restaurants succeed.

He also believes this new approach will help create a healthier, more vibrant community.

Found, who oversees operations at both restaurant locations, says his family “embraced the introduction of Bill 148” – which brought in dramatically higher minimum wage standards, among other measures —  and saw it as an opportunity to critically look at their operations.

“Increases in minimum wage were necessary to improve vulnerable members of the workforce and the overall local community,” he says.

Minimum wage increased on Jan. 1 from $11.60 to $14 an hour. Next January, it will jump to $15 an hour before being tied to inflation after that.

As an economist, Found says he can look at businesses and see their operational performance relative to industry standards.

“I quickly realized that Hobart’s had the same problem as most restaurants — a costs problem not a sales problem.”

In fact, Statistics Canada shows that full-service restaurants have the lowest profit margin compared to all other industry categories at just three per cent of sales. It’s also the most minimum wage dependent industry.

Found says with profit margins being as they are, absorbing a 20 per cent increase in minimum wage when labour as a percent of sales is typically between 30-35 per cent of sales, is challenging.

“It must come with the mentality that “managing the pennies will take care of the dollars,” Found says.

“This is particularly true for restaurants as it is a high volume, low-margin business. A typical restaurant around our area does anywhere from $500,000-$2,000,000 in sales per year.”

Found says Hobart’s is managing to find efficiencies that allows them to handle the increased costs with “very minor price adjustments,” thanks to “smart menu engineering” and because of software he developed specifically for monitoring restaurants cost of goods sold and labour.

“The result is being introduced in our upcoming menu change, and it will elevate our product quality and offerings,” he says.

As for many restaurants, it hasn’t been easy for Hobart’s, according to Found.

“Not many people know that we were in dire straits three years ago with maybe four to five months away from having to close both our locations,” he says.

Within two years of applying his data-driven tools, though, “we shifted to the top quartile of full-service restaurant profit margins as percentage of sales without changing our overall business structure.”

Found says he soon realized that the restaurant industry “is full of cost inefficiencies.”

“It isn’t that restaurants can’t handle a minimum wage increase it is that their inefficiencies can’t.”

Any restaurant that runs efficiently, he says, can make upwards of a 10 per cent of sales profit margin – more than enough to absorb most of the cost of the new minimum wage.

“In order to do this, you have to harness the abundance of data that customer orders and patterns show. Think of the movie Moneyball but for restaurants,” he says.

‘Found Analytics’ is aimed at helping local restaurants succeed, says Found, which he believes plays a role in community building.

“More successful restaurants mean a more vibrant community which helps all. My passion is to help communities prosper.”

He says most independent restaurant operators feel like they don’t have access, the time, or the knowledge to use the necessary tools to “manage the cents.”

“Operators don’t realize that not doing so is what creates their own struggles by making large decisions that are not data driven.”

He calls this the “old style of doing business,” where you know that out of 10 decisions only two will be right but there is hope they will make up for the eight other bad ones.

“Harnessing data will ensure that your decisions will be limited to only the right ones.”

Still a People Business

Frank Peters, who is operations manager at Hobart’s, says that despite the data-driven analysis, the restaurant business is still “a people business.”

He says some of the turnaround in Hobart’s fortunes has freed up his time to allow him to focus more on customer contact and staff development.

“We have reduced costs without having to negatively impact the quality standards that we worked so hard to build, whether it is in the products we buy and sell or the physical maintenance of the premises,” says Peters.

“The balance also of consistent quality of food, environment and service is I believe my role,” says Peters, who notes the analytics driven approach has allowed them to make necessary changes without taking away what brought people there in the first place.

It’s also what has “kept them coming back over and over, in some cases three generations within the same families.”