What New Restaurant Owners Need To Understand About Investing In Human Capital
Updated: Mar 10
By Andrew Parr
Doris Yuen and Ken Wan are the young, vibrant, and passionate owners and operators of Meta Asian Kitchen in Avanti Food & Beverage. Just like you, they got into the restaurant business to fulfill a sense of purpose, in their case through Chinese cuisine – authentic to their family recipes. To obtain a sense of security through financial freedom. To expand their sense of self through their Hong Kong heritage. They are now on a mission to fulfill their sense of place by searching for the proper location for a brick and mortar restaurant location extension to their brand and to understand their sense of time – when is the right time to open. All of this will create the ultimate gift that a food and beverage business give – a sense of belonging for everyone involved; Doris & Ken, their employees, and the community they serve.
The overwhelming problem they face is that the “restaurant industry standards” don’t leave enough money to pay their employees not only a livable wage, but what their actual value is. We all know the supposed proper labor percentages of 12% BOH labor, 8% FOH labor, 10% management labor. What does that actually mean? Why are we even trying to get there? This doesn’t even contemplate the difference between operational labor (what you pay people either hourly or salaried) and fully burdened labor (payroll + payroll taxes + benefits). This is the root cause of two more obvious problems: the inability to make payroll and high turnover due to low wages (and an overall lack of investment in the four restaurant employee pillars of Wages, Benefits, Culture, Education). This can make any restaurant owner feel like they are drowning. It’s just wrong that by reaching all of these arbitrary industry standards you still can’t attain success!
We understand what it is like to be stuck in scarcity mentality, and how hard it is to shift your mindset to abundance mentality. Turnover that costs about $6,000 per line level employee and $14,000 per manager. That’s each restaurant employee or restaurant manager you turnover.
How do you get out from underneath all of this? You invest in your most valuable asset - your people. How can you get comfortable with all of this? We have your back. Don’t become another statistic – part of the 73% restaurant industry turnover rate and 60% failure rate in the first 12 months of operations. Follow a map that will lead you to 75% employee retention and satisfaction. You will transform from overwhelmed and undervalued to a pillar of culture and commerce in your community.
Andrew Parr, Angry Olive Consulting's Founder, is a restaurant and hospitality industry leader with over 25 years of experience including consulting, project management, restaurant operations and talent acquisition. His education includes a BA in Psychology and History from the University of Wisconsin along with a JD from Hamline University School of Law.
Andrew was born and raised in Milwaukee, WI, and currently resides in Denver with his wife Jody and their dog Cooper. Andrew is a Past President of the Board of Directors for the Scleroderma Foundation – Rocky Mountain Chapter.