"The Restaurant" Reality Show Season 2

[Stone]

Aren't restaurants expected to lose a lot of money in the first few months?

[Lesley C]

Well you know Tim, for those of us who didn’t toil alongside Rocco and soak up his former magnificence, it looks like this guy spends more time scratching his ass, pouting, complaining and flirting with the ladies than running a restaurant with his name on the awning. Worse, though, is that he seems ready and willing to perpetuate this image week in week out. If integrity were the name of his game, why would he let this train wreck go on? Does he care? Is he in it for the money or the celebrity? There hasn't been one second on that show where Rocco comes off like a seasoned pro -- not one.

Cooks may rule, but this cook’s looking less and less like a chef and more and more like a sell out.

[jhlurie]

Aren't restaurants expected to lose a lot of money in the first few months?

I think the concern is that it's losing money while it's packed with people. It might be different if it was a normal restaurant, without the leg-up of network TV and tourists by the bus-load.

[WHT]

Aren't restaurants expected to lose a lot of money in the first few months?

I think the concern is that it's losing money while it's packed with people. It might be different if it was a normal restaurant, without the leg-up of network TV and tourists by the bus-load.

Good point. but what we have here is not just loss but money being thrown out needlessly.

[glenn]

I understand that the restaurant is supposedly losing 100k a month, but it took a half million in losses before anybody said anything?  Not very fucking likely.  Same thing with the financial statements, for all we know Laurent saw the basic monthly totals and grosses and not a profit/loss sheet.  How much of those losses include paying back the initial investment and do you really think 4 million was spent on that space?

Precisely. Even paying $180 for a business card couldn't get them in a hole so deep so fast. They're either writing off the initial investment (amortization, depreciation) at a mind blowing rate or they're full of crapola. And for chrissakes, Laurent might be a swell manager and wonderful guy, but is he expected to vouch for the validity of financial statements? How many people w/o a financial background actually know what an income statement is?

[jcsaucey]

Precisely.  Even paying $180 for a business card couldn't get them in a hole so deep so fast.  They're either writing off the initial investment (amortization, depreciation) at a mind blowing rate or they're full of crapola.  And for chrissakes, Laurent might be a swell manager and wonderful guy, but is he expected to vouch for the validity of financial statements?  How many people w/o a financial background actually know what an income statement is?

He is the fucking General Manager! He should now how, when, why and what every penny in the operation is spent on. This show is terrible, but I am so addicted.

[ingridsf]

What is such a shame to me is to see someone who has toiled in some of the best kitchens be denigrated so quickly when he tried to open a concept based on something close to his heart...Remember, everybody brings something to a party and at the end of the day it is everyone's fault/responsibility.

Of course, I'm enjoying this train wreck and drama as much as anybody, if not more but I hate to see a chef fall so publicly and watch people who don't know the pressure, work ethic, knowledge, skills, creativity, imagination and dedication it takes to be a chef, laugh at him like he's a buffoon or simpleton. 

Oh Tim Olivett, I so admire your good heart and so don't have one of my own. At least not in connection with this program, or more specifically, with the star. I have the customer's point of view and for the owner to act like Rocco does with women customers is incredibly unappealing. Making your guests feel welcome is good; making them feel YOU is not.

And I don't buy that Rocco is the one needing sympathy when it's his staff who have had missing paychecks and have been led by managers who don't understand worker's comp, or how to put a floor mat down before accidents happen. Of course it's a team effort. But a team needs a leader. They don't seem to have one.

[KatieLoeb]

Precisely.  Even paying $180 for a business card couldn't get them in a hole so deep so fast.  They're either writing off the initial investment (amortization, depreciation) at a mind blowing rate or they're full of crapola.  And for chrissakes, Laurent might be a swell manager and wonderful guy, but is he expected to vouch for the validity of financial statements?  How many people w/o a financial background actually know what an income statement is?

He is the fucking General Manager! He should now how, when, why and what every penny in the operation is spent on. This show is terrible, but I am so addicted.

He might not know what a P&L report is because he isn't a CPA, but as General Manager he sure as hell ought to know what food cost, beverage cost, weekly cost-of-goods expenses vs. "other" expenses are, etc.

And for the record, I don't have a financial background at all. I've never taken an accounting class and I not only know what a P&L report is, but I produce them, analyze them and correct the imbalances in them before they go to the partners, outside accountants and legal representatives every month.

[glenn]

He is the fucking General Manager! He should now how, when, why and what every penny in the operation is spent on. This show is terrible, but I am so addicted.

Yes, you're right. However, in reality and at least in my experience, the role of general manager is limited in financial matters at most to such things as food, liquor and payroll cost and other key elements. I have never worked with a general manager who had an understanding of financial statements, much less knew what they were.

Edit after reading Katie's comment. Can you explain what your position is Katie? I stand by my comment. Of course there will be exceptions, but this is the rule of thumb. And I say this with enough experience to know.

Edited April 27, 2004 by glenn (log)

[Mabelline]

I cannot help contrasting this to the end of last season's "Kumbayah" moment. To me that explains a lot.

[KatieLoeb]

He is the fucking General Manager! He should now how, when, why and what every penny in the operation is spent on. This show is terrible, but I am so addicted.

Yes, you're right. However, in reality and at least in my experience, the role of general manager is limited in financial matters at most to such things as food, liquor and payroll cost and other key elements. I have never worked with a general manager who had an understanding of financial statements, much less knew what they were.

Edit after reading Katie's comment. Can you explain what your position is Katie? I stand by my comment. Of course there will be exceptions, but this is the rule of thumb. And I say this with enough experience to know.

Glenn:

It's in my sig line. I'm the Controller and Beverage Director of a small but very busy restaurant in Philadelphia. My point wasn't about what I know, just that one needn't have studied finance or accounting to understand or more importantly want to learn this stuff to improve their managerial skills and macro view of running a business, be it a restaurant, a retail store or whatever.

[jhlurie]

As I said earlier, I don't think we've "learned" much beyond the fact that Laurent admits to seeing monthy P&L reports. We don't know if he showed them or hid them from Rocco, the guy who was supposedly his "boss". The range of possibilities here seems pretty large:

• Rocco, at some early point, says "don't bother me with this" and Laurent slavishly follows that.
  
• Rocco, at some early point, says "don't bother me with this" and Laurent tries to bring the issue up and gets shot down continuously, until in self-defense he gives up.
  
• Laurent is incompetent and brushes off the significance of the reports himself.
  
• Someone at Chodorow central--some liason--tells Laurent not to worry about the numbers.
  
• Rocco is perfectly informed about all of the numbers and simply wouldn't admit it on camera.
  
• There are two sets of numbers floating around.
  
• This has all been arranged for TV.
  

Did I miss any? I really don't think we fully know what to make of the fact that the restaurant appears to be losing money, according to Chodorow's team, and the fact that Laurent acknowledges to seeing reports about this and Rocco doesn't. Certainly it's easy to believe the two extremes, since the possibilities in the middle seem almost too numerous to count.

[mags]

Am I correct in remembering that Rocco had never run a business before? Or even had an ownership stake?

[KatieLoeb]

There are two sets of numbers floating around.

After my initial exposure to restaurant bookkeeping I interviewed with another former employer who thought I was calling to refer someone else for the position of Office Manager with his company. "You know how to keep books?!?", he said incredulously. "Sure", I said, "Both sets!"

I was hired on the spot!

[pjs]

Am I correct in remembering that Rocco had never run a business before? Or even had an ownership stake?

Well, that seems painfully obvious at this point.

Management can't work without a monthly P&L. However, they have no right to see the monthly Balance Statement unless they have a financial stake in the operation. Don't confuse the two.

PJ

[glenn]

It's in my sig line.  I'm the Controller and Beverage Director of a small but very busy restaurant in Philadelphia.  My point wasn't about what I know, just that one needn't have studied finance or accounting to understand or more importantly want to learn this stuff to improve their managerial skills and macro view of running a business, be it a restaurant, a retail store or whatever.

Not to go off on a tangent (as I always do), but it never ceases to amaze me how little GM's in the restaurant industry know about the finances. I don't think this is the case in any other industry. I think the main issue is that owners don't encourage such involvement. I suppose the rationale is that most restaurants are comparatively small privately run operations and owners rightfully don't feel it necessary to share their private info. Also, GM's in the restaurant industry probably have less business training than in other industries having worked their way up from waiter or bartender for the most part.

[KatieLoeb]

It's in my sig line.  I'm the Controller and Beverage Director of a small but very busy restaurant in Philadelphia.  My point wasn't about what I know, just that one needn't have studied finance or accounting to understand or more importantly want to learn this stuff to improve their managerial skills and macro view of running a business, be it a restaurant, a retail store or whatever.

Not to go off on a tangent (as I always do), but it never ceases to amaze me how little GM's in the restaurant industry know about the finances. I don't think this is the case in any other industry. I think the main issue is that owners don't encourage such involvement. I suppose the rationale is that most restaurants are comparatively small privately run operations and owners rightfully don't feel it necessary to share their private info. Also, GM's in the restaurant industry probably have less business training than in other industries having worked their way up from waiter or bartender for the most part.

Glenn:

I've worked for enough owners in the past that didn't know that stuff either. In fact I'm certain that's more than a fraction of the reason that so many restaurants fail.

Nobody thinks about the day to day stuff. The assumption is (if the grasp is even firm enough to comprehend at the basic level) that you buy product (food, wine, liquor, beer) and mark it up to what is considered an "industry standard" of say 30-35% for food and 40% for wine and about 25% for liquor. Then the money comes in and you turn it around and use it to pay the vendors that sold you the food, wine, liquor, etc. Except that there's payroll, and payroll taxes, and sales taxes, and sometimes liquor taxes or "Use & Occupancy" taxes (depending on what state you're in), and repairs to equipment and the physical plant, and insurance - Worker's Comp AND Liability, and the day to day expenses of keeping the kitchen running like getting the hoods cleaned and the restaurant exterminated and getting the grease hauled away and the dishwasher chemicals and maintenance and the knives sharpened, and office supplies and menu paper and utilities and etc. etc. etc. Need I go on? Restaurants fail because they drown in OVERHEAD. And because no one thinks about what goes in to controlling the controllable expenses like labor cost, food cost, beverage costs, etc. This stuff doesn't take care of itself. It requires a firm grasp and serious teamwork and communication between the FOH management and the BOH management. It requires having the tools (the raw numbers from last week and last year, the projections, the daily cash position, the credit card "float") and pushing the rock uphill together. If the FOH is saving on payroll by staffing just enough to make sure the guests don't suffer and the BOH isn't watching their overtime or doing stupid shit like paying a $12.00/hr. Line Cook to peel grapes and frittering away whatever savings might have been realized then it's all for naught.

[Mabelline]

YOU GO GIRL!!!!

[godito]

Not to go off on a tangent (as I always do), but it never ceases to amaze me how little GM's in the restaurant industry know about the finances

I love it when things add up! This is exactly whay "restaurants are supposed to loose money in the first months" They are not, but cooks and floor managers rearelly know enough about P&L statements or, like Katie said:

And because no one thinks about what goes in to controlling the controllable expenses like labor cost, food cost, beverage costs, etc. This stuff doesn't take care of itself. It requires a firm grasp and serious teamwork and communication between the FOH management and the BOH management

I can't think of a good reason why Rocco would never care enough about the finances of his restaurant to ask to see the statements. I mean, how is the food costing done? However, it does make sence that nobody ever saw the numbers..., how else can we justify the stupin spendings in business cards, knifes never to be used and flowers!

[glenn]

Katie's post: **** ;-)

[Mabelline]

It does not add up--whatsoever, which leads me to think that it's going to be a big thing in J.Chod's lawsuits, or at least, his accounting.

[glenn]

Maybe he's down $582,123 because of his legal bills.

[KatieLoeb]

I just realized I didn't even mention the RENT in my RANT!

[Mabelline]

There ya go...that ain't exactly what I was thinking-mine was more along the line of how a guy who owned Braniff Airlines and lost all that could walk away from nearly a M loss, and act like it's an annoyance.

[mags]

Am I correct in remembering that Rocco had never run a business before? Or even had an ownership stake?

Well, that seems painfully obvious at this point.

Management can't work without a monthly P&L. However, they have no right to see the monthly Balance Statement unless they have a financial stake in the operation. Don't confuse the two.

PJ

Hunh? Don't confuse me with someone who confused the two. I didn't say anything about the balance statement or the P&L, nor do I care about them; my question about Rocco's business experience was a function of my wondering whether he had any notion of what he was getting himself into, or whether he imagined his role consisted of taking a blank check, doing what he liked with it, and smiling pretty for the cameras. Additionally, I was wondering why Choderow hadn't written into the contract that Rocco would spend X amount of time at the restaurant. And then I thought, well, maybe he didn't include it in the contract because he assumed that Rocco knew what it meant to run a business. But if Rocco DIDN"T know -- and sorry this is getting so convoluted -- then this whole thing may just be a case of expectations that were insufficiently spelled out, on both sides.

If that's the case, if Rocco really didn't know that he needed to be spending more time at the restaurant, then Choderow owns a good part of the responsibility for this fiasco. He took on a neophyte as a partner and expected him to behave like an experienced businessman.