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Katie: Welcome to the Best Metrix podcast. Each episode, we meet with industry experts to discuss how they evaluate financial statements, what metrics they commonly use, and how their clients have improved. We'll also gather suggestions of how you can incorporate the same insights and processes into your own practice. Thanks for listening and enjoy this episode.

Glenn Dunlap: Hello everyone and welcome to the Best Metrix podcast. Today's [00:00:30] subject is one of the most famously fraught with financial challenges and at the same time captures the imagination of so many. So we're going to talk about the best metrics for restaurants here to help us understand what's really going on in this fascinating industry. As Jabari Daniels of Chester and Daniels, Jabbar is a Bachelor of Science in business administration from the University of Nevada, Las Vegas, with a major in accounting, before moving to Atlanta and obtaining his CPA license in in Georgia. He gained the majority of his experience in the casino industry and [00:01:00] he currently advises clients in the restaurant industry, among. Among other things, for Chester and Daniel's Inn in Atlanta, Georgia. So, Jasper. Thanks for being here.

Jabbar Daniels: Thanks for having me, Glenn. It's definitely a pleasure to. You know, dive into restaurants, of course, having some background in Las Vegas, which. You know, hospitality is definitely a big thing there. So I got some experience and. Just kind of understand a little bit of things and then, you know, started with the. With the firm here and kind of dove into a lot more of course, as it grew. So. Thanks for having me here. [00:01:30]

Glenn Dunlap: Yeah, I love it I love it. It's exciting to talk about this. I mean, this is one that everybody sort of beats up on the restaurant industry because of. You know, it's a tough one. Uh, and so many of them, uh, fail. But I think that's part of what. You know, we wanted to kind of discuss today is, you know, looking at some of the things that. Um, you know, that they may want to may want to consider. But before we jump into those things. Tell us a little bit more about Chester and Daniel's. Why don't you tell us about your firm? What you guys are up to, you know, how did, uh, you know, just other anything else you want to share with us?

Jabbar Daniels: Absolutely. [00:02:00] So, yeah, Chester and Daniels, we got it started. It's actually. So my name is Jabari Daniels. I'm the Daniels of it. And then the Chester is actually my sister who's also a CPA. So we got it started back in 2015. And we actually saw an opportunity to help out a family friend who actually had a ophthalmology practice. And we actually jumped in there. And that's kind of how we got started and just jumped in and helped them kind of clean up everything with the books and, you know, just make sure everything is running smoothly for them. We got to get it rolling there. And then from there, uh, [00:02:30] my sister, who was also working in the industry or in a Big Four public accounting, and then I had some industry and decided to not really grow the business. So I kind of just took it and ran with it. I decided to really continue growing it. And so now, uh, we are myself. I'm pretty much the I am the only CPA outside of my sister who maybe does some work here and there, but not necessarily. We also have another staff and staff accountant. Um an assistant and some other contract workers that work with us. So [00:03:00] it's still pretty small but growing. But we we service, uh, folks, uh, small business clients helping them with their accounting, um, uh, accounting, bookkeeping, organization, tax planning and tax prep. We do focus on restaurant clients as one of our niche industries. Um, we'll definitely service other industries as well. Um, and a lot of the focus is on that consulting that cast service where we're giving that advisory and really getting to hire that high value service on how to help them sustain and grow their businesses [00:03:30] instead of just getting the regulatory and the compliance work done. So that's what we like to focus on.

Glenn Dunlap: Uh, crazy need there. I mean, it's um, absolutely, you know, business owners struggle with, uh, you know, just the, you know, the day to day putting out all the fires and, and knowing where to put things, uh, which is also pretty interesting to think. Well, as I was preparing for this, um, this episode, I was thinking about, um, the, you know, getting [00:04:00] started as a small business owner and creating your accounting system. You know, picking which one, how you're going to do it, and then, you know, choosing the chart of accounts and creating those things. And it seems like, um, you know, you maybe start with whatever the system is that you're using suggests to you. But I've seen some of the craziest things come out of, you know, the accounting systems and restaurants, just how they're tracking things or not tracking things. And that's I was so I was just thinking [00:04:30] about, you know, how every bookkeeper just sort of picks the accounts and creates them and does things. I, you know, we've seen we've seen everything from the bookkeeper putting everything into, uh, all in one account, you know, it's and there's, there's literally one account that was everything. Everything was, you know, revenue and expenses were put into that one account to a bookkeeper, creating a new account for every time they entered something into the system, you know, and then sort of everything in between, like, you know, picking names that [00:05:00] you just go, what? I have no idea what you're talking about.

Glenn Dunlap: Absolutely. Yeah. So I'm sure you've seen the same where it's just sort of everything in between. Right. So maybe that's maybe we can sort of start with thinking about, um, you know, when you're looking at financial statements for a restaurant, first of all, maybe kind of what are you looking for? How are they? How are you looking for them that to be structured. And, you know, what are you expecting to see on there. And then and then maybe what are you expecting to see in the numbers. Because I think I'll tell you where I'm going. Why I asked this question is I [00:05:30] think about like, um, you know, revenue are you tracking revenue in a bunch of subcategories in terms of, you know, um, you know, thinking about food and beverage and that kind of thing and even breaking those down. Are you thinking about cost of goods, sold materials and all those things, or are you looking more for sort of big buckets to be in the right place or so kind of kind of give me your thoughts on how you what are you looking for initially when you're looking at that setup there?

Jabbar Daniels: I mean, that's a great, great, great, great thing to think about when you're when you're kind of going into that, it's just like, okay. Yeah. How how detailed [00:06:00] are their accounts. So like where they are now, how detailed can they be. How detailed do we want them to be? Those are definitely big questions that you want to ask when you're looking at those. Of course, because they can just be as simplified as possible. But can you do you get all the detail that you're, that you may need for some of the deeper diving things? I mean, yeah, you can see the top level. Okay. What is the what is their what are their bottom line. The top level and the bottom line. You can see those things. But when it comes to like trying to like inch out every little bit of profit you can, which in the restaurant industry is very [00:06:30] tough of course, because that's. Yeah. I mean it's it's very tough to because those margins are small. But going back to it, it's so important to have that, uh, that, that, that chart of accounts and the way you need it. Um, and having the accounting foundation done, I think that's the, that's the big part that I feel like gets missed sometimes, especially if, uh, those businesses you're, you know, you're you're you're, you're inheriting those books from the, the owner that was doing it themselves or something like that.

Jabbar Daniels: It was like, oh, there may be a lot of work that needs to be done to get this for sure. You can actually help them. So, um, [00:07:00] that's a that's a very good thing to start out. But I'd say, uh, things that I, things that just jump out are the big things, of course, because I mean, you know, um, when I, when I kind of get in the big things, um, uh, dialed in, it's really, it's really hard for you to sustain a restaurant or a food and beverage industry, those big things being the cost of goods. Uh, how much are you actually paying to for those things that you have to prepare and sell? And then, of course, labor. I mean, those are the two, the two big things that, uh, that [00:07:30] you're going to spend the most money on. And so, uh, those are the like my eyes are just basically just go straight to those. Of course, when when we're looking at it, what are those percentages? Are they are they are they you know, are they. Well in that in this area for this type of food and beverage service or are they really hurting you? I mean, those are the two things you want to definitely jump and look at and make sure that you're there So, um, like cost of goods, for instance.

Jabbar Daniels: I mean, you know, they it definitely depends on what type of things you're purchasing and selling. So [00:08:00] but it can be anywhere from like 20 to 40 or 20 to 50%, um, because I've seen it anywhere fall anywhere in there. And then how do you course continue to get those lower? Um, so I'd say to answer your question, those are the those are those two things that jump out, but without if you want to get into more detail on that cost of every single thing. Yeah, you're going to need to break out all your different revenues by, um, type, you know, your food revenues, your your beverage revenues, your, uh, um, if you have special events, anything like that, you want to kind of break all those things [00:08:30] out. And then even the cost of things, which can be a lot, uh, very tedious if you're if you're doing everything and, uh, or at least have a way to do it, um, uh, you may need, you know, of course, some expensive services or bringing someone in to actually break out all of those little things. So it can be tough to do that sometimes, too.

Glenn Dunlap: Yeah, I would say there's sort of here's the good and the bad. I would think the point of sale systems have probably gotten so incredibly detailed and the things that they're doing, but a lot of times that somehow you've got to get that to communicate [00:09:00] with your accounting system, right. So, so you may have a lot of detail outside of the accounting system that's providing, you know, breakdown of revenue and things over here. But all of your expenses are over here. And so you're trying to figure out how to marry those things up. Have you found are there is there a tech stack that you love working with in this space that kind of helps marry those things or.

Jabbar Daniels: That's a very good question because there isn't there there and there isn't. There isn't a whole lot that just really just makes it seem easy for you. Yeah. I mean, because, you know, a lot of restaurants will use like toast, for instance, and then or [00:09:30] square. They'll use those, uh, of course there's others out there, but those are the big the big ones that you see a lot of the time. And there really isn't anything that just breaks all that stuff out directly for you. Um, I will say, because we do utilize Xero, um, and uh, we use like Hubdoc, if that's connected to zero to where we can actually just import like an invoice. Like so an invoice for, for, uh, for um, for goods that they'll purchase. Import that in there. Break it out by line item. Shoot it right into zero. [00:10:00] Then we can just attach it to the actual payment, and then it'll break everything out and have it all lined out for you. So that's that's very helpful to use. Um, but sometimes, uh, you know, you do have, you might have to break things out, um, by hand if it doesn't link in directly in every restaurant, you may use a different POS. Um, so they don't, you know, because they don't all they don't all, um, kind of talk as easily. That's where it's a little bit tough. So we haven't figured that out all the way yet. But it is integral I would say.

Glenn Dunlap: So then it just [00:10:30] adds another layer of complexity when you're not not just when you're setting up your accounting system. If you have a different if you're tracking things different in your POS that you want to get into, you know, your accounting system, you've got to make sure at least that you're setting things up and tracking things that were, you know, this is food, this is beverage. And then you know what? You know if you're going to break those down? You're looking at those things and, uh, you know, might be might be bar, might be restaurant might be, you know, by server by, you know, any of those kinds of things that you'd be looking at. So, uh, it just needs [00:11:00] to be, you know, both of those things getting set up so that you can communicate from, from one to the next. So that's pretty interesting. Yeah. Because it's kind of you think about the old tickets and like how everything, all of them was paper and manually and then all of a sudden that was being tallied up, but it was being tallied up in the accounting system. So. Right, right. You know, you had some of that stuff happening, you know, may have been slower, but it was all in the same space. So it's an interesting.

Jabbar Daniels: Yeah, absolutely. And uh, you know, um, because I, you know, we have clients where sometimes, you know, it's just, you know, 1 or 2 people that are managing everything and [00:11:30] they may not have the ability to break all those things out. And then I have other other clients where they have someone internally that's in the office doing all that breaking out, and then they get those detailed reports. So it's just, uh, the bandwidth of, of, uh, of course, the size of the, the restaurant, the restaurant locations and then how much? How much staff do they have? How much, you know, power do they have to actually do all of those things, or can they pay someone you know and outsource it and be able to pay someone else to do it because it [00:12:00] can be done. It's just that you have the ability to do it. And then that also makes it can make or break how they're able to sustain and go in the long run, because they may be missing those little things that may be helping them. Uh, you know, just make sure they're fine tuning everything that they need to. So, yeah, that's a that's a huge part of it. It's it's different. Everything is digitized now. Everything is linked and straight in and all the efficiencies are there. But some things they don't it's not there all the way yet. So there still needs to be that, that manual effort [00:12:30] that, uh, you know, either you can do or can't, you know.

Glenn Dunlap: Yeah. Yeah. So you, you mentioned, um, you know, 20 to 40%, uh, in terms of material cost, right? So we're talking about everything in that with the food beverage alcohol in. All right is that kind of and that's a range right. It's going to depend on the type of restaurant and exactly what they're charging. And Billings, you certainly want it to be closer to the 20 than you would 40. Right. You know you know because everything absolutely such thin [00:13:00] margins I think. So you know, as you're, as you're consulting with somebody, I mean, pricing is always a pain in the neck to kind of figure this stuff out. I mean, do you get you get into the pricing conversations and, you know, are they are they using something where they do, you know, a specific kind of markup? Like if this steak costs us 20 bucks, we're going to make it, you know, we're going to sell it for 80. Is it a is it A4X number or what's how do they get how do they get to those things.

Jabbar Daniels: So you know that's that's a that's definitely a good question [00:13:30] because I feel like we're not may not necessarily have like all the time in the world with the clients to like really dive into the real, real details on that costing. But if we do see a or over like a high level look and say, well, I mean you're definitely charging too low. That's something we'll point out. But I would say for specific items and things that may be, uh, you know, the who's managing what's going on for the day to day in there. I think that is, you know, we do may push that on them a little more, but at least giving [00:14:00] them the ability to know that that could be a problem if it's affecting them in the long run. But uh, but yeah. No, that's a that's definitely a good point. Um, because every different thing is going to have a different profit margin. Right? So um, depending on depending on the, on the, the cost of what it is and how much you can actually mark it up like alcohol. You can mark that up like a lot. Right. So a lot of folks will rely on that, you know, um, because you can you can pay so much for it. And then, you know, you mix up those drinks and things and then charge a [00:14:30] lot more for them, per and then seeing how much you get per bottle and things like that. So, um, yeah. So that's one thing. And then, you know, when it comes to like a steak or something, it might cost you a lot to get that, that good marbled dry aged steak or something like that. But then you might have to charge a whole lot for it as well.

Glenn Dunlap: Right, right. Yeah, it's it's interesting you hear things, but you don't. I, I've heard that, um, you know, you're pretty much going to pay, um, the price of a glass of wine is equal to the cost of the bottle so [00:15:00] that they. Yeah. When they, when they open that bottle, that there's a chance that it's going to go to waste. So you're going to. Yeah. You're going to you're going to pay that for glass. So I don't I don't know if that's, you know, something.

Jabbar Daniels: Spoilage and spoilage. You got to think about too right. You got you got to think.

Glenn Dunlap: Right I mean.

Jabbar Daniels: I think that's right. Yeah.

Glenn Dunlap: Yeah, yeah. That's it's got to be one of the most difficult, you know, moving targets constantly. I mean, they're going to turn their inventory frequently. You don't want it to a bunch of stuff to sit. Yeah. Right. Unless it's all frozen. [00:15:30] But then, you know, it's a it's a different conversation. But.

Jabbar Daniels: Yeah. Right, right. It is it is very tough to, to really dial that stuff in. But you know, it's, you know Especially when, uh. When? Because when things are rolling. Good. Right. Let's say, uh, let's say costs are pretty steady, you know, and dollars are rolling in, but you may not be looking at all those things upfront. And when it gets bad, let's say the industry takes a hit and then or the economy takes [00:16:00] a hit, let's say cost goes up on the on the items. And then those margins might be getting a little tighter. And you're not already looking at those things. It can affect you for sure when those when the when the bad times come and I see that happen. And of course with Covid we saw that happen a lot in the restaurant industry. We saw a lot of folks closed down, um, because they weren't able to adjust with those things happen. Or, you know, there's other a lot of other factors. I mean, Covid sure was a was a time where, you know, there was a lot of different things that happened. And you can't really a lot of people couldn't sustain it through it. But [00:16:30] but, but understanding what those what those, uh, what those problems may be when the time comes. And being able to adjust when they come is definitely a big, big part of it So I think it's neglected a lot of times when things are going well. Uh, and then when it comes to a problem, it's like, oh, shit, what do I do? You know. Um, so yeah, that that's, uh, that's a I think it's imperative that folks get that early.

Glenn Dunlap: Well, a friend of mine owns a couple of McDonald's franchises, and one of the things he said was, is he goes, you know, you think when you when you own a restaurant [00:17:00] that's doing a couple million dollars a year that you're managing millions. And the reality is, is you're still managing pennies. You have to you have to manage to that level to to manage everything in order to make anything on on those businesses because there's such so difficult. And I think, yeah, let's talk a little bit about labor. So we've talked about materials. Yeah. So I guess to wrap up materials maybe a little bit. I mean I here's another thing that's just a moving target. We've seen inflation 5% you know, and everything's [00:17:30] and not annually 5%. You know we're seeing you know these things go up sometimes monthly. And so I mean I don't know how you print a menu and and know that these are the costs that you're going to be dealing with because you know, well, you know, I don't know. This isn't food, but gas was 289 two days ago. It was 349 when I was driving in today, it's like it went up $0.60 in a day. Like think about like if you had a transportation business, you'd be getting, you know, there's there's no way you would be able to plan for that. So [00:18:00] same thing I think is holding true in the restaurants when you see, you know, we can't even get eggs, we can't get you know, our eggs are now what? You know how much I can't even imagine what it's like trying to to manage that. So when you're how do you help people so, you know, don't don't go long on print menus or do you tell them. Right. You know, to, you know, to be paying attention to this and and how frequently are they being forced to adjust things.

Jabbar Daniels: Yeah. I mean, you know, that's a, that's a, that's a big part of it. Um, and I think it's still, uh, [00:18:30] you know, it's something that is being monitored, of course. And seeing that. Right. Okay, okay. If margins are down okay. The first thing you look at. Okay. Material costs that fluctuate, right. So looking at those. Yes. Um, yeah. If you have to print those menus and raise it up by just a little bit, I mean, that's something you may have to do sometimes if it's small enough, maybe the customer won't see it. But if you're like you're saying the McDonald's, there's volume there, you know, so you got to you got to manage those pennies. If there's if it's $0.50 [00:19:00] extra over the course of hundreds of different items that you're selling. Yeah, that may that may have a compounding effect over, over time. So yes, those adjustments may be necessary to in order to keep up with those little fluctuations. So I mean, I, uh, we do try to catch those things when they happen, for sure. Um, in the grand scheme to, to help clients, you know, kind of adjust them when they need to. Um, but sometimes I will say, you know, there's so many moving parts that it's hard to [00:19:30] pinpoint those. Exactly. Um, but for sure, when they hit some thresholds that if they adjust, um, but also I've seen we've helped clients where sometimes it may be the vendors. Okay, well, if there's one vendor that you use for at one point they had the lowest price for that. And then next time they this other one has like Cisco or Restaurant Depot, they may have like a lower price at this point. Well maybe maybe you switch on over to them for this, this this period right now. So just monitoring uh, you know, where you're getting it and [00:20:00] those prices that go into it. But yeah, I mean quality is also another thing too. So, um, a lot of different factors that go into all that, but just keeping an eye on them for sure.

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Glenn Dunlap: Well, I mean, you pointed out something there in terms of the suppliers and the number of suppliers. I mean, having some options there. I mean that certainly when we see, um, you know, the supply chain being interrupted, you know, sometimes, you know, one vendor may not have it or, you know, their quality drops or they, they change something. Yeah. So that certainly [00:21:30] makes an awful lot of sense to be, you know, paying attention to what's happening with your different, different vendors and have some options. You know, keep yourself from being locked into something that's the one and only solution that you might have, because that's that's a pretty risky proposition. So absolutely.

Jabbar Daniels: Absolutely.

Glenn Dunlap: Could be we saw that. Yeah. Also really impacts people. Um, you know, we can we can see that across most of the industries where we saw in, you know, 2020 with the supply [00:22:00] chain interruption inventories went through, you know, so to, you know, dangerously low if not, you know, causing disruptions. And then right, 2021 we saw it kind of whipsaw back where they got to excuse me to excess inventory. Yeah. And now now it seems like it's sort of leveling out again. But yeah. But I do think I do think it's caused people to take a different look at their, you know, suppliers and number and yeah, quality in those relationships. Right.

Jabbar Daniels: So yeah I mean all [00:22:30] factors I mean it's just like a constant, you know, constant eye on them, constant checking because it's just like, you know, you got to you got to you got to maintain that, that bottom line, especially if just that little bit can take you into potentially a negative, uh, net income situation. So it's always a, always a always imperative for sure. Yeah.

Glenn Dunlap: For sure. So let's talk about labor. I started to go there a minute ago. And then the the materials thing kind of distracted me. I wanted to go deeper there. So if we go to thinking [00:23:00] about labor, I mean, here's here's a hot topic we've got both presidential candidates are talking about not taxing tips. And Amy, uh, you know, so which is. Yeah. Uh, that's well, that's another conversation we can have another time. There's another conversation. Right. Um, but I think the but the idea of just, I mean, what's happened in labor in terms of, uh, you know, certain cities, certain states, you know, bumping minimum wages and you see the requirements in terms of taxes and tips. I'm sorry, tips for, um, [00:23:30] waitstaff. I mean And you know, when you've got virtually no unemployment and you've got all these things. I mean, it's been it's been a tough this finding. But we we still see restaurants that aren't fully backed to open the way they were before. So you know, what are what are you seeing, you know, happening with your client base. I mean, in the Atlanta metro. And is it something that we, you know, that, you know, kind of see elsewhere?

Jabbar Daniels: Yeah. I mean, you know, labor is a huge one. It's there's just so many factors to consider when it comes to labor. [00:24:00] Um, and I think, yeah, getting back or jumping into the tip aspect to me, of course, you have the tip credits that that may affect, uh, that may affect how your, how your staff are paid that are tip receiving employees. Uh, so that's one thing. And of course, they're all our state's different. Um, but I know here in Georgia they do have a tip credits where you can, uh, essentially, if they're tipped a tipped employee, uh, you guarantee them a minimum wage salary. So let's say you guarantee [00:24:30] them him $10 an hour and then they get tipped, you know, for one hour or their average hour of tips or let's say $15 an hour for the hour, then you're your hourly wage will go down to $2.13, and then your tips will cover the at $10. And then whatever else they make over that they get, they get paid as well. So you're essentially paying them out in those tips. Uh, and it's a very controversial thing, of course, because, you know, an employee [00:25:00] may look at their check and they're like, I paid $2,000.13 an hour, but not taking into effect that they also got paid those tips and they were guaranteed a wait there.

Jabbar Daniels: So there's a lot of different things that go into that. I have seen it where because it's such a such a big thing to consider, because I have seen it where the restaurant will not even consider doing those tip credits. Right? So they're just paying them a wage and they're making tips on top of it, and it can really hurt the restaurant because, you know, you're paying them for [00:25:30] their full time. They're also getting those tips. Uh, so. But you're eating, you know, you're you're because the cost of the goods is, you know, maybe 20 to 40%. Let's say it's at 40. And you also have the wages, which you're probably paying, maybe even another, you know, 40% or something like that at that point, instead of the tips taking care of it because, uh, you know, people, they're okay. They're some people may not tip, but a lot of times they're I've seen it where they're people were over tipping a lot. And especially in the inner cities they're tipping quite [00:26:00] well. So the employees are getting paid pretty good on those tips. So looking at it from an from the back of house or the accounting perspective, looking at it, it can really hurt the business to not take advantage of those credits.

Jabbar Daniels: Um, but uh, you know, some do, some don't. And because some, some may not because they want to be competitive, but I can bet that, you know, keeping those employees in maybe long term, uh, is helpful, of course, because turnover is a thing, but it can really harm those books So you gotta you gotta raise your prices [00:26:30] or something, because it really can eat into what you're actually taking home at the end of the day. Um, and being able to actually pay the owner. Uh, so labor is. Yeah, it's a huge thing to where it can really, you know, it can really make or break what that what that bottom line looks like for the, for the restaurant and, um, and, and of course, you know, just maintaining the, the management aspect of maintaining the relationships with those, the staff members and making sure that they are happy, of course, making sure they get what they need. Um, [00:27:00] but, you know, and making sure that it's always staffed because then you need, you need, you need folks in there that actually, uh, continue to run the run the restaurant, too.

Glenn Dunlap: So I'm kind of curious about the so because I think you mentioned something where they said that they, you know, um, restaurant owners want to be competitive and it's a competitive space, right? They're trying to keep the good servers in there because that can, you know, make or break their service. Right. So, yeah. Um, do you have to do the tip credits It's, um, evenly across the board. Or could [00:27:30] you pay somebody instead of is it 213? Could you pay them, you know, five bucks, you know, plus the, you know, or could you pay them. Is it is it a or is it just all or nothing.

Jabbar Daniels: I think it's more of an all or nothing. I'm not I'm not a I wouldn't say I'm a payroll expert on all the, all the rules and regulations on payroll, but I believe it's just a, it's either you do it or don't. Um, but I'm not not positive on that. Uh, but uh, but yeah, it's kind of, it's kind of, it's kind of built in there to where at least, you know, someone knows if they say, okay, [00:28:00] you're going to get 15 an hour, they know that they're going to get that 15 regardless of what happens. They'll get that at the end of the day. So even if it goes down that 213, you're still getting that 15. It's just because of the tips. Your tips are covering it. Yeah. It's just because you know, you're the business is collecting those those those funds. You're still getting paid out. It's just that you may not get the 15 plus all those tips that you're making, you know? So, uh, yeah, it definitely, definitely depends. And then there's other things like, okay, do they have really come down to the policy? Are they [00:28:30] all ships? Are the tips shared all across, you know, all across the house. There's there's support positions that that get tipped out as well. I mean, you know what. How does all that look do each does each employee take home exactly what they make or do they have to split them, you know, things like that which are really up to the owners. Um, but when it comes to, yeah, the minutia of like, um, of. Yeah, if they, if they can like, hey, this employee gets guaranteed at least it's five, you know, even after the tips or I don't know if there's anything and I and I think it [00:29:00] would be even more of a hassle to try to do that from the payroll side. Uh, even if they were able to. I'm not sure if they're even able to do that. Yeah, but good question though.

Glenn Dunlap: That's interesting. It's um. And is that, is that what's the time frame in which that's measured. Is it every shift or is it across. Yeah. Across the pay period.

Jabbar Daniels: Uh, it is actually across the, across the pay period, I believe. Okay. Uh Yeah. After you actually running payroll and you calculate all the tips and everything, because, of course, everything won't be paid out [00:29:30] until that pay period. So when you're calculating it, it would, it would make sure that paycheck is evens out to at least it should be. Um, if I'm not mistaken, if I'm not mistaken, we don't do a whole lot of the running the payroll for folks. We just make sure that they're kind of set up the way they should.

Glenn Dunlap: So yeah, because you could have an awful shift where nobody shows up. It's just a bad day, bad weather, whatever. I mean, that just keeps people from coming into the thing. And then you may have another one that you kill it. So you would think that it's going to even out over time. Right.

Jabbar Daniels: Yeah. No, that's that's a that's definitely good. It might be something I need [00:30:00] to look into to see because I haven't haven't thought about that avian per shift or versus that. So I'm like I was you know considering for the clients that have that do it. Uh, yeah. Was was thinking that it was for the full pay period, but definitely, uh, I should check on that and make sure, uh, make sure to see if it says my shift or not.

Glenn Dunlap: Yeah, I would imagine. Yeah, I would imagine that'd be too small of a sample size. I think you'd probably have to kind of broaden that out a little bit, but maybe not. I don't know. It's the stranger. Stranger laws have been in place than [00:30:30] that. True. True. Very true. Yeah. True. Yeah. Trying to figure those things out. Um. All right, so that's that's pretty interesting. It's, um, uh, you know, trying to figure out the, you know, the, the craziness of that. Right? You've got you've got people that you're trying to to keep. And it's such a variable comp. Yeah. I don't know. You see some restaurants that seem to figure that out and they take care of their people. And those people are there and consistent. And then you see others that it's just [00:31:00] nonstop turnover in there. There's never anybody the same in there. So I don't know. Right. Um it's odd. You know, you would think that it is. It wouldn't be that I don't know. Yeah. No. How do some do it and some don't? That's what I don't understand.

Jabbar Daniels: I agree, I agree. It's, uh. It's a it's a tough thing. And then, you know, not really being in the, in the day to day with them. I mean, you don't you don't necessarily see exactly how you know, why people staying in their, uh, or why are they leaving. Because I feel [00:31:30] like it also could have to do with the environment that they're working in. And so if they like the team members or if they, you know what? How are they working? Are they getting the right breaks that they're supposed to, which are, of course, uh, regulated. But there's there's probably so many different aspects that you just it's hard to kind of kind of understand what why the turnover could be high or not. Um, but it probably one of them is, you know, how much are they, are they actually getting the pay and, and what they, what they need, you know, from day to day. [00:32:00] Because if not. Yeah. What they get it better over here. But then, you know, of course you got different styles of cuisine. Of course, if it's a fine dining place, they might get paid a little more because their average cover is a lot higher. So they might be getting tipped out more, more over there then, you know, a waffle House somewhere where, uh, you know, it might they may not get as much because their price is lower. The price point is lower. So, um, you know, I think it just depends. It depends a lot versus, um, for, for that industry for [00:32:30] sure.

Glenn Dunlap: Yeah. For sure. I mean, it's just so many variables in that too. Right. So yeah. But you see it but you also see sometimes you see the same waitress at the waffle House year after year. So yeah.

Jabbar Daniels: I mean, hey, they might love it. You know.

Jabbar Daniels: They.

Jabbar Daniels: Might be great in there. You know, they might love working. Exactly. What? Yeah. Exactly. Right. Yeah. Yeah. I don't mind. I mean.

Jabbar Daniels: I love waffle House.

Glenn Dunlap: Yeah.

Jabbar Daniels: Same great, great atmosphere, man.

Glenn Dunlap: Same.

Glenn Dunlap: You got a lot more of them down south than we do here, but.

Jabbar Daniels: Yeah. Yeah, yeah. Lots of them.

Glenn Dunlap: Yeah. [00:33:00] That's right. Yeah. You can drive through Georgia and, like, it seems like there, there might be a waffle House across the street from each other. It's kind of.

Jabbar Daniels: Oh, yeah. Oh, yeah. Right.

Jabbar Daniels: They're, like, competing with each other.

Glenn Dunlap: Yeah, it's like Starbucks down there you've got right there.

Jabbar Daniels: It really is.

Jabbar Daniels: Man, there's lots of them though. Yeah, probably like four per square mile.

Glenn Dunlap: Yeah. That's, um, the waffle House is in Indiana. Used to have to be called waffle and steak, which was funny because the, [00:33:30] um, somebody in Indiana had actually reserved the name, uh, waffle House. So there was a whole chain of Waffle Houses when, um, you know, when I was growing up that were not at all the Waffle Houses, that.

Jabbar Daniels: Right.

Glenn Dunlap: That we know today. But then when when that chain went under, then waffle steak became waffle House.

Glenn Dunlap: They were able to take. Yeah.

Glenn Dunlap: Yeah. But it was it's funny because it was the yellow and black square letters.

Glenn Dunlap: Yeah.

Glenn Dunlap: That and then they just had a little ampersand in between [00:34:00] the waffle and steak. And then the all those got swapped out for house.

Glenn Dunlap: When, when.

Glenn Dunlap: And so they had a long term plan. They knew that.

Glenn Dunlap: Yeah. Yeah. We're gonna get, we're getting.

Jabbar Daniels: So yeah they, they had a, they had a good the lettering easy to just swap it out. Very good.

Glenn Dunlap: Yeah. So you know I mean there you've got the power of, you know, a national chain that's buying all of those things. And you do have you do have something that's consistency in that. But it's man getting getting starting a [00:34:30] restaurant from scratch has to be one of the toughest things. Yeah. Do you get do you get involved at all with the firms as they're as they're, you know, writing their business plans and getting set up and working on on that and how? And if so, how do you help them gauge like what to invest? I mean, you're talking about everything from the kitchen equipment to to the, you know, the, the the China to the, you know, flatware, to the linens, to all those things, you know, or, or plastics, [00:35:00] depending on what, you know, what level you're at. But, you know, how do you help them? Yeah. I mean, I suppose they've got a theme and they're going with that theme, right? And so they're trying to do the things that build that out, and you're trying to figure out how to how to afford, you know, the theme and get set up, but I'm assuming. So I guess I'll couch this I'm assuming that one of the reasons why restaurants fail is that they either over invest or under invest on the front side of that, and then they either expect so much more business up front and they don't care for, you know, expect the sort of long [00:35:30] term, you know, uh, take off, um, or they do the wrong things at the beginning. They have such a flurry and then it just, you know, sales fall off because people go, yeah, they, they don't know what they're doing, and the food's terrible. Service is bad. Whatever. So it seems like just you've got to get it right, right out of the chute and, and nail all of those things. So how do you help them? So. So I'll go back now. How do you help them make the right investment and the right places and understand, you know what? What do we need to do to make this thing successful? [00:36:00]

Jabbar Daniels: Absolutely, man. That's a that's a great a great question. And I'll, I'll start that off by saying, uh, a lot of the time folks are coming in looking for accounting when they, when they do have the problem unfortunately. Yeah. Right. The problem is already there. Like they already got everything started. They already got a girl. And then they're like, oh, now I need to count it. And then they and then they start, and then you have to come in and sometimes fix some problems or monitor problems and help them just sustain it in a way or continue to go. And sometimes it doesn't always work out because they're already maybe too late. That [00:36:30] happens, but I do. Fortunately, I do have some clients who actually we started working on one location that they had, and then they're actually opening new locations and things like that. So then we can help them actually get started the right way on that new location. So, um, actually in the building process right now, um, and, and they're opening up in a hotel, actually, and they're building it out and all that stuff. So, yeah, the first things to talk about, of course, they have [00:37:00] some funding for that. So yeah. What do we do with that funding. Yeah. They need to build everything out. They need to make sure they got all their equipment taken care of. They also they got to make sure that staff is ready to go. Um, before the before, um, opening, you know, for the getting rolling? Uh, we definitely need to talk about all those different, uh, costs, food costs and their pricing, all those things.

Jabbar Daniels: And then the other thing, which I think is a huge part of it, is like cash reserves, having some cash reserves just so you can you can weather that [00:37:30] early storm of, you know, that unknown of what's going to happen, how many people are actually going to come in the door, what are we, you know, are we marketing? Right. All those things where you may be in that deficit in the beginning until you get it right. Uh, and so, like having that and figuring out what that is, I think is a big part of, of, uh, just getting started on the right way, just because you don't want to be in that negative and have to put your own money in there in order to sustain and things like that, because you see that happen as well. So I'd say, uh, you know, to answer your question, it's just, uh, just [00:38:00] everything you need to build it out and get ready and then making sure you have that reserve and you can actually sustain for the time it takes you to even out and make sure that you're actually going to be profitable to continue. But yeah, I think it's a lot more fun to continue here, but, uh, a lot more fun to kind of help, uh, get it rolling than it is to fix problems. I would say.

Glenn Dunlap: For sure,

Jabbar Daniels: Because.Uh, coming in to fix the problems that were already created is very tough, especially when you're working with, uh, maybe business owners [00:38:30] that, um, they have they're stuck in their ways or something. They almost sometimes use their business as a bank account, things like that. And it's like it's never a good, good, good situation for cash flow. Right. So so yeah, when you're when you're able to like kind of get things, help them get things rolling and they have that that open mindset where they're actually taking your advice and things like that. That is uh, that's the good part about, uh, helping these, uh, restaurants out for sure.

Glenn Dunlap: Well, every accountant that's listening to this is it feels your pain because they've got clients that do exactly the same thing, right? I mean, that's a common theme. [00:39:00] Uh, and, and for you business owners that might be listening to this, uh, knock it off. You know, go see your accountant first and then.

Jabbar Daniels: Exactly. I mean,

Glenn Dunlap: I'll say what.They want to tell you, you know, come, come see me first. And, uh the. Yeah. See your accountant first?

Jabbar Daniels: Yeah. And I don't want to.

Jabbar Daniels: You know, I want to limit how much money you can spend here. But sometimes it's necessary because you don't want to extend your business.

Glenn Dunlap: Right. Tony Hawk called that his fun killer. He had a he had a CPA on staff, and she was his fun killer. So he had ideas. And so [00:39:30] you mentioned a cash reserve. So thinking about this from a metric standpoint, are you thinking, you know, 2 or 3 months or are you thinking 5 or 6 months of cash reserve? Like how how far out do you think you know, do you think that they should have in reserves?

Jabbar Daniels: Yeah. I mean, I'd say at the, at the least two at the least I think, um, but, you know, this is all of course, this is what's available. Of course, because it may not always be there, but if it's something we can control, then. Yeah, I mean, I'd say at least [00:40:00] two, but if you can extend that out even more to have that on reserve, I mean, that'd be great. Just because, you know, you still want to find yourself in those holes where it becomes a lot more stressful than it used to be. Um so I'd say at least two, um, if possible, we've got to understand what how much payroll is going to cost you every payroll run, right? Um, and then, of course, as the as the cash does start rolling in, we've got to see, okay, at this point, how much burn is there? How many months can we sustain with this reserve? Um, and looking [00:40:30] at, uh, looking at those type of things, just to make sure that you know what position you're in at any given time. But, yeah, I'd say at least two, um, at least two months, uh, in reserves, just to, just to for, you know, if everything stopped right now, how long can we pay our staff and how long can we sustain? Um, yeah, I think I think that's, uh, that's probably a good way to go.

Glenn Dunlap: Yeah. Maintain supplier relationships and do whatever you need to do to, you know, to kind of.

Jabbar Daniels: Absolutely handle.

Glenn Dunlap: That stuff. I mean, yeah, you don't want to have the best one and then lose them.

Jabbar Daniels: Yeah.

Glenn Dunlap: Right. [00:41:00] Yeah. All right. So a couple of months. I mean, the hard part in all of this stuff. I mean, I've been. I've never started a restaurant, but I've been I've worked with those who were starting them. It seems like you always get the surprises and the locations that you're in that something, you know? Oh, we we ripped out this thing and then we found this, and then it cost us twice as much as we thought.

Jabbar Daniels: Always.

Glenn Dunlap: You know, the equipment that you had your eye on. And an auction goes higher than than what you expected. I mean, or whatever it is. I mean, there's always yeah, it seems like [00:41:30] there's always something like that, that that just ends up costing the business that much more. It takes longer to get in, get it open. Um, but I think it's, uh, you know, so, so the temptation would be to start the business and have some cash reserves that you think are going to be those 2 to 3 months of reserves that you have set aside, and then to dip into that as you finish out the build out and oh, we'll just do this and oh, we'll just do that. And all of a sudden now your cash reserves are gone from, [00:42:00] from what you expected when you started. So Undercapitalization probably so. So we've talked about, you know, some of the, the, you know, the spending on one side, but it would be an undercapitalization issue. So that kind of leads me to the next question then, which is thinking about the financing world in, you know, it's I hear things for different industries about access to capital. The cost of capital has certainly gone up. But what are you seeing in terms of, you know, as you're working with some of these startups and investments are the are the banks they've [00:42:30] always been skeptical of lending money to to restaurants because the failure rate. But, you know, where do they stand today. Is it is it are they open to it or are they or do you see do you see restaurants that are getting bank financing and getting started, or are they left to non-bank resources?

Jabbar Daniels: Yeah, I think they are. I mean, there's still that okay. You have to have at least been open like two years, you know, to be operating at two for, for a few years and have some kind of history. I think they're still looking at that. But I also do see a lot of the time and, [00:43:00] uh, you know, sometimes it's harmful if like, uh, you know, they need some funding, they go kind of the owner will go out on their own and say, oh yeah, I found some funding with some working capital loans, which usually are pretty tough to climb themselves out of. A lot of the time, but they'll go ahead and just get those because they know. They know they need the cash. And if I, you know, if I was they were consulted at first I'd be like, man, let's think about this first. We don't want to we don't want to put ourselves in a bad position because those end up costing them so much money [00:43:30] because they're in there paying it every day or every week. Uh, and it just eats into their profits so much. Um, but I haven't seen I haven't seen a situation where they haven't been able to get loans, usually because, you know, they're looking at all their cash flows coming in. You know, a lot of times they're looking at that oh, you're actually operating. Cash flows are coming in.

Jabbar Daniels: We'll give you a loan because you know, you got you got cash flows coming in to pay for it. So a lot of times they are they're all giving loans for that. But it's I think it's just it's just [00:44:00] the owner being more strategic about if they want to take those loans or not, just because it could harm him in the long run. I know when it's when when you're thinking about keeping your doors open. The last thing you want to do is not take a loan, because you want to make sure you have the cash to float, but the cost of it is the thing that that that isn't considered in full all the time, especially when those long term loan long terms come at them and they don't read every single page of that, and they don't really know how much it's costing them. At [00:44:30] the end of the day, they're really taking a loan for, you know, the loan to a you're actually paying back 100,000, but you're only getting 50, you know. Right, right. Stuff like that where it's like, well, now we got to make $50,000 or we're cutting off your bottom line, you know, because that's that was, of course, very exaggerated. But, um, you know, it's a lot of money that you're, you're now just out of because you took this loan. We have to pay it back, you know, so.

Glenn Dunlap: Well, it can be it may seem.

Glenn Dunlap: Like it can be kind of that drug deal, too. I mean, it just sort of feels like, you know, you get it, [00:45:00] and then you take you, you know, you're doing it. And all of a sudden now, like, you know, how do you it's it's addictive in that it's the cash now and then. The challenge is, is like, how do I break this habit and get out of it?

Jabbar Daniels: Exactly.

Glenn Dunlap: Because you see, like a lot of these processors like Stripe or Toast or, you know, others that that offer those, those, those deals and then. Yeah. And all of a sudden now, yeah, I don't know.

Jabbar Daniels: They just.

Glenn Dunlap: 10%, 25% of your sales or whatever. Like, so you make $100 sale and all of a sudden, you know, you're operating on 75 bucks and it's [00:45:30] like, exactly. Yeah, exactly.

Jabbar Daniels: Exactly. So like PayPal for.

Jabbar Daniels: Their big ones. Yeah. Where they are, they're just, you know, they're they're they're in charge of your payouts. So they just cut it off the top and just take a little off the top. Right. And they just stay.

Glenn Dunlap: There's no float in that.

Jabbar Daniels: There's no yeah there's no float in there at all. So yeah longer.

Jabbar Daniels: Longer. And I actually had one of a restaurant clients had to have to have this talk with uh, because they were taking those like those working capital loans. I'm like, hey, look, man, if you can consolidate all these and [00:46:00] put it into put it into a longer term loan, like get a lump sum for a longer term so you can get out of these things. Pay it once a month versus paying every day, every week. And you know what that percentage is? Your income. Your your interest is going to be lower on a regular basis. Um, but and you're you're not having to worry about paying it every single day, every single week. So that that's definitely something that, that they consider. Because when they when they do those, a lot of times it's so hard for them to get out because they end up just taking another [00:46:30] one to pay off the last one and then and then keep it rolling again. They ended up doing that and it just hurts them. And and I hate to see it. I hate to see it. And I try to avoid, uh, avoid them doing that at all costs. But sometimes, sometimes the only option if they don't have any other funding and things like that. So, um, and I have seen it where, you know, I've seen, seen folks get out of them, but it takes the it takes the really detailed, uh, like analysis of what's going on, where can we cut costs? And you have to, like, really be, uh, very [00:47:00] fine tuned into what's happening and to, in order to get on the other side of that. I've seen it happen. Um, sometimes I've seen it not not go well. You know, sometimes you have to close doors and things just because they can't afford it. Um, or it just eats them up a little bit. Um, but it's definitely possible. It's just, uh, trying to avoid it if you can.

Glenn Dunlap: Yeah.

Glenn Dunlap: Right, right. Yeah. So, I mean, the challenge, I think, and maybe I oversimplify this, but I think the challenge for banks looking at a restaurant is that, you know, you've got [00:47:30] fixed assets, which can be.

Jabbar Daniels: Yeah.

Glenn Dunlap: Undesirable for them to own if they. If you can't make a go of it. Right now it's used, uh, restaurant equipment, which is not going to be nearly worth what you paid for it. Right. I mean, it's going to have some value to it, but it's. But but use tables and chairs and all that kind of stuff are things that they're looking at going, you know, if you can make a go with it, I, you know, I'm gonna have to sell it at a fire sale or auction or something. So, um, so that that makes it tough. Inventory is, you know, you can't bank against [00:48:00] that. They really have. No. Are So you're really talking about a pretty slim balance sheet when you get down to what they can use as collateral in these things. So it makes it a pretty tough, uh, deal up front. So, um, do you, do you look at it when you're when somebody's starting this and say, you know, you're going to need 10%, 20%, 40 or 50% equity in the deal. And the rest of it, you could maybe borrow in terms of cash out of the gate, but you're going to need at least sort [00:48:30] of quasi equity friends and family money or something that sits there and is patient for a good bit until you're until you're up and going. Or is there a structure that you look at like that that seems to make sense, or is it just across the board? It might it might be so that it varies so much depending if you're talking about, you know, a cart versus a food truck versus a restaurant versus a, you know, you know, so there's a ton of different things there. But is there. Yeah. Do you see things when you're going into it like, okay, this is $1 million investment. We're going to need half of this from you and friends and family [00:49:00] or you know I don't know, maybe I'm making that up, but.

Jabbar Daniels: You know.

Jabbar Daniels: Um. I guess, um, I would say I don't dive into it too much, uh, just because, I mean, I. If if I could see it there, I don't, I don't necessarily, uh, ask for it to be pulled in. Necessarily. Um, because, I mean, you know, if things are if we're able.

Jabbar Daniels: To.

Jabbar Daniels: Operate efficiently. Then maybe you're okay. As long as, you know they've gotten this [00:49:30] far, as long as you're able to. Operate efficiently, then maybe that isn't unnecessary. But a lot of times they they may have that. Personally that they'll have to put in. Um, and a lot of times I see that happen like, and I don't deal with their personal stuff, but if they need. The cash, they know that, you know, it's their business. And at the end of the day, they're responsible for it. Either they're going to keep it going or they're going to shut it down. So if they will, they want to. And they find themselves in that position. Usually it's their funds that they end up pulling into it or. Finding loans and things like that But, [00:50:00] uh, these are these are the these are maybe those clients who don't always take all the advice that, uh, that, uh, that is given to them. You know, so if, if, um, if I have that perfect client where they're going to listen to everything, they're going to do it exactly how we're going to do it, then maybe we might not need that. You know, we might not need you might not need to put that in there. If we're able to operate efficiently and be cashflow positive steadily, you know, going forward. So I don't necessarily say I look for, hey, we're going to need this right here. So just go ahead and set it aside because I don't want to [00:50:30] I don't want to tap too much into their personal business. Uh, like I was saying, usually they have it somewhere, but I'm not going to ask for it. We're just going to make sure that they know what what's what's going on here. You know, if, uh, if I foresee that they're, you know, going to start dipping into the negative, then yeah, maybe we need to have that conversation. Right. Yeah, I don't I don't jump and jump in and throw it out upfront.

Glenn Dunlap: That's good. Just kind of curious. So thinking about this relationship we talked about you know you get brought in a lot of times after the fact. And so, you know, you get you come in. [00:51:00] What I'm sure this varies. If they're, you know, if their hair's on fire and they've got a bunch of stuff that's, you know, really a problem, I'm sure you're going to meet with them much more frequently, but let's just say in a normal operation, like if you're, you know, working with a restaurant, you've helped them get everything set up and systems in place. What kind of frequency, what kind of rhythm do you like to be in with them? And you know, what do you recommend to them? Are we meeting once a week? Are we meeting once a month? What? What are your thoughts there?

Jabbar Daniels: I like to do once a month usually. [00:51:30] Um, if, if uh, because you know, we do have like kind of packages where it's like, okay, we're just skeleton. We're just going to get our baseline stuff done for you. Tax plan, do tax prep for you, all that stuff, get the get the books done and general basis. And that at least is once a quarter. I mean, we at least will check in once every once a quarter because, you know, essentially they should have their operations and management down to where they can operate on their own and not need, like the additional analysis and things like that. But if you do at least once a month and sometimes, yeah, that may jump up even more, especially in the early stages. We might [00:52:00] meet every week or every other week or so, just to make sure that we got all the foundational stuff that we got to get done. And then we're having those discussions on making sure we're tweaking things that need to. So but if things are coasting and things are good at least once a month, um, it's like a go to kind of touch point for us to make sure that they, you know, of course, got all their they're actually seeing what their reports are saying and actually understanding what's going on and able to make the decisions that they need to. So I'd say once a month for sure.

Glenn Dunlap: Yeah, that makes sense. [00:52:30] Makes sense. I mean, get the systems in place and kind of work through the startup. So so so one last thing is that, you know, and then maybe we maybe we should do two last things since this one's not going to be a great question, but I'm gonna ask this question anyway. So they tell you one of the things they tell business owners, especially not not all business owners, restaurant owners that, you know, when you open the business, the first thing you have to be focused on is who's stealing from you. So, you know, thinking about that, unfortunately, I mean, that's just going to be the case. You know, we've got you know, some some pretty high profile, uh, you [00:53:00] know, examples of that in Indianapolis, but kind of thinking about that. How do you help a business owner, restaurant owner as they're going into this, you know, kind of avoid those things? Uh, you know, or, um, you know, help them protect what's rightly theirs. You know what? Yeah.

Jabbar Daniels: Yeah. I mean, that's that's definitely something that's, uh, big in the industry for sure, especially if you're working with cash. You're working with things that, you know, that could potentially, uh, you know, some fraud and things like that could potentially be, uh, be, uh, active there. [00:53:30] Um, so, I mean, that's why it's so important to look at the metrics, look at the, those, those, those percentages of revenue, things like that, because you'll start seeing spikes in things. And as long as you're looking at on a regular basis, you'll start seeing some things that look a little funny. And then you can dive in and look a little more, look a little deeper, and and then you'll uncover some more things. The more you look at it, the more you understand it, the more those things will jump out at you, the more you can uncover. And of course, the more detail you have. But, but, but first and foremost, I mean, it's something that, you [00:54:00] know, will just have a, have a talk about of preventing those things, you know, making sure that, okay, because, you know, a lot of restaurants and, uh, food and food and beverage, uh, service industries are going just cashless, you know, like, hey, we're we're going to deal with cash. You know, we're just taking because everybody has their Apple Pay or Google Pay or anything. They, they they have the ability, especially depending on where you are located and what the demographics are like and things like that.

Jabbar Daniels: So preventing maybe that's that's one of them because you're, you're, [00:54:30] you're uh, staff can't necessarily change the bank accounts where the money's going. Right? Or, uh, take the POS and make some changes there. So there's some safeguards in that. But also on the other side, I mean, yeah, there's still cash that's being passed. And I think that's a big part of it or items, materials. And I think that's just, uh, you know, like, yeah, if, um, your cost of goods ends up spiking up ten, 20% or something like that. We're like, wait, what the heck is going on? You're looking at it, right? We're not looking to go. Why is why are we buying [00:55:00] more than we than we were before? But we're only making this much off of it. I mean, those are the things that, you know, that that are going to stand out to you looking at those percentages and those fluctuations in it. And that's why also it's so important to have those different categories broken out, like we're talking to, talking about in the very beginning, like if you have alcohol split out as a line item. So for revenue and then you have the cost of alcohol as you compare those two and you say, oh, that's our markup is working just as it should be.

Jabbar Daniels: That's something that, you know, you want to you want to be able to look at. [00:55:30] So not having that that deep level of detail, you might miss some things. Some bottles might go missing and you probably won't even know. So because you don't have that detail and you're not having the eyes on it that you need. So that's a good point. Um, it's a good point. And another thing that, you know, I don't I don't it's not a because we're always looking at just high level. Yeah. If we're looking at those metrics, we can we can start to infer some things, but since we're working at a high level, when I end in the day to day, like catching someone doing something in there is definitely not something that we're going to [00:56:00] we're going to be able to catch, but we can look at the numbers behind it and give the owner some pointers on where to look. You know, and that's the that's the big thing. Uh, fortunately we haven't had that situation. Um, you know, I've had I've had clients who just have cameras everywhere and things like that, like they do, you know, what they need to do. Um, so we haven't had to look at any metric or see any big spikes or anything like that that we had to investigate further, luckily, but sure happens.

Glenn Dunlap: Well, you you came out of the hospitality space in, in Las Vegas and talk about some a place [00:56:30] that's monitored heavier than.

Glenn Dunlap: Anywhere else in the world, right. Oh, yeah. I mean, the holy smokes.

Glenn Dunlap: You know everything. Yeah.

Glenn Dunlap: Uh, you know, and.

Jabbar Daniels: We can we can talk for hours about, uh, things I've seen in there because I used to do internal audit for, uh, for the casinos. Yeah. So, um, doing internal audit. Got to see the surveillance room and that. Yeah. You know, at the aria, which we were at a conference before, and those cameras are there, so they're way high up there, but they can read the time on your watch there. So it is just [00:57:00] yeah, it is crazy how good they are and they're looking at everything for sure. And then of course in the restaurants and things as well, because they all have bars, right. You know, they have like bars and things and they're, they're monitoring, you know, they have the bottles that pour exactly an ounce and a half or whatever, um, for, for a shot and things like that. And they're monitoring it very closely. And, you know, you might think, oh, it's a casino. You know, they're giving away free alcohol, but they're monitoring everything very closely. They want to know, okay. Yeah. [00:57:30] How many drinks did that client have? How much money did they put in the machine. You know, they were they're they're looking at it to really understand, like everything that goes into it and making sure they're profitable at the end of the day. And that's the only way to do it. I mean, even as a big of operation as a casino to a smaller operation, as, you know, a mom and pop, uh, you know, restaurant, uh, you definitely want to be able to look at all those little, little things and make sure you're profitable at the end of the day because it can eat you up for sure.

Glenn Dunlap: I think that's it's so true. I mean, it's, uh, you know, thinking about that, thinking about [00:58:00] owning a business that does millions of dollars of business, but you're managing the pennies. I mean, that's it just goes down to. Absolutely. It goes down to that every time. I mean, especially when you've got so many moving pieces like this that are out of your control in so many ways.

Jabbar Daniels: Yeah.

Glenn Dunlap: Um, yeah. It's it's got to be one of the most difficult things.

Jabbar Daniels: So it really is. Um, but I will say, um, even though it is, uh, the reason why we've kind of leaned into it is that, uh, we we like working with the working with restaurant owners. I mean, they are fun. I think they're, they're [00:58:30] they're fun type of business owners to work with. I mean, they have that passion for their restaurant, for sure. And they're and they take it very seriously and, and just, you know, and then, of course, you know, we can go to the restaurants and actually have fun there with them too. So and have some get some food here and there. You know, that's always a good, a good little perk. But uh, but also yeah, they're just good people to work with and I do really enjoy that. So that's what kind of leads us into working with those restaurant owners and then and then helping them, because there's so many unknowns that go into it and things that they're not even considering because they're in the day to [00:59:00] day a lot of the time, not all the time, but a lot of the time the owners are in the day to day, you know, doing a lot of the work and may not even get paid for it. How do we get them paid for it? You know, we got to make sure that we're monitoring everything so that this good person can kind of walk away with the dollars they deserve to.

Glenn Dunlap: They be rewarded for their.

Jabbar Daniels: Business. Yeah.

Glenn Dunlap: That's right.

Jabbar Daniels: That that input they're putting in and that passion they have for their business. So I enjoy it. And yeah.

Glenn Dunlap: I love it.

Glenn Dunlap: I love it. I think it's great. I mean I think actually I think in some ways, um, [00:59:30] you know, the folks that work in the, in the, in that industry and culinary, you know, when there's, when they're trained in, uh, in the culinary arts, um, in some ways, I think they're probably better prepared. I'm going to make some people mad. And when I say this, but they're probably better prepared for business ownership than than a lot of physicians are, you know, they're so steeped in a ton of what they're doing with, you know, from an education standpoint. But they do very little to talk about the actual operations of running a business. Whereas I think in culinary school, a lot [01:00:00] of times they're they're they're thinking about cost and waste. And how do you how do you manage this? And like, you know, this is, you know, when you, you've when you've got the, you know, yesterday's brisket goes in the chili for tomorrow.

Glenn Dunlap: Yeah. You know, becomes the, you.

Glenn Dunlap: Know, that you're going to extend to those things.

Jabbar Daniels: Exactly. Exactly.

Glenn Dunlap: Not have waste. You can't afford the waste in that space.

Jabbar Daniels: Right.

Glenn Dunlap: Whereas the doctor's office, there's a lot of times they have so much profit and there's so much waste there, and they just aren't paying attention to it.

Jabbar Daniels: Exactly. I mean, I definitely agree [01:00:30] with that. And then insurance. Insurance is a whole nother thing to talk about for sure. But I will say, um, so at UNLV, I went I went to, of course, the business school where accounting was located. It was like I had my classes downstairs, upstairs with the hospitality. So all the students are like color culinary, you know, culinary arts and stuff like that. They're up there cooking and things. So you can just like you're saying, they're learning the business. Well, yeah, sometimes they're really learning the business side of. Yeah, running restaurants and hospitality and things like that. It was very cool [01:01:00] to see that because, yeah, it's like it was like a full restaurant up there and they're really learning all the ins and outs of things. And you're right. I mean, there you can't, you know, go into that business without knowing all of those things. I mean, you can, but I think it's hard to because you're taught them. I think at the end of the day, because the restaurants are restaurants. Right. That's the that's the what you're going into. So you kind of understand what goes into a lot of that stuff. So, um, the other thing I will, I do like working with like, you know, there's like a lot of times there's like the married couple where [01:01:30] one of them will be the cook and another one will be the business person. That's right. A lot of time, the mom and pop, I guess you can call it. Yeah. You work with a lot of those. And I think that that helps out because, you know, one person's focused on making sure that everything's done here, and then the other person is making sure that all the business aspects and things are done, instead of one person just trying to focus on all of it, because it's really hard to do that. So I do enjoy kind of kind of working with those folks sometimes too. So um, but yeah. Good point. Good comparison.

Glenn Dunlap: Front of house, back of house. I [01:02:00] mean, I think those are good. You know, you've got to understand the whole thing. You can't just be, you know, in the, in the back and expect the front to write all this. Um, I don't know if you. Have you read Unreasonable Hospitality by Will Guidara?

Jabbar Daniels: No, I have not, um.

Glenn Dunlap: Crazy good book. And it applies to so many other businesses as well. But, um, you know, 11 Madison Park, um, is, you know, was ranked as the best restaurant in the world for, you know, a lot of years running. So, um, but it's, [01:02:30] um, he does talks a lot about, you know, the relationship with front and back. And he was the kind of the front and and the chef was the, you know, the back. But the way that they worked together and made that that restaurant known for what it is, that's, that's a.

Glenn Dunlap: Fantastic.

Glenn Dunlap: Book. And of course, I'm also.

Glenn Dunlap: Hooked on the bear.

Glenn Dunlap: I'm hooked on the bear.

Jabbar Daniels: The bear is.

Jabbar Daniels: Amazing. Oh, that's a great show. Man, I love that show. I need to read that book, man. If you like that. What's it called?

Glenn Dunlap: Unreasonable hospitality.

Glenn Dunlap: By Will guidara

Glenn Dunlap: Get there. Yeah.

Speaker4: All right.

Glenn Dunlap: Yeah. [01:03:00] It's I mean, we've talked about the application of that in, in, you know, in just customer experience across a lot of different businesses. And, you know, how do you how do you treat the customer and how do you take care of them in that process? I think there's just if you take a step back and just start thinking about things from a different perspective, it's it's great and it's, you know, highly recommend, especially in the restaurant space. So any listeners that are serving restaurants, that's a that's a great book. I highly recommend [01:03:30] it. And uh, you know, it's a fun read. And and then he makes he's actually in uh, will the author of that book actually pops up in the, uh, the third season of The Bear when they're really.

Jabbar Daniels: Which which episode.

Glenn Dunlap: When the when the restaurant is closing that he worked for him. And there are all of those people from the food business that are there for the what do they call it? They called it a ceremony of some sort.

Jabbar Daniels: It was like the funeral. The funeral? That's right. Yeah. Yeah.

Glenn Dunlap: And, um. [01:04:00] Will, will is is there. And his wife, I'm going to space her name. But the lady that runs, um, she's got a cookie business, and I'm spacing her name, but she's also in it, too. But yeah, so there are a lot of restaurant people in that. In that episode.

Jabbar Daniels: It was the round.

Jabbar Daniels: Table. The round table. There were all the people were talking about. Yeah, I could I could tell just by listening to them talk that they were actual folks in the restaurant industry. You could just you could just tell. And they weren't just actors, they were just sitting there. [01:04:30] So I have to maybe look back and see which one he was. But yeah, that that was awesome to see that. Like just hearing it from the real the real chefs in there and stuff. It was great. That show was amazing. Yeah.

Glenn Dunlap: Yeah.

Glenn Dunlap: Katie's Katie's messaging me here. It's Christina Tosi. So that's the the the other lady that that's that's he's married to her. They they met in the restaurant business.

Jabbar Daniels: So, cookie, uh, what's her cookie?

Jabbar Daniels: Cookie.

Glenn Dunlap: Uh oh. Is it milk? Uh. Milk bar. Milk bar.

Glenn Dunlap: Bar. There it is. Okay. I got I.

Glenn Dunlap: Got [01:05:00] part of it. Thanks, Katie. For for keeping us straight here. So.

Glenn Dunlap: Milk bar?

Glenn Dunlap: Yeah. In fact, she's got a spot on. I think she's got one out in Vegas that you can go to. She came up. She's the one who came up with it. Like the milk that tastes like the the bottom of the, um, you know, the cereal. The cereal? Yeah. The cereal.

Jabbar Daniels: Oh, yeah. Cereal milk? Yeah. She's got the.

Glenn Dunlap: Yeah. That's her. That was her idea. Yeah. You get the. Yeah.

Glenn Dunlap: You get all the all the.

Glenn Dunlap: Sugar and the toppings that come out of the bottom of the cereal box.

Glenn Dunlap: That's the.

Glenn Dunlap: Yeah, [01:05:30] that's her thing. So, you know.

Jabbar Daniels: I gotta check it out.

Jabbar Daniels: Yeah. Make some in Vegas.

Glenn Dunlap: That's right.

Jabbar Daniels: Well, okay. Okay.

Glenn Dunlap: Yeah, we'll have to. We'll have to go hit a couple of these spots the next time we're out there So.

Jabbar Daniels: Yeah, absolutely.

Glenn Dunlap: That's right. And for those of you who don't know, Jabbar and I kind of we run into each other at conferences everywhere. So that's that's how we've gotten to know each other and work together on some stuff.

Jabbar Daniels: Excellent. I know.

Glenn Dunlap: Right. It's got to be soon after the last tax season. It'll be like a sprint to the end of the year. And that's. I'm sure [01:06:00] I'm sure it's going to be so. Well, Jabbar, this has been fantastic. I've really enjoyed the conversation. Uh, I love, uh, picking your brain about, uh, the restaurant space and and, um, you know, getting to, you know, to talk about the metrics in this space because it's, um, it's definitely something. I mean, whether you know much about it, we frequent them enough that, you know, you kind of. Yeah, you can kind of look at things with a different perspective. And if you're working with people in this space, you know how passionate they are, but also how how much they could use some assistance in [01:06:30] working through these things.

Glenn Dunlap: So thanks for sharing space.

Jabbar Daniels: Yeah, such a tough space. No, I appreciate you allowing me to be here and talk about it. Uh Definitely fun. Yeah. Thank you very much and hope to see you. Of course, at the next conference. Hopefully.

Glenn Dunlap: Yes.

Glenn Dunlap: Well, Jabbar, if somebody wants to get Ahold of you, how did they do that? What's, um. You know, can you LinkedIn or, you know, email or what's, um. How would you recommend?

Jabbar Daniels: So, um, Chester and Daniels, we our website. Chester daniels comm. Uh, we have a, you know, a forum if you'd like to reach out and talk [01:07:00] to us. Uh, definitely email at info at Chester Name.com if you'd like to reach out. Um, we are on LinkedIn. I believe Chester games. You can find us as well. Uh, we don't have too much of socials, but those are definitely the places that we're located. And, uh, yeah. That's great.

Glenn Dunlap: That's great. Well, thank you very much. And, uh, and hopefully you enjoyed the this, uh, this episode on the on restaurants. It's been it's been fun talking about it and, uh, you know, we'll look forward to seeing you on the next episode of Best Metrics. Thank you.