I was impressed to see Gordon Ramsay explain TOC basics to a failing restaurateur in his new reality show “Ramsay’s Kitchen Nightmares” the other night.
Ramsay is the gruff, Scottish, Michelin-star-winning, celebrity chef. His show tracks his attempts to knock poor-performing restaurants into shape with his unique mix of screamed expletives, gentle reasoning and some sound business principles.
The other night he asked a restaurateur to explain why, on the one hand, she was promoting a cheap burger on her blackboard, while on the other, her menu items were ridiculously overpriced.
She explained that, because she was loosing money, her accountant and banker had encouraged her to raise prices — which she did. The problem is that this reduced cashflow. So, to generate cash to pay wages, she had to offer discounted blackboard items!
Predictably, Ramsay instructed her to phone her accountant and advise him that he is an a*******. But what was more interesting was the solution he proposed.
Ramsay instructed her to re-price her menu, serve smaller meals and focus on selling three courses to diners, rather than one.
But here’s the good bit. Because the restaurant’s weeknights were quiet, he told her to switch her focus from selling food to selling tables. His solution was to sell each table for 10 pounds — a fixed menu — and then sell each table multiple times in the one night.
While Ramsay has probably never heard of TOC, he’s smart enough to know that tables are typically a restaurant’s constraint — and, consequently, that the key to maximising the profitability of a restaurant is to maximise Throughput per table.
If you’ve seen the show, you’ll know that Ramsay often fails to rescue the restaurants he takes on. In the case of this show, when he returned a few weeks after his initial stay, the restaurant was doing well — particularly weeknights. From memory, on the particularly weeknight that Ramsay visited the restaurant was so busy that it had turned it’s tables three times each! And the restaurateur reported that she was, at last, making money.