Part 4

Brother-in-law knew the game. Oh, yes. He had worked for a number of years as assistant manager in a similar enterprise. With his "knowledge of the business," he should have made a success of this cafeteria of his.

He knew how to handle the help, how to buy, how to run the kitchen, and so on. The operating details were as an open book to him. Judged from every outward appearance, the cafeteria was up to standard. It should have climbed out of the red in short order.

He had been taught to buy carefully and to manage economically. "Well bought," he announced, "is half sold." He'd read it in a book and he thought he was being a good salesman. Still the business stayed in the red.

Our ceramic friend was faced with kissing his investment goodbye--and probably with making a job in the pottery for a good restaurant man--with throwing good money after bad, or with getting into the cafeteria business.

He figured this business ought to pay. Somewhere, he knew, his brother-in-law had gone wrong. Just where, he believed he could find out.

So he took over the business. Brother-in-law stayed on, leaving the new owner free to observe.

And he did nothing but observe for a solid week.

Each night he made a list of the points in managing which had come up in the course of the day's work.

In a week's time he had an accurate list of all the actual jobs of managing, as all bills except for gas and light and rent were paid and a profit and loss statement was taken each week.

Then he arranged the list in order of natural importance.

It began with marketing and checking bills with deliveries, and ended with counting the money and depositing it in the bank.

"Hold on," he thought, "this isn't such a long way from running a pottery. What am I in this business for?"

"Because," he answered, "I want to leave as much of that money in the bank as possible, and mark it down as profit."

So right away he started to draw pictures. The chart on this page is the result after he had worked it over and polished it up.

+---------------------------------------+ | +-----------+ | | | Making | +--------+ | | |the Service| | Keeping| | | | Pleasing | /| Down |\| | +-----------+ / |Expenses| \ | / \ / +--------+ |\ +-----------+ | / +----------+ | \ |Building up| | +---------+ | Fixing | +--------+ | +-------+ | and | | | Getting | | Prices |_|Guarding||| Net | |Maintaining||_| More | | to Be | |Against | | | Cash | | the | | |Customers| | Fair and | | Waste | | |Profits| | Run-Down | | | In | |Attractive| +--------+ | +-------+ | Cafeteria | | +---------+ +----------+ | / +-----------+ | \ / \ +---------+ |/ | \ / \| Buying | / | +----------+ |Supplies |/| | | Making | |Carefully| | | |the Foods | +---------+ | | |Attractive| | | +----------+ | +---------------------------------------+

Note how it works backward from his final objective--"Net Profits."

"Now," questioned his alter ego, "how do I determine how much of that money stays in the bank as profit, and how much has to be checked out right away for expenses?"

And from his handy list of managerial functions it was plain that it depended on three things--buying right, selling with as little waste as possible, and keeping expenses down.

"Now we're getting somewhere," he said to himself. "Those things lead me right into my next job--which is to fix prices fairly. For what's the use of buying right, handling supplies carefully and keeping expenses right down to the bone unless my selling prices cover costs, yield a profit, and still look reasonable to the public?"

Yes, and the most attractive prices, backed up by careful buying and all the rest, wouldn't keep the dollars clinking merrily over the counter unless the food was so good and the service so excellent that customers bought liberally and came back for more.

By this time, you'll note, on taking another peek at the chart, he had worked right back to his "Number 1" job--getting more customers in.

Thus, by ANALYSIS, he found out definitely what had to be done--and what had to be done first. Brother-in-law thought he knew, but he had begun at the wrong end. He had been looking after expenditures first and receipts last. He was trying to squeeze a little margin out of his receipts before he did anything about getting the receipts.

How different the new owner's viewpoint! His brother-in-law, he found, was thoroughly competent. He'd simply got off on the wrong foot. In the kitchen and the storeroom, he was a good operator. But the new owner's place was "out front."

His job was to "get more customers, get them to spend more--and to give them such good food and service that they would come back and bring their friends."

He began by spending money. Took out the gas pipe at the entrance. Replaced it with a brass rail. Provided a small lounging room where customers could wait for their friends. Put in upholstered chairs so they could be comfortable while waiting. Put attractive uniforms on attractive serving girls.

There was an air of good taste about the place when he got through.

Then he changed the arrangement of the counters. But you know all about that--how the desserts came first so they would catch your eye before your tray was too heavily loaded with the heavier part of the meal. Staples which offered a small margin of profit were relegated to places in the rear. Dishes that made the best profit got the positions up front. Each day he offered a low-priced "special." Thus he planned to increase customers' purchases.

And the business began to grow.