What Do You Pay Your General Manager For?

publication date: Mar 2, 2017
author/source: Mike Toms

Manager, Chef, bartender

General Managers have it tough.

Long unsociable hours, snappy customers, equipment breakdowns, late deliveries, salespeople harassing them, employees claiming they were underpaid, owners on their back about last month's numbers, suppliers wanting to be paid...the list goes on and on. There is hardly an opportunity for time off and when they are finally able to get a day to themselves and are on the verge of relaxing, they get a call from their assistant saying the world is ending and they need to come back immediately.

Problems, problems and more problems. General Managers are paid to solve problems first and foremost. We know this, because we've been there.

We come across a lot of owners who expect their General Managers to count, recount, verify, generate, analyze and if necessary re-verify their inventory on a regular basis so that they are "on top of the losses," and THEN take action to correct any results and trends they are able to decipher from the information they have collected.

Apart from taking up hours of valuable time from a GM's already overcrowded schedule, the inevitable interruptions from new problems that need to be dealt with means that this is often a fruitless task that yields little in the way of insight or progress.

Meanwhile, bar owners receive a false sense of security and believe that everything is "under control" when in reality they are losing money and are completely unaware: in this case, what you don't know, can and will hurt you.

So if you are an owner, and your GM or bar manager counts your inventory you should be able to answer the following question easily and immediately:

  • How much were you missing on your last inventory?
  • How much did this loss add up to in dollar terms?
  • What are you and your GM doing about it to ensure that number is going to improve next period?

Sadly, the reality that we see is that in-house inventory counts often amount to little more than a paper exercise to keep owners happy. Most owners cannot answer the above questions and instead default to pour cost numbers which are a notoriously terrible measure of performance on their own.

Even in cases where GMs have the time, energy and determination to generate and execute a perfect inventory count, it can only do so much. We recently worked with a multi-unit client in a bar that is part of a national chain with a household name, whose GM had recently won Franchise GM of the Year at the annual awards ceremony. In short, he is a superb General Manager.

Having done some exploratory work we found that his packaged products (especially bottled beers and wine) were on point and exceptional. We later found out that this was because he was doing twice-daily counts on these products (think of the time involved!) in full view of the staff.

However, when it came to liquors and draft beer it was a different story. Even though he was "tenthing" bottles weekly, his staff knew there was no way he could accurately measure each bottle and keg and so losses were in line with industry standards we see elsewhere (20-30% missing in most cases).

The point is that your GM cannot realistically be expected to reduce your liquor, beer and wine losses given everything else they have to do. Even if they focus solely on this and nothing else, they simply do not have the tools at their disposal to generate information to hold your staff accountable.

The reality is that no one got into the hospitality industry to count bottles (not even us!). The best owners realize this and set their GMs free from the grind of inventory counts by using audits and allowing their manager to do what they are good at: leading their team, delighting their customers, moving the business forward and yes, even solving the occasional problem that arises.

It's reasonable to expect your GM to solve problems-that is what they are paid to do after all. However, if you expect them to count your inventory before they can solve your inventory problem, then you actually are asking them to identify the problem, analyze the problem, and verify the problem before they can even start solving it. That's a lot for anybody to do, no matter how good a GM they are.

If you agree that your GM is there to solve problems, isn't it a better use of their time to start with an inventory result and use the time he/she would usually have spent counting to start dealing with the results and planning the actions that are needed to improve the result next time? Isn't that a better use of your financial investment in them?

General Managers have it tough...Help them get the bonus they deserve (and the profits you deserve) by giving them the information they need to do their job.

Mike TomsMike Toms is the Owner/Operator of Sculpture Hospitality for mainland Miami-Dade County. They specialise in reducing pour cost and making sure owners receive all the money due from their sales. Article written by colleague Stuart Gilchriest.