Friends of Branded!
Happy Saturday and I hope you had a great week!
The title of this week’s H^2 comes from a quote attributed to Mr. Peter Drucker (November 19, 1909, to November 11, 2005), an Austrian American management consultant, educator, and author, whose writings contributed to the philosophical and practical foundations of modern management theory.
The only problem, Mr. Drucker didn’t say it, he didn’t believe it, and this theory has received a great deal of criticism as a most flawed strategy.
I heard this quote on Wednesday night at an awesome industry event hosted by our friends at Citibank in connection with the annual Citi Emerging Restaurant Forum.
It actually wasn’t the “what gets measured gets done” quote that really got me thinking, but rather the combination of this quote and the one that followed, “and winners want to be measured,” that made that happen.
But first back to the quote attributed to Mr. Drucker, that he didn’t say or even mean.
According to an article I found by Anne-Laure Le Cuniff, it’s believed that the quote originated in a paper published by V.F. Ridgway in 1956 called Dysfunctional Consequences of Performance Measurements. In this paper, Mr. Ridgeway was making the case that we should be more careful when using quantitative measures and a journalist, Simon Caulkin, summarized the paper and simplified it by writing: “What gets measured gets managed—even when it’s pointless to measure and manage it, and even if it harms the purpose of the organization to do so.”
Bringing it back to Mr. Drucker (and then I promise we’ll move on), what he wrote in his book, “The Effective Executive: The Definitive Guide to Getting the Right Things Done”: “moreover, because knowledge work cannot be measured the way manual work can, one cannot tell a knowledge worker in a few simple words whether he is doing the right job and how well he is doing it.”
Okay, there’s a lot to unpack here, so let’s dive into it!
Wednesday night I’m listening attentively to these ideas and the importance of the adapted “what gets measured gets done,” combined with the “and winners want to be measured.”
The hospitality industry is a people-first business combined with food & beverage. Readers of the H^2 know that we can, and I dare say must be tech-enabled, tech-supported and get leverage from our tech-stacks.
Restaurant sales are hitting all-time highs, while the failure rate of restaurants is increasing.
I’ve heard from many hospitality operators how they’re being inundated with technology solutions and how it’s overwhelming. The super vast majority of hospitality operators didn’t enter this industry to be technologists and certainly not to be data scientists, and yet, embracing and having a strong tech-stack is mission critical for the success of operators and their brands.
The article by Ms. Le Cuniff resonated with me, particularly considering my focus (obsession?) with the hospitality industry b/c while all businesses, of course, need metrics to measure their performance, many performance indicators do not neatly align with specific metrics. It would therefore be a mistake to artificially force employees fit into a measurement model.
Anne-Laure shared some rules of thumb that can help determine how to measure performance in a way that’s mindful of such cases (and she had me at “people-first management”):
- People-first management: Don’t hide behind numbers to measure people’s performance. Have human-to-human conversations. According to Mr. Drucker: “Your first role is the personal one. It is the relationship with people, the development of mutual confidence, the identification of people, the creation of a community. This is something only you can do. It cannot be measured or easily defined. But it is not only a key function. It is one only you can perform.”
- Metacognition: Instead of applying the same measures of performance over and over, make sure to reflect on the way your current measurement systems impact the way you think and work. How are these measures impacting your incentives? In what ways could these measures be gamed? Is there any potential for second-order consequences?
- Non-measurable performance indicators: Make your peace with the fact that some performance indicators simply cannot be measured. Innovation, creativity, enthusiasm, expertise… are all impossible to truly measure. You could of course use an indirect measure (which many companies do by administering tests during the hiring process), but do not confuse the incomplete—and potentially flawed—measure with the actual factor.
Why today's obsession with management theory and how to engage and re-think workforce performance?, Well, b/c restaurants are an extremely labor-intensive industry.
How labor intensive? Great question!
Our industry requires 4x the amount of human capital to generate $1mm in sales. That’s right, restaurants require 4x the number of employees to generate $1mm in sales.
I’m not going to tell anyone how to interpret or use the above information, but to me, it screams that we’d better be thinking about our human capital and how to attract, motivate, recruit, train, engage, communicate, maintain, reward and manage our respective teams a great deal. The previous sentence can and should be applied to every industry, but the restaurant industry needs 4x the number of employees to generate $1mm in sales!
But while labor and the need to successfully manage our workforce is mission critical, despite labor costs remaining above average, average hourly earnings of restaurant employees have fallen for three years in row.
In fact, on Branded’s Foodservice Feud board, recruiting employees is no longer the top answer on the board. In 2022 and 2023, 50% and 45% respectively of restaurant operators ranked recruiting employees as their top challenge (followed by food costs at 19% in 2022 and sales volume at 19% in 2023.
In 2024, sales volume is the top concern at 26% followed by the economy at 25% (and recruiting employees has dropped to the bronze medal position at 18%).
Bringing this to a close, I’m going back to the two quotes that had me start digging into management theory and our industry, “what gets measured gets done” and “winners want to be measured.”
Of course we need to measure the performance of our workforce, and our best people will want to be measured! But we need to use the right metrics to measure them.
This all made me think of baseball, specifically Michael Lewis’ Moneyball, and the great Billy Beane, who I was fortunate to get to spend some time with backstage at the FSTEC conference in 2022).
If you don’t know the story of Moneyball, Mr. Beane, with the help of others, of course, rethought baseball and the metrics that measured performance (and therefore the type of ballplayers a baseball team should be pursuing to win).
I think the restaurant industry is having that same rethink and with the help of technology and the data we’re able to collect, while we of course need to maintain and even celebrate and expand upon our creativity, enthusiasm, and innovative thinking, we’re now able to quantify our actions, predict outcomes with greater accuracy and use the right indicators to measure our performance.
To my restaurant friends, we’ve pushed prices higher, we’ve stretched our guests, and over 50% of us are most concerned about sales volumes and the economy.
Our playbook needs to change, and we need to re-think our models.
I would never profess to have all the answers, but I do believe we have a lot of ideas and technology solutions that can helpful. Let’s leverage the wisdom and experiences of this community to win.
It takes a village.
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I’ve been writing about Branded’s portfolio companies as well as some friends in the market here in the shoutout section.
This week I decided to pull a LinkedIn post from one of Branded’s partners and our go-to-market specialist, Mr. Seth Temko, who did some boasting about our friends at Fishbowl.
Fishbowl announced, and Branded celebrated, it’s giant leap forward for restaurant groups looking to grow loyalty and engage their guests.
Why is Branded so excited about this announcement?
Well, as industry enthusiasts, we fully embrace Fishbowl’s mantra that every client deserves a loyalty solution that’s powerful, easy to manage, and deeply integrated with other marketing channels.
This move by Fishbowl is also consistent with my own conviction that the need for bundled & integrated solutions is so important b/c of the efficiencies it creates for operators (the best-in-suite vs best-in-class argument).
Guest data, which is really consumer preference data, is so important and for good reasons, the digital transformation we’re experiencing makes personalization mission critical to attract and maintain guests (and you can’t personalize an offering or a marketing campaign if you don't know your guests).
This is the path Fishbowl is on and Branded is super excited to see our friends bring loyalty to the forefront of its platform.
Might there be a third reason why Branded is so excited about this?
There might be, but let’s re-visit that a little later in October.
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Branded invites readers of the H^2 that are interested in learning more about our portfolio companies, and investment strategies to become part of our Access Hospitality Network.
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Featured Episode: Navigating the New Era of Restaurants: Connecting with Customers in a Shifting Landscape
Join Michael Schatzberg, “The Restaurant Guy,” and Jimmy Frischling, “The Finance Guy,” as they sit down with Maria Rivera, CEO of Smalls Sliders. Maria’s leadership showcases her passion for innovation and excellence, shaped by her experiences at Disney and other industry giants. Her focus on simplicity, operational excellence, and customer satisfaction drives the brand’s success, proving that greatness comes in small packages. Smalls Sliders isn’t just about burgers—it’s about creating joyful moments with every bite, and their innovative, 750-square-foot model is already ahead of the curve in the fast-casual market. In her conversation with Schatzy and Jimmy, Maria shares insights into her leadership style, balancing empathy and accountability, while highlighting the rising influence of women in top roles in the restaurant industry.
Tune into the episode and subscribe to our channel here: Hospitality Hangout With Maria Rivera
Re-Run of the Week:
Throwback to an exciting episode of Hospitality Hangout as Michael Schatzberg and Jimmy Frischling sit down with Sterling Douglass, Co-Founder & CEO of Chowly, to discuss exciting developments in restaurant tech. Douglass explains how Chowly, a leading point-of-sale integration company, helps over 12,000 restaurants seamlessly integrate orders from major platforms like Grubhub, Uber Eats, and DoorDash, improving operational flow, boosting revenue, and saving on labor costs.
True or False: Sterling earns the award for most appearances on The Hospitality Hangout. You'll have to listen to find out!
Tune into the episode and subscribe to our channel here: Hospitality Hangout With Sterling Douglass
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MARKETING
Hooks Your Restaurant Can Use to Go Viral
By: Rev Ciancio, Head of Revenue Marketing at Branded Hospitality Ventures
A hook is the first 2-3 seconds of your video that makes people want to watch more. It gets them engaged, stop scrolling, gets them interested and ultimately get them to watch the rest of your video. Hook leads people to believe that they’re gonna get a pay off by watching the video.
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That’s it for today!
See you next week, same bat-time, same bat-channel.
It takes a village!
Jimmy Frischling
Branded Hospitality Ventures
jimmy@brandedstrategic.com
235 Park Ave South, 4th Fl | New York, NY 10003
Branded Hospitality Ventures ("Branded") is an investment and solutions platform at the intersection of foodservice, technology, innovation and capital. As experienced hospitality owners and operators, Branded brings value to its partners through investment, strategic counsel, and its deep industry expertise and connections.
Learn more about Branded here: Branded At-A-Glance