Behind the Episode: Gordon Ramsay's Secret Service | When Pride Meets Payroll

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What's going on everybody? Welcome back to the Rock Harper Show. I'm your host Rock Harper and the Rock Harper Show, that's three times in the intro, that's crazy, is where curiosity leads and bold conversations are always on the menu. I am, if you don't know, I'm the Hell's Kitchen Winter Restaurant owner and one of the secret diners on Gordon Ramsay's new show on Fox, Secret Service, where he went undercover to save struggling restaurants.

and I was one of the secret diners. Pretty cool. What I saw was deeper than dirty kitchens and chaos. Restaurants fail for all kinds of reasons. Bad systems, weak leadership, burnt layout, mean, burnout, bad math, just no plan at all. And this show is about the truth and how to flip it. Each week I bring you real lessons from the trenches, bring in experts and give you tools not just to survive, but to build something that lasts. Today's guest is one of the smartest people I know when it comes to restaurant finance.

and someone who actually walks the walk. Matt Hetrick is a top 40 under 40 CPA in the United States. Woo, that's heavy right there. Matt Hetrick is also the president and owner of the accounting firm Harmony Group, the premier restaurant focused accounting firm in the US. He acts as CFO for more than 150 businesses around the country, one of the industry's leading minds on hospitality finance.

Matt was a fierce advocate for hospitality businesses due to pandemic and hugely influential in crafting the rounds of PPP legislation that passed during that time and is a major voice in DC's initiative 82 fight. Thank you for all of that, Matt. Matt has a development group, Harmony Hospitality is successful restaurateur in his own right and is the father of three, a decorated combat infantry veteran and deeply committed to his belief that helping individual

operator succeed and thrive helps the entire industry to continue to grow. Matt, man, wow, what a power. We all know you're a beast out here, but it's crazy even reading, man. Welcome to the Rock Harp show, brother.

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Thanks so much for having me, man. I really appreciate it. I'm excited to be on the show. Wish my background was as cool as yours right now.

Listen, no, no, your background is cooler because you look great and moisturized. I'm in here in restaurant fighting off mosquitoes and trying to figure out how much all this liquor costs behind me. But we'll get to that later. Matt, we're to jump right into it. are, the first episode that I actually, I won't give away a trade secret there, but we went to Arizona and filmed at Mrs. White's Golden Rule Cafe.

There we go, yeah.

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And Mrs. White, lovely matriarch of the family, of course, and a pillar of the community out there in Phoenix. She'd been running this cafe, I want to say for 60 something years. Her brother, oh no, son, I think son, Larry. He's a son, okay. Larry's taking it over and it's just not doing well. Food isn't that good, service actually was pretty good, but he's on financial straits. And I want to talk about

Yeah, Larry, the sun.

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Pride and legacy and and sort of some of the familial bonds that or the familial practices that we inherit and hand down and what that really means so You had a chance to take a look at the clip with Larry to describe it to the folks I don't know if we can play it here because of to see if Fox will give me the permission but Y'all should definitely go check it out on YouTube if you can find it or Hulu for the replay on demand, but

Gordon kicks everybody out and he wants to talk one-on-one with Larry and in this one-on-one Chef Ramsay discovers that Larry and his and his mom that the restaurant they are broke he says I'm broke and they're losing about a hundred thousand dollars a year a couple grand or so a week so what I wanted to talk about one if we could just if you could just tell me your initial thoughts of that exchange

with Larry and Gordon and what did you think of that? What stood out?

And you know, the first thing that came to mind for me was like, God, what a common story, right? Cause I looked at Larry, you've got this legacy business, right? With a ton of soul, really important to the community, right? And it makes me think of restaurants that I work with. You we work with Ben's Chili Bowl. You used to be at Ben's next door, right?

I do.

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Work with the family and you know these iconic institutional kind of places that have been around forever right and then you we work with. Literally mission the best restaurant tour in the country from the last couple years and James Beard left and right people Michelin stars all this kind of stuff and like there's this really interesting commonality with almost.

all of these businesses, right? Which is like everybody walks in and they see a bustling dining room and they think, man, they must be printing money. God, it must be so awesome to own a restaurant. So easy. All you gotta do is make good food and like everything's great. Right. And I'm like, shit, if everybody knew that that was the case, that that's like a facade, right? Like they have a lot more sympathy, I think, and empathy for the people that are working in the restaurants, the owners of the restaurants, how hard they're grinding all day, every day.

And then maybe, maybe almost like a little bit of pity for how many people are on the cusp of being broke every single day, like day in and day out. A lot of times it's not somebody's fault. It's just like, it's what's going on and it's almost always behind the scenes.

Mm-hmm, you know you you kind of you you perfectly segue to my next question But I think you know you and I gotta have another conversation on the podcast because you know as we talk about I mentioned 82 Which is a local issue here for those of you are not in DC But but it's a local legislative issue rule or a What do you call a law? Yeah, that raises them it gets rid of the tip tip minimum

credit and i won't get into it i do know that in the in the comments on social but just in the discourse that i hear from people even my friends people it just have they think that because you know there's a busing dining room that you're making money hand over fist and it's pretty pretty simple and it's just not always the case so you raise a good point there and i appreciate you bringing that up but i am curious so it is very common

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according to what you say and I believe it is as well. Why do owners hide their struggles from loved ones like you know I think as a man I can understand the nonsense of being too prideful right I I get that I've done it I don't want to do it I try not to do it now but why do people do.

Yeah, but like that. Yeah. Yeah. mean, even even like that, it's like, you you kind of think about it a little bit, like you say, you use the word nonsense there, right? And it's like, is it too much to like, want to be?

to want to succeed and also to project that sense, right? Because you know that you're being perceived by other people all the time. there's even cultures based around that. you think about it, like saving face in wide swaths of Asia is a really big deal. You can't do business if you don't know how to make sure that you're not impinging on somebody's pride. So I think here, especially the American mindset, we're a culture of people

founded ultimately like at some real level on like fuck what we used to do we're gonna take a new chance right not everybody ended up here for that reason but certainly people who came by choice have been doing that for a while so it's like in the blood of people to take chances to try to be successful to do all that stuff and nobody wants to admit like when something that they do didn't turn out it's not just restaurants I'd say we you know my firm Harmony Group works with

tons of people across all kinds of industries. It could be anything from contracting to professionals to restaurants on the tax side in particular. And we focus on restaurants on the rest of the side. But what I see as such a common story is it's like this struggle of a person who has an entrepreneurial spirit, whatever that is. If you're a staff member, you're younger, you're whatever, it's your side hustle. Don't we love the side hustle?

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aren't our number one celebrities in this whole country. Like at this point, people who did like the Kardashians are literal. I'm going to make a video and turn this into billions. And we like celebrate that hustle. We celebrate wealth. I'm not sure that is or isn't the best thing in the entire world, but, um, you know, it's like, it is the drive. It's, what we do here. And so, uh, what you see in restaurants all the time is like a deep seated unwillingness to say, tried this thing and it didn't work.

Right? Because it's almost saying my value is my values based in some real way on whether or not the things I'm trying to do are going to succeed. And here I am telling you I failed. Right. And people are afraid of that failure sort of undercutting, know, basically undercutting like the value that they're assigning to the task at hand. And I think that's like, I mean, I think it's like a really

Deep-seated thing in restaurants. It happens all day every day like every single restaurant that's struggling. Nobody knows about it We we tend to know about a lot of people who are more on the ropes than other people just because of like the nature of our work being like very intimate and behind the scenes But every restaurant that I know of that struggling nobody else does right they just like that one got some awards That one's got this that one's got that I mean, yeah

I'll give you a DC example from just a couple, like the last couple of weeks, wasn't causa. Didn't they get like a nomination or something? And the next thing you know, they're in the paper, the business journal for they've never paid rent or which probably means they they're on the like a bankruptcy track. Cause if you're not paying rent, you're probably not paying sales taxes. You're probably barely making payroll and that's a restaurant that's super busy. Right? Yeah. it's hard to It's hard to blame Larry for that, man. or like,

It's not even about like blame so much as like his story is so common and I think a lot of people don't get to see that and recognize how common it is.

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You know that listen, I can empathize tremendously. I remember I was involved with a restaurant and I wasn't even an owner. I was like a partner. This is many as well over a decade ago. But this is after Hell's Kitchen and the place was going out of business and the owner decided like the numbers weren't working. He just wanted to sell it. And when I tell you I got like depressed.

because this is like my thing. It had my name on it and I was like, couldn't believe publicly I was about to fail on such, I felt like it was the worst thing in the world because Rock Harpard, Chef Rock was closing a restaurant. And I thought everybody was gonna clown me and I was gonna look like a laughing stock. And I woke up the next day and nobody gave a fuck. Because

You won, you know, somebody told me this. forget what chef told me this. know, restaurants close all the time. know, Wolfgang Puck has closed restaurants. know, Gordon Ramsay's closed restaurants or or Jose Andre. Like you could name anybody in the world in any business and they've closed it. So it didn't work. You know, it's just like you said something about that. Like, you know, we tried and it didn't work. And I like to win. Don't get me wrong. I hate losing.

But I also, feels different. Meditation has helped me with that, sort of stillness and just understanding who I really am. I'm not a restaurant. I'm not any of this. I'm not any of it. That has helped me. But I only say that to say I completely understand being stuck in that place. What is challenging is when it happens to your family. And I haven't had that happen where I've...

passed on anything I'm sorry I'm swatting away if you're watching this I'm freaking DC mosquitoes are killing me I've sprayed everything I'm probably breathing

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Do that, you know, do background and they're trying to come in. They're like, what's up?

But let's dig into the to the to the nitty-gritty and this is this is I want to get into the actual number so Larry told chef Ramsay that he's losing about 2,000 a week and People I've had many conversations with people outside of restaurants or outside of business and they're like, how are you still open if you're losing a hundred thousand dollars a year, I've had business years where I've

where it shows like, you lost money last year. And I think that people do not understand what that means. Explain that for the people, please.

Yeah, mean like, okay, so.

Like in a real way, what it means, it totally depends on how you funded your business and whatever else, right? But I'll tell you a good example, I think, of where it leads to the most difficult outcomes is people, if you're rich to begin with, what's that joke? It's like, what's the fastest way to make a million dollars, Start with like two million and open a restaurant. So, and it's a real thing. If you put in a whole bunch of your own money,

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then if you're making money, it's going to generate profits and at the end of the day, you got more money in the bank. What did you do with it? Hopefully you took it in salary, you did whatever with it, but a lot of people are borrowing money. They're paying back the bank, so you might have had enough money to go in and if you lose money, it's tallying up basically how much came in, how much the expenses are. But what people will do is make choices that

basically allow them to keep trying to band-aid through it, right? like a very common one with, especially with small business owners who are like strapped and don't have resources. And that tends to be, unfortunately, like the smallest restaurants with some people who like really deserve a chance at success but just don't have that ability to get in. Though maybe they won't pay their sales taxes, right? Maybe they won't.

Maybe they won't pay payroll taxes if they're running their own payroll. Maybe they won't pay rent. Maybe they'll stiff some sort of some pliers here and go somewhere else. seen every version of like how people can do this. We rarely stop working with somebody at Harmony Group because we work pretty hard with folks to keep them sustainable for a long haul. But somebody gets a bad restaurant and you know at some times you just can't turn one around or

concept didn't work and you can't adjust, whatever it is, it's usually some combination of bad luck, volume-based stuff, right? And in those cases, the only people we'll ever stop working with typically are ones who won't pay their sales taxes or other things, because that can sort of go on us. And you can't get rid of them. They don't even know it. think sometimes when they're trying to bridge it, they run up these bills and it's like, you can't.

You can't go bankrupt from sales tax. That money was never yours. That's the government's money. What we'll see a lot of times is people will run up those kind of bills and then they'll try to like work out a payment plan or whatever else. And that happens. is what it is. The toast loan. We call it the toast loan cycle. It's probably unfair to toast if they're a sponsor or something, my bad guys. they're B2B loans, right? They're just like, they're...

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receivables factoring kind of arrangements is what they're known as. And that's basically somebody lends you money, gives you some money upfront, and then they're going to take some of your credit card receipts along the way to pay it back, right? Plus a fee. And some of those are fine, but some of them are, are they look like they're going to cost, I'm to borrow 50 grand and I'm going to pay back 55 or something or something else. And if it's too short of a period, cause most of those loans are like over three months or six months to, to like,

lower the risk of the person who's lending to probably a business on the ropes. interest rates are crazy high. So people like I can think of a couple clients that we have right now who have gone down that cycle. have nobody else that they know that will help invest in their money or they don't have any resources and they just take one bad loan after another to keep it going to try to like turn stuff. And that stuff happens all the time. The biggest like challenge though that we see is it's one thing to bridge a gap, right? But a gap has two sides, right? So

If you realize you're down at the bottom of the hole on the edge of a cliff and you're like crap, gotta throw a fence or like, you know, a bridge across isn't gonna borrow some money, it's gonna be expensive. That's a fine business decision. People do it all the time. But you gotta be going somewhere, right? Is what you're gonna, like if I'm gonna take that money and I'm gonna keep losing money, like you know, I've lost money up to this point that I need to borrow some. At that point, what am I gonna do different on the other side? And that's where.

I think that's like the biggest challenge that we see in the restaurant industry in, you know, Larry, in the show, it's like a pretty good example of it. Like you're losing the money and the pride gets in the way of having conversations, but the conversations are so important because you've got to figure out why, right? Cause you've got to fix why. And if you can't talk with your team, if you can't talk with advisors, if you can't work with anybody who can help you because you can't have the conversation in the first place.

then how are you gonna get from here to here? It's just more of the same, but I just spent a lot of money in between and I dug my hole deeper, you know what saying?

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Yeah, so walk me through, okay, so if you're in a room with Larry, Gordon Ramsay, Mrs. and they're losing 100 grand, right? okay, a couple of points. Let's just say, you know, they get, I don't know, 300, $500,000 worth of value out of this show because of the media exposure.

But also they get a renovated kitchen. get equipment. They get a team for people that don't know. And again, I can't reveal, you know, I'm not a producer and can reveal what I what I know. But there's a team like Chef Ramsay really puts a team on these places because they want them to do well. But let's just say there is no there is no Secret Service. There is no Gordon Ramsay. And you're in that room with Larry and he's spilling it out to you.

Nope, forget what they got on the show. What? they want, well, I'm not even gonna put that on there. What is your advice or what questions or how would you navigate that situation with Larry if you were your client?

So, first thing I'd say is like the number one rule of holes is when you find yourself in one, stop digging, right? So.

When people are up against the wall like that, the thing to do is first start, I'm a CPA, I'm an accountant, numbers minded person at some real level. The first thing I need to know is not basically what are you serving, what's the guest experience, all that kind of stuff. That matters immensely. But before we get to that, let's see how are you losing money? What is the problem? So I'm gonna look at a P &L with them and hopefully our approach to stuff

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is if your P &L is accurate, it starts to tell a story. I always tell people accounting is a conversation for a small business owner in particular. So if you own a restaurant and I'm like, Larry, how are you losing two grand? We want to look at a good P &L or at least get to a point where we can. Sometimes that takes some time, right? So we can figure out what the real problems are. Because in restaurants, it's all...

Effectively just a relatively simple math problem that everybody can control But if they don't know how to like approach it then you know ultimately you're sort of not gonna be able to stop digging the hole right so the first question I'd have is let me see that PNL and how much money is coming in and Like on a monthly basis right it get up down to the week. It doesn't really matter But we want to see a period how much money came in then we're gonna check the rent right so in the case of like Larry and you can

apply this to any restaurant, but like in the case of Larry, I'd want to know how much they do in sales on a given month, make sure that they know what it is because it informs all the rest of their budget. And then, you know, how much do we do in rent? And is that rent figure 10 % or less of sales, roughly speaking, that's, that's kind of the magic area. Like you want it to be like 6 % in a really well, like a good lease situation.

which means you're not paying too much for the sales that are coming in, but a lot of places in big cities, know, eight to 10 is pretty normal. If you got a rent situation that is reasonable, you know, you're not sitting there paying 20 % rent, then everything else can be fixed. If the rent is over 20 % of your sales, the chances that you can fix that are gonna be really, really slim. And the real question is, do you have a different concept you can do? Can you change this up? Can you like,

double your sales pretty quickly. If not, we need to talk about how you're gonna shut this down, Because you can't, there's not enough profit in restaurant to pay 20 % of your sales into rent. A bar, sure, you could get like, you could make it work, but it's still tough. You're not gonna make a lot of money at the end of the day if you're doing that, but with a regular restaurant of any variety, if you're paying more than 10%, you're done. You know what I mean? It's gonna be a tough, tough deal.

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And so, go ahead.

I was going say, look, if your rent is okay and your sales are okay, like if that ratio works, then the rest of it, to be honest, is simply going in and identifying, I say simple, it's not that simple, but it's going in and identifying where you're overspending, right? And it's almost always in one part of your prime cost, so your labor is going to be off or your cost of goods sold is going to be off, right?

And for the people that don't know what prime cost is, can you briefly explain that?

Yeah, so whenever you're running a restaurant, the key metric we're looking at before anything else is what are my prime costs. So I'm going to add up all the costs of goods sold for food, for beverage, and then the costs of labor, including the taxes and the benefits and things of that nature. So if I add all of that stuff up into one bucket, it, my usual question there, is it around 60 to 65 % or less of sales?

If it's over that, then we got to dive into like what part is off and how do we fix it? But, and then spoiler alert, it's almost always labor, but, if your rent's okay and you get your prime costs, all right, you should be making money, right? So if your rent's okay, then it's almost always going to be a prime cost issue. And you look like a guy, at a guy like Larry in this situation, they've been around forever. He doesn't want to, you know, he knows they're losing money, but what I'm guessing is he's probably

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He's an older fella. He'd probably worked real hard in, I'm guessing he worked there his whole life. I don't know the whole backstory, but yeah. so like, know what I mean? Like you can, you can get by and make things happen and like grind your way to success. And a lot of places do that, but I'll tell you what probably happened to Larry and the rest of the crew there. Cause I was watching that clip, right. And when Gordon tells everybody to sort of get out with the cameras and you know, whatever, so can have this one-on-one with them.

I saw a whole lot of people leaving that space, right? And in Arizona in particular, Arizona is basically the same kind of problem as DC and Denver, whatever else. They don't have tipped minimum wages, right? And I don't know if you knew that or not, but they basically have a $3 tip minimum wage credit. So the tip minimum wage there, it exists, but you're still paying like $11, $12 an hour. think it's...

I think it's like 11 and change right now. So how do you make that work? Right? Because people don't want to spend a crazy amount of money on the, know, especially in different like cuisines, you got soul food. You're not trying to spend like $50 a plate, $60 a plate. Like that's not how that works. Right? Just like, don't go to McDonald's and expect to spend 15. That's like, so like you expect certain price points for certain types of food. Right. And,

It's one of the challenges I think a lot of say like Chinese food like our clients that are in that space always kind of joke that about that people like think of it like takeout, right? So you expect to spend just a little bit of money and when you try to charge like 35 $40 people are like, wait a second. That's not that's not what I

That's what we think of Chinese food.

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Is that fair? No, that's not the point. But that's like kind of not the point, The thing is you have cost constraints. And so if you have those and your labor is real expensive, like you don't have a tip minimum wage, then at the end of the day, it pushes a lot of these like really iconic businesses out of business if they used to have a model like that.

Yeah, so this is really good stuff. So just to recap, just to make sure I understood that, the first thing we want to do is look at our sales and know how much. And I don't know how many of y'all out there watching, but how many of you know if somebody asked you tomorrow or today or yesterday what you bring in?

or not on a monthly basis and no shame i'm not going to be shamed or or you should but you should know and if you don't know i think that's fine too but you should be able to have access to it and

You should like you should if you don't know what your sales are like were last week you

that's like a Paul's point. I shouldn't be, I can't run a business this way, right? Because I need to, I need to be thinking what that tells me from like an advisory and CFO and CPA perspective. And as a restaurateur, if I don't have a sense of what I did last week, I'm not saying I know exactly it was $19,117 and 20 cents. saying it was about 20 grand last week, like pretty, pretty close, right? Then everything else I'm going to do that needs to be a little bit of a math problem.

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Right, you solve the human problems and the food problems and the guest problems after you start with a math problem. And the math problem is like, what were my sales?

like last week, what do I expect my sales, better question, what do I expect my sales to be this week? And then if I know what my sales are this week, I can say this is what I'm allowed to spend on labor, and is my schedule gonna match that? This is I can spend on cost to get sold and food and everything else there, am I able to do that? You can start diving into the other ones, but if you're not in this cadence of thinking about what are my sales gonna be, what were they, and connecting them, then you can't

do the rest of it. like just means that you have a ton of bad habits. Most restaurants are like very cyclical. Think of it like waves at the beach or something like that, right?

Most places in the country have like two cycles. There are some places that are just, you know, like the beach towns will just have one big season and then everything else is slow. Right. Yeah. Most other parts of the country will be, like nine non-vacation places will be slow in the winter, like in January up to Valentine's day and

Then the two weeks after that, that's like kind of the slow period. Then they get busy in the spring. Then they get slow again in the summer because everybody went off to the beach or to whatever their family vacation is going to be. And then they do it again in the fall, right? And it's just like a wave, just like a, but you got to be thinking about that.

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to run the restaurant because you gotta be thinking, what were my sales this week last year? And if you don't know that and that's not part of your process, then you just like pause and be like, damn, I gotta have some sort of organization to how I'm doing things. Because if not, I'm just trying to speak. I'm going on vibes and that's not gonna work.

Yeah, listen, well, this is yeah, you're right about that. We are a vibe running country right now and it ain't working in a lot of ways.

So true, right? literally, everybody can complain. Like it knows how to complain about it in like other pictures. You're like, dude, what do you mean? Like we're going to just do tariffs overnight, like out of nowhere, because you just fucking decided.

It's vibe. Terrors are a vibe. I wouldn't be surprised if somebody said that. Like yo, terrors are a vibe.

Right. what was surprising to me just quickly? What on this season? Where the lack of like the modern POS systems, you know, I've had one. I had I had GoTab to start when I started Queen Mother's. OK, well, we had toast and I had GoTab.

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Then as Queen Mother really started to take off, GoTab is awesome for what we needed. But then when we grew, they just didn't have what I needed. And then we've been with Toast ever since. And, you know, it is not cheap, but it is robust. I will say that. Toast is a machine. And coming from somebody that came from the old school where the only game in town was micros,

where you couldn't get access like unless you had 10 grand or 20 grand. Toast is is head and shoulder like it is it is marvelous in so many ways. Yeah, but anyway, it's not a toast commercial. If y'all want to sponsor the show toast holla at me.

Yeah, yeah.

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Right after the toast capital thing in there and you did I agree?

Well, I got something to say about that damn toast capital, but I'll say that for another episode. Toast, if y'all want to do an episode, call me. what was interesting to me as you talk about sales and budgeting tools and or budgeting, I think about, man, you know, I could just click a button and find that information right now. I could click a button in my scheduling software, whether that be in toast or outside of it and forecast and budget and do all of those things.

Yeah, and you know this is coming from CPA one of the top CPAs in the nation, especially probably the premier CPA in hospitality and restaurants Saying that these are the things we need and to know is a restaurant. Okay. I have access to those things makes me feel Comfortable now full disclosure y'all. I am a harmony client and a believer I didn't say that the good ones here. Yeah. Well, thank you. I appreciate it. Well, I you know wouldn't be without y'all but

at is super accessible now in: 2025

not using the tech that's available I thought was a red flag.

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Yeah, yeah, mean like, and it's kind of an interesting thing. really depends how complicated.

your restaurant is in some ways, mostly in the sense of like how fast can it get out of hand? Because I can think of tons of like small bars that have a couple, just two or three staff or whatever else. And it's like kind of easy to run that on vibes, right? As long as you know how to cost a drink or your rent's not too high, you can get by. And I'm not going to advocate like, come work with Harmony. If you're so small that like you can't go a ride. But what sort of like the way that we approach it with people and what I'm trying to

coach people into is like you I'd obviously advocate for anybody bigger you need someone you need us right like you need whatever else but that's it's not because we're like the only people who can keep books in the world it's because of like what you do with the information and so you don't actually need

necessarily to work with somebody else. Like don't make that an excuse. I would say to someone like Larry, right? If you, if you can't afford it, you can't access it. You don't want to change your POS, whatever. You still have this conversation that you need to have with your business. Right. And I think of accounting as this conversation, but it's like, it's like habits and sort of an approach that needs to be more disciplined than most of us really are. I'm, I'm not the most organized person in the world, which is like weird for a CPA.

As we look in the back room, it's like I could see, I could see, I could eat off of that floor. he says he's not the most organized person. Love to be that. You seem pretty organized to me, my friend.

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I appreciate it.

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I got the commander's blanket over there so, Revan for the thumbs up. Yeah, like, so you're Larry. Cause I love him as so much of an example. Like he's afraid to talk about it cause he doesn't want...

That's right, that's right. I love it

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he doesn't want anybody to know, right? He doesn't want to let people down and all that stuff. And it's like, yeah, if you own a restaurant, you have to be vulnerable in ways that it's such a weird line to walk. have to be prideful when you're doing marketing. You gotta be like, yeah, you want to be here cause this is successful and it's going to be a full dining room and it's going to be hot. And like, you're going to enjoy that and you're sexy for being here, right? That's part of the vibes of every restaurant, no matter who you are, like not McDonald's, whatever, but like most restaurants you want

people to want to be there. So you have to like portray that success. But as the business owner and like managing staff and making decisions and even like working with vendors, you've got to be able to like nuance a little bit of the vulnerability. Like things aren't as good as you say. We, I call it the, I call it the rule of 30 % and it's like whatever people tell me they're doing in sales. like, okay, whatever that number is, I did 3 million.

Or whatever, two million. They're probably doing 30 % less, like a million and a half, right? If people tell you things are okay, that means they're pretty bad. If people tell you things are going good, that's probably okay, you know what mean? It's kind of like how it goes.

Yeah, it's a lot of it's a lot of guys sorry to cut you off There's a lot of conversate the rammies the local awards here in dc coming up next week And I have conversations every year and it's so funny you talk to guys And you say man, you know how much what you're doing and you know, some of these guys are saying man I did You know, we did three million last year. I'm like You did three million

Yeah. I almost like almost always like there's a number set where they start to tell the truth because it's like, okay, cool. But like when people tell you some of the like lower ones, it's usually not true. And you can almost always tell, it's a funny thing. You can often tell if somebody's, I'm going to say like, you can often tell if somebody's struggling a little bit more than they're letting on. if they're the restaurateur that did like,

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let's say one place and it was a super big hit and then they did two and three and they take a little pause and then they start to open some weird stuff after that. Like if you know somebody that's doing something that's way unconnected to like what they're, what you expect them to be doing a lot of times you're like, shit, they're looking for, they're looking for an exit, right? Or like that's a life, like throwing a life jacket out there, a life preserver kind of thing, right? Like,

So when y'all see me open up a bubblegum shop that's only open from midnight to 6 a.m., you know, I'm fucked up, y'all.

But it is funny because like sometimes it's like good ideas, right? Yeah. And someone wants to like pursue that good idea and they're just going to spend it too early instead of being like, damn, I need to get I got to either get my house in order.

House and order it.

Say goodbye to this one and like move forward. There's so many, there's so many restaurants, so many chefs where people will basically work for free for a long time because they don't want to, they don't want to take that one step of being like, all right, this one didn't work. It's not a reflection on me as a human being. I just need to cut bait because I've taken smart choices to try to make this better. I've gotten some help. I've got advice. I couldn't fix it. Okay.

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probably wasn't fixable then let me move on, right? Let me walk away. That doesn't mean give up on something the moment you hit like a difficult thing. my, my restaurants have struggled, especially coming out of pandemic and, different things like that. And we had to just take sort of like a hard, hard relook at different things and then make educated choices about, how we were going to adjust operations, things that we're going to do differently and do all that stuff. And I've got them back on track, right? But that doesn't mean that I never thought of shutting them down.

Right. It's you don't give up right away, but you got to make a game plan that makes sense. And the first part of doing that is like recognizing it's almost like addiction, right? First, you got to admit that you have a You got to seek help, right? You got to go through the steps. And I think a lot of restaurants

Yeah.

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You got a problem. Yeah

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mean, you one of the things that bothers me a little bit in the restaurant game is like when people struggle and you do that first math problem, it's like, were your sales? What was your rent? And if the answer to that is good enough, right, 10 % or less.

and then they're still struggling. Most of them don't take that second step that I was telling you. So first, let's compare our sales to our rent. Second, let's start looking at prime costs and make sense, right? Most of them do this instead. They'll go in, what were my sales, what was my rent, that ratio's okay. It's the city, it's the neighborhood, it's the guests, it's the whatever, everybody's down.

Something else but what I'm doing it's outward so just like addiction. It's something else outside of me

Yeah. Yeah. It's not my fault. It's the weather. It's the, it's the thing, whatever it is. Right. And instead of ever like doing the hard, it's like super hard work to like change everything up. Cause you usually have to lay people off. You usually have to like rework schedule to menus and stuff like that. They don't, they just don't even like address that side as the most likely meaningful cause of

Super tough stuff, yeah.

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like the success not being there and then you jump to the blame game and yeah, tough because even if stuff changes on you, even if your sales drop, even if whatever like.

you know, at some real level, you got to be able to adjust to that. And you can adjust to it as long as that first math problem is right, which is your rent is okay, right? The rest of it's a whole different thing. You might have to change a lot. might only have to change a little, but something's fundamentally wrong. And a lot of people, because they can't, they can't start and say, I'm admitting there's a problem and I'm going to admit it to the people who are most meaningful.

to me in terms of finding a solution, they just get stuck in either hiding it or they'll have a private conversation with themselves and their business, is this is okay. It must be, it's outside of my control. The city changed, this changed, that changed, whatever it is, right? People aren't drinking as much anymore. It's like a big thing with some bars right now. It's like, that might be it, but like, what can you do to change how many drink at your place?

You know what's what's interesting and i'm gonna ask you in a second about if you could um, give me sort of three You know takeaways or tips and tools for samani, you know, because there's people watching that are like larry or in a position, uh similar you need a pen We're running restaurants right live on the area. I it. I love it. This is this is what we're about restaurants, so Yes, yeah, um so

someone's approving an invoice back there.

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I want to ask for three takeaways or it doesn't have to be three whatever you whatever you are just I would love for the audience of people watching to be able to Implement something or to start somewhere if it sounds like awareness is the first step and having a sense of what is going on But before we get to that it's so You know, I always ask that work what you just talked about holding a mirror up to yourself a hard mirror

is really hard. was speaking with a friend last night about their business. It's not a restaurant business. But when you fail, or when you get a bad review, or have a client who wasn't quite happy, you didn't hear it out of the park, especially when you're like a superstar, not in a celebrity chef sense, but you always kill it in your business. And at one time when you don't, it's super easy and very convenient to say, well, it was them.

They don't get it right chefs do this all the time. They don't know how to die the episode It just came on I was just on in in Frederick, Maryland at Callahan's I sent back a steak It was tough as hell and the lobster was tough and the kid in the in the kitchens arrogant kid said They don't know what the hell they're talking about It's supposed to be chewy as if it was a New York strip and you know and you know I couldn't reveal myself and I didn't know that until I saw the show but okay I don't know what I'm talking about. It's so easy to just

Your medium rare came out medium well and you're like, dude, you... My bad, that mistake is great.

Exactly. Well, crazy thing was it was perfectly damn near perfectly cooked. That's what was worried about this steak. It was red. It was just it was the shittiest cut of meat in Maryland that day. And you know, they just got some cheap ass, you know, no roll New York strip or whatever. Exactly. Sorry. I know right, John, catching all the straps.

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Select enjoys a choice like a real bottom one.

Yeah, the terrible. So but you want to point the finger outside and the tough thing to do and I do this. I'm not patting myself on the back, but it's really tough when you're like, man. Yeah, you know where my place is in DC. Things have changed. This is a changing neighborhood and the clients have changed and the atmosphere is changing and DC is changing with the with the new administration. But also what else am I? Are we not?

doing to because there's a couple of places around here that are killing it. There's a couple of places around here that have brought in or that are opening up new beautiful concepts and they're doing really well. So you gotta ask yourself not specifically, but you gotta say rock. What are you doing? What could you do? It doesn't mean you need to do all of the things. I'm not going to open up sushi or or ramen spot. That's not my thing, but contextual or categorically where are your opportunities and what are you missing?

And I think even the step of that, right? Even taking that step to say, there's a sense of you said something about vulnerability, there's a sense of honesty, self honesty that is really valuable in life, but definitely in business. So, you know, I appreciate you bringing that forward, but I did want to ask you, you know, if you're looking at a Larry, a small soul food joint cafe, this is your client or this was someone in your family, you know,

What are something when you're in this debt, know, a hundred grand, some people are even more debt when they own buildings or have even bigger, larger debt. And they want to close. think that I'm sorry. And they want to stay open. OK, so I'm assuming that everyone. Another conversation is closing the doors. I think we should come back and talk about that. I'd love to do an episode just talking about when it's time to say no, but when it's time to say go.

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But for this one, let's just assume that everyone watching and Larry wants to stay in business and keep the legacy alive, the family on business. Where would you say, you know, awareness, getting your calls, but what are two or three things that you would encourage your client or your friend or your family to do in this case?

So yeah, I love this question. So like just in general, like this challenge of it, right? And I'd say first, you gotta be willing to admit you have a problem, but not just that. You have to like identify what it is, right? And do it properly. So we're losing $2,000 a week. The question is not, you know.

That's like a symptom of some other problem, if that makes sense to you. You know what mean? What is the real problem is the question. It would be a little bit like, and I have history with friends and their family with some addiction struggles, so it's a pretty good analogy for me. Ex-person ending up in the hospital is not the problem. It's the, this person is an alcoholic.

you know, can't get over that particular thing, right? And that's why they're in the hospital. So I think people, when you have those conversations, you have to start doing them regularly, but they have to be like accurate, right? You have to be thoughtful and insightful. And sometimes that's hard, but you got to put in the effort to do that the right way and identify what the real problem is. Cause the problem is not that somebody's losing too grand. That that's the outcome of some other problem, which in Larry's case, bet you.

You know, I wasn't there, but I bet you their portion control was kind of weak and they were giving out too much food for too little money and they too much labor. Just knowing that particular segment of the market, I'm guessing, right?

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That's one of the problems. Yeah, you right on.

So yeah, I'm just, you know, it tends to be those kinds of things. So like, what's the real problem? Okay. Then you come back to, well before we've been doing that, like admit that when you identify a problem, then you gotta make the step two is that you gotta make a smart plan to address it. Right. And you gotta stay focused on that plan and the, like the antecedent thing you have to accept before trying to make a plan and stay focused on that plan and whatever else is that you gotta say, whatever I've been doing.

is not what I'm going to keep doing, right? Like we don't have to do what we have done. I think restaurateurs get real caught up on a regular basis with this, like partly because their identities are driven by the businesses they're running, the restaurants they're running, right? So they get really hung up on this idea that like, I can't change something because someone's going be mad. Somebody is going to notice somebody, cares. They come to your restaurant once in a while, right? They don't.

They're not memorizing your prices. They're not memorizing the menu structure and how you present it or the dishes on it. They might have favorites, but if they come back and you have something else good, they're going to do it right. People will not make changes. It's crazy. So people get stuck in this like, we've always done it this way kind of thing, but it's on the smallest things. Schedules won't change. Menus won't change all that kind of stuff. And if you won't, if you won't just admit first, oh, I got a problem. Here's the problem. And then come at it and say, I don't care what I've done in the past, but I'm going to start fresh.

within the same paradigm, then you're never gonna do it and you should quit. Because if you cannot change, you're doomed to be extinct, right? So step one, admit the problem and identify it. Identify it accurately. Step two is make a smart plan to address that, being willing to change, and then stay focused on it. Because here's one of the things I see a lot of restaurateurs do that really messed them up, is they...

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have a problem, they might be, if they're working with us, we've identified what the real problem is. And then they come up with like seven different ideas to fix it that they want to do like five of them all at once and then other ones. And that's not how you fix problems, right? You got to be able to like be succinct about it. Identify like one or two things you're going to do to hit the core problems and how you're going to do it and when you're going to do it and make a plan to do that. You want to get your sales up, right? Well, to get your sales up, you're going to have

I want to get my sales up to where? To some level you got to have a target. It's got to be by when, it's got to be time bound. And then what are the three or four things I've got to do to make that happen, right? So I've got to implement social media posts every single day. and maybe to do that, I've got to recruit a social media person or to do it or whatever else, right? I've got to run a wine dinner every other week for, to, to like an event, whatever it is, et cetera, et cetera, et cetera.

And you know, some of that stuff doesn't apply to every business, but every business has that kind of thing. We got a great soul food place, you know, in the same thing called mama J's over in, in, in Richmond in, love. Okay. So you know it, right? My girlfriend's apartment was like right up the street from there. And so, but they would do, they'll do block parties and stuff like that. Right. and so they're like an iconic institution in Jackson ward.

Mama Jade. yeah, yeah.

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And like them doing a wine dinner would be absurd, right? But them doing a block party would be awesome. Just like a Michelin restaurant doing a block party would be crazy, but them doing a wine dinner makes sense. You gotta like stick there. You gotta be consistent. You gotta have a plan, but you gotta do things to get there and they have to make sense and they shouldn't just be make work. They gotta be meaningful, right? So Mama J is running a block party. Probably drives a whole bunch of sales. Whereas Mama J is running like a Monday night special, like changing it up every week or.

we're gonna do a special catfish system. Okay, like you're just doing work and you're not gonna get anywhere doing work that's not gonna bring in the money and fix the things, right? Whatever it happens to be. And then I'd say the, I'd say that number three thing, you know, and this is sort of like a pervasive piece of this. You're identifying the problem, you're making a smart plan and staying focused on a couple things that make sense and doing it quickly and not overthinking it and not worrying about the past, right? But then the,

is realizing and identifying and sort of like owning this fact that like hard choices don't make you a bad person, right? You don't have to be everything to everyone, but you need to just be like a morally straightforward, honest sort of person who's making a plan that is makes sense and takes the emotion out of it. So what, where that like sticks out to me the most in restaurant failures is people will sit there and be like,

I just have to like do all these things and employ all these people because I can't let them go. Right. And so on and so forth. Well, you don't know that like, that's a crazy premise. That's saying that you're the only job in the whole world. You're the only kitchen in the whole world that like you are the, you owe that person something more than you do. You owe them a paycheck. You owe them honesty. You owe them never cheating them. You owe them being like kind and

you know, following all the laws and everything that you owe another person when you're working together, but you don't owe them that job forever. And in fact, if you're holding them a job and running your restaurant into the ground, you might be screwing them over, right? Because a worst best case scenario, you're teaching them terrible habits that they're going to carry forward into other jobs, right? And so you're really setting them up for failure instead of setting an example.

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And then worst case, like you're holding them back from other opportunities that might be better. Maybe they feel a sense of obligation to you when you could like address that conversation, sort of man to man, person to person and sit there and say, Hey, listen, we're not doing that well and I've got to cut labor and I've got to do it so that we survive. I don't have a position for a sous chef anymore. We've got to cut down to just I'm working the line. I'm, I'm ex-boying, I'm, I'm, you know, or we can have a KM or whatever it is. Right.

but I don't have this position anymore. I'll help you find a new one. I'm going to give you some notice that you can, you can do those things in a kind way and feel really good about it. But like at the end of the day, you can't, you can't give them a job and then strip it away. Cause by the time you fail, what if you fail in, I don't know, January, the first week of January, then nobody's hiring in the restaurant industry then. But now if you lay them off in October, they'll be picked up within a day. Right. And you can find them a new place. So

People like take on themselves, Larry said it, he's like, I feel like I'm supposed to hold up the restaurant. And they put on their shoulders a lot of pressure that doesn't belong there. Does that make sense?

that's powerful. Yeah.

You don't, you don't have to pay everyone the most money in the world. You don't have to give everyone the most hours in the world. You don't have to give everybody a job forever. Pandemic taught me this in a way that I thought was like really powerful because there's a lot of people, a lot of people we were working with who were like so upset about, know, whatever. they were paying money. They were bankrupting themselves, basically trying to keep people on payroll, give them something to do, blah, blah. Because they like, they owed that and it would like create, they thought that, know,

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They were in it together, all that kind of stuff. The moment the stuff changed, people just quit the job and went to a new job, just like they always do, because they didn't owe you anything in the first place. They owed you a work day, and you owed them a paycheck. And along the way, you need to be a good person, but you don't do it forever. There's not a messed up situation, right? There's not a marriage. They get the choice, and it's a beautiful thing about restaurants is people can move cities, people can...

not come to work next week because they got a job or got accepted to school or whatever it is. And that's great. But stop carrying everybody else on you. You don't owe that. like, that's not some part of the gig. Yeah, that makes sense. But I'll give you one more on it. And it's just people need to like, when they get in this place, there's an overarching need that they have. And it's a

good point to spend money or whatever else it takes, but you need to educate yourself and access help. I think it's a really weird thing about being a small business owner and the decision making that's in there. If I break a leg, I'm not gonna sit there and be like, I'll just keep walking on it figure it out. I'm gonna go to the doctor, right? And I'm gonna get some help and...

I'll spend the money it takes to fix my leg and put it in a cast. People go all day and like run into like giant financial problems, be losing money at whatever else it is with their business, which is the same thing as I broke my leg and they don't come for help. Right. Or they come when it's too late or they want to be really cheap and don't want to invest in it. It's like you're losing $2,000 a week. You know that you need to be bringing in people who know how to help you do those other three things, identify the problem and make a good plan.

I

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It's not a sales pitch for us. You can go to whoever you want to if they understand the industry and it could be friends. could be whatever it can. Obviously I know that we do this for a living at Harmony Group, but you know, sometimes it's like, it's one of those situations where somebody will come in and they like know that they need to help. They're sort of like, Hey, are you a doctor? Like, can you, can you fix a broken leg? And we'll be like, yeah.

but it costs some money to fix it brokenly. they're like, okay, nevermind. I'll just keep losing $10,000 a month instead of spending, you know, 5,000 bucks or 10,000 bucks to like fix a thing, right? Like to actually fix it. And you can easily end up spending hundreds of thousands of dollars running in this circle of debt and bankrupt yourself instead of like being like, okay, I know that I've got a problem. I need someone to help me identify it, make a plan, stay focused and, you know, make the right choices. And so get some help.

Yeah, educate yourself and access help. mean, that is wow that you just dropped some some some gems, if I can reiterate, I thought you have a problem. No, not too much. Listen, this is a this is great. I mean, y'all kidding. We get it from from the from the from the expert. And, you know, I don't know where you're going to find these podcasts, but you probably didn't pay for it because I'm putting it out for free. So this is great.

I can't hear a thing.

Definitely should pay me. Yeah, and now I'll pay Matt to Whistle it in half Admitted you have a problem and identified a real problem be thoughtful and insightful about it Smart plan to address it step to have a smart plan to address it and then I love this part Whatever I have been doing. I'm not gonna keep doing. love that It's so cliche when people say, you know to get something different. You got to do something different

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But it's not cliche. It's just that it's just so profound.

I mean, you know, I have like a saying for that that I can't believe I didn't put in there. That was silly.

I try to tell people, especially when they're in these kind of situations and it's like, look, run the restaurant that you have, not the restaurant you wish you had. That's how you get from A to B, but you can't run something you don't have. It tells you the story. You know what you got. You want it to be something different. You got to run the one you got right now and then work your way towards what you want it to be. So run the restaurant you have, not the one you wish you had.

I love that. I don't know who's calling like right in the middle of my show. Doesn't the world know we're recording? Love that. And then stay focused on it, right? So needs to be meaningful. Don't overthink it. And this is great. I I wish I would have had this 25 years ago. Hard choices don't make you a bad person.

I can tell you a bunch of times where I should have cut bait with staff or a certain thing, maybe even a subscription, right? Or supporting somebody else's business and it's just not working, buying a certain product, hard choices don't make you a bad person. I love that. And lastly, educate yourself and access help. mean, is, listen, Matt, I could talk to you for like six hours.

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But we gotta get you back, And I really appreciate you coming on the show. But before we go, I want you to tell people a couple of things. One, anything that you'd like to spread out into the world and to promote. I know you had a charity event that's really meaningful coming up. And also if people want to find you. We'll link it in the show notes and all of the things. But I want to hear you tell us.

I appreciate you giving me that chance. Obviously, look, if you're a restaurateur, you're listening and you want to work with the best and make more money HarmonyCPA.com Harmony group come definitely reach out. We love to work with people all around the country, literally everywhere from Honolulu to D.C. But I'm in the I actually live in Richmond, but I'm a Maryland native and I own some spas up there, not restaurants, but, you know, massage and facials wellness spas.

I just want to put a little plug out there for Calm for a Cure. We're doing our fifth annual one. One of my business partners passed away from cancer within the last year and we've for the last five years have been providing free wellness care to...

to cancer patients throughout the DC metropolitan region, all throughout the year, just taking care of people at their lowest points and trying to bring them some hope and just like a general sense of wellbeing. And it's a big deal for us. We raise money to take care of people and work with local hospitals. So I encourage you to check out Even Keele Wellness Spa, which is in Annapolis and Baltimore, soon to be crofted in Columbia, and help support Calm for a Cure if you have anybody in your life.

that's a cancer patient.

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Man, that's beautiful. And that's why we love you, Comfort Cure, is that a website?

That's calm for the number of well actually it's not it's at even keel spa.com calm character.

You'll able to see the calm for cure there Beautiful man. I couldn't think of a better way to go out Matt Hetrick president of harmony CPA harmony group

It's been awesome having you on the show man. if you'd love it, if you'd like it, I'd love to have you back on as the season progresses because all of these joints have in common. ain't making enough money and they treating their money right. And there's so much that I wanted to ask you in this that I couldn't because we out of time. But I'd love to have you back. But this was awesome, man.

I can't wait to man. I appreciate you and I'll talk to you soon. Thanks so much.

(: 01:02:20

Thanks Matt and make sure y'all tune in to the next episode of the rock harper show. This has been a blast I'm gonna say all of the things like it subscribe it share it Let me know what questions you have about restaurants if you learn something from this is something that you thought maybe you got some tips you've been in a situation or or you know somebody that was I'd love to hear about it in the comments and What you'd like to see in the future as we go forward?

with Secret Service. What's been your favorite episode so far? And stop, I see y'all in the comments. Stop clowning me about my outfits. I gotta stay undercover, so stop cracking on my clothes. Until next time, stay cold, stay cold, stay bold, and be curious. I'll see y'all. Peace.