Accurate Accounting Reduces Costs, Spurs Growth for Restaurant Owners
Jacob Skelton was a sophomore at the University of West Georgia when he started working in the kitchen at South Street Station in Carrollton. When the restaurant closed in 2008, he went to work at the bottle shop next door.
At that time, Skelton couldn’t have guessed that he and his friend, Chef Sean Teehan, would re-open those kitchen doors in 2011 for their own restaurant, the popular 302 South Street.
“I was graduating and trying to decide whether to go for my master’s degree or a career job,” says Skelton. “Around that time the owner of the bottle shop, Debbie Neal, bought the restaurant’s foreclosed property, and I half-seriously said I’d be interested in owning a restaurant there.”
He had not planned on starting a business, but when she asked again a few months later, Skelton said yes. “It had always been a popular location,” he says. “But I had no clue what I was getting into.”
Neal helped Skelton find a private investor, and Skelton brought in Teehan who, like Skelton, had worked in the industry off and on since he was a teen. Skelton contacted the UGA SBDC at the University of West Georgia to learn more about financing options and business planning.
The new partners started building out the restaurant in 2010. When the investor later pulled out, they decided to go forward with their plans. Skelton again sought the help of (now former) SBDC consultant Monica Smith. “She taught us how to come up with sales projections and do a market analysis to finish our business plan and develop a loan proposal,” he says.
She taught us how to come up with sales projections and do a market analysis to finish our business plan and develop a loan proposal
They took their proposal to the banks. “Our confidence in how immediately successful we were going to be probably scared off a bunch of lenders. But Sean and I had come so far and didn’t have any- thing else to lose,” he continues. “So we handled the rest of the build-out on what little financing and contracting skills we had.”
They opened 302 South Street on March 2, 2011 – “302 Day” – with about $3,500 in food and $1,500 in the bank.
“We flipped the marquee from CLOSED to OPEN, and the customers started pouring in,” says Skelton. They doubled their projections on opening day. But they still had a lot to learn, he admits.
Since 2012 SBDC area director Todd Anduze has taught Skelton ways to cut costs with aggressive accounting. He helped Skelton line up a University of Georgia engineering outreach services energy audit and provided market research, including a Secret Shopper.
“Todd introduced us to menu engineering and planning for the rise and fall of our costs, which we now factor into our prices,” says Skelton. “He gave us different strategies on shopping with vendors, and advised us on getting a restaurant-specific point of sale system that paid for itself within a month.”
“They were losing money in operations,” says Anduze. “That’s a challenge common to small businesses. Now Jacob works on lean accounting, capturing every loss he can. Every quarter he puts actual costs in the budget. If there’s something out of order, he’s on it.”
Skelton reports that 2013 was the first year his sales were “in the green.” His staff has grown by two employees, to 25, while he reduced costs by three percent.
“What we’ve learned from Todd helped us come into our own and become more accurate. We’ve doubled our gross sales every year, and it’s looking like they’ve grown another 23 percent in 2014.
“Trying to meet and beat our forecasts is now the ultimate thing I use the SBDC for,” he says.