What makes a business a well oiled machine?

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There is nothing that brings me more joy than a business that thrives in a notoriously difficult space. You know, one of those businesses that everyone says “It’s really hard to make money in the ____ business.”

I’m talking about those businesses that are damn near impossible to scale. Looking in these really gritty / difficult areas is interesting because there are some outliers and clear winners. Many times there are multiple examples.

Hardware stores are tough to scale yet we have Home Depot AND Lowe’s. Often times thriving in small towns right across the street from one another. 300+ full time employees to operate a single location in one of the toughest labor markets in history.

We have small business owners with 5 person companies complaining to each other “I can’t find anybody willing to work” yet both of those companies staff 60x as many employees a few miles away.

The restaurant business is my favorite example of this.

80% of restaurants make virtually zero money. They are nothing more than tremendous time sucks for the owners and a drawn-out financial failure. Yet a few have been able to rise to the top and scale massively profitable and successful companies…

Do me a favor and visit your local Texas Roadhouse.

I went to this location on Thursday of last week at 4:45pm with my father-in-law. All 155 parking spots (I counted) taken and 10 more cars circling waiting to find a place to park. A line out the door.

Walk inside and every single table is full. Entire bar area full except two spots which we snag. Likely 250 people sitting and getting waited on in this building. Sheer madness. 30+ waitresses / bartenders / bussers + a full kitchen.

And the place was humming along like a well oiled machine. Just a sheer management masterpiece. The food was great – my steak was better than a steak I paid $75 for at a high end steakhouse in town a few weeks earlier.

What does it take to pull this off?

A large and extremely competent group of people who are properly motivated.

After all, every successful business is nothing more than a group of people…

The X factors:

  • Recruiting
  • Hiring
  • Training
  • Systems (who does what, when)

When a business gets it right, it is a thing of beauty.

I looked at the financials and Texas Roadhouse stock is at an all-time high. Same store revenue is up 37%+ over 2021. The average store does $7 million in sales – which means $19k+ a day. They only serve lunch on weekends – I would not be surprised if this location in Athens is one of the largest stores and does $50,000 in sales on a Saturday. 16% of their revenue comes from to-go orders as well.

This is a great video on the economics of a steakhouse (discussing several chains).

Even more mind-blowing:

They manage 697 stores and oversee $4 billion of annual sales.

I made a tweet about this and the response was very interesting. Many people commented that Chick-fil-a is a better example of operational excellence. I am a huge fan of Chick-fil-a and think it is inherently a better, easier, more profitable business – but the management expertise it takes to run a chick-fil-a does not compare to a sit-down restaurant at scale. Texas Roadhouse is more impressive.

The streamlined workflow of this Texas Roadhouse with people lined out the door was incredible to witness.

Cheesecake factory is an excellent comparison and does it at an even larger scale – $3.3 billion in revenue with 46,000 employees across 308 stores. Thats 10.7 million per store or $30k a night – with some of the largest locations undoubtedly hitting $75k+ on busy days. With 150 employees per restaurant.


What can we learn from this?

The most competent person in your town manages one of these restaurants. If you need a competent manager, go snag one of them or pay a recruiter to do it for you.

It’s a tail as old as time that operations is the key differentiator in business. Your idea doesn’t matter. Your operational grit and your ability to manage people is what matters.

A friend of mine was an excellent cook turned failed restauranteur. A quick story (and a lesson) outlining the other end of the spectrum, and the more common occurrence in business.

My friend loved cooking. Was excellent at it. Had friends over often and really enjoyed cooking for them. He would get told by everyone who tasted his food “You should open a restaurant.”

Eventually he did. Took out some loans. Quit his 9-5. Opened a restaurant. He ran it for about 3 years. Worked 60 hours a week. No vacations. No more cooking for friends. Every Thursday through Sunday night. The last one to leave at 1am.

The only time he saw his friends they were in his restaurant and he’d stop by between stressful situations to say hi.

He gave up a few weeks ago. Broke. In debt actually. And broken as a human. Reading the google reviews for the business it is a little sad… No raving fans like in those dinner parties in his home. Just customers complaining about cold food or slow service or undercooked steak.

It turns out running a profitable restaurant has very little to do with your ability to cook. Running a profitable and successful business of any kind in any sector consists mostly of doing the same things:

Recruiting, hiring, training, managing, selling and solving problems.

He wasn’t a manager. He didn’t enjoy confrontation. He wasn’t a people person. He spent very little time owning a restaurant actually cooking. Almost none of it actually.

The lesson: Don’t start a business unless you’re ready to become an OPERATOR.

And if you own a business and you sit back and complain every day about how hard it is to recruit and hire talented people let me tell you something:

Texas Roadhouse employs 82,000 people across 690 locations. That means 118 employees per restaurant. They’ve found, trained, hired and motivated over 100 people in your town to work at their restaurants.

Stop blaming the economy, take some ownership over your business and go out and study these folks who know how to win!


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About Me

I started the Sweaty Startup in December of 2018 because I believe the Shark Tank and Tech Crunch culture is ruining the real spirit of low-risk entrepreneurship.