Open-book management, if you’re unfamiliar with the concept, is when a company is transparent to employees about the company’s financial information, including cash flow, profitability, and more. Occasionally, this extends past informing staff to more active programs, such as profit sharing and educational classes around financial literacy.

The term was first used in 1993 by John Case, although the method has been around since the ’80s. While open-book management isn’t limited to one particular industry, its place in the restaurant industry is certainly most welcome, given the staffing crisis of fewer workers and more restaurants. Open-book management has been empowering and informing employees across countless business sectors. Intended to educate employees and allow for more visibility into the business, open book management can help decrease turnover and strengthen employer-employee candor.

Below, we highlight four of the benefits that restaurants, employees, and guests see as a result of open-book management in a foodservice business.

Employees feel valued

Let’s start with the obvious: When only a handful of the nation’s one million restaurants practice open-book management, it’s clearly a sign that management needs to make an effort to retain, appreciate and value staff. For employees, this investment is an instant, effective morale booster. Trade, a restaurant in Boston, is new to open-book management, but employees are already taking notice. Juan Franco, a line cook at Trade, said, “It’s very important that they’ve invested in us because we are a family here at Trade. It makes me really proud to work here.” It’s probably safe to say that Juan isn’t going to quit Trade anytime soon.

This benefit is a perk for owners, too. Employees want to work where they feel valued, so businesses will see an influx of applicants who know they will be paid and treated well. Now, restaurants are able to filter through the best of the best and equip their team with long-lasting, qualified employees.

Employees understand the impact of their work

The push for financial literacy and education is making all employees realize the weight of their actions. Let’s say one line cook is always a little quick to guess portion sizes, meaning the restaurant’s expected food cost is different than the actual cost.

Showing your employees the current financial state of the business — and explaining that food cost variance is worse than expected — alerts that employee that they may need to more closely adhere to portion sizes. Open book management may not seem like it would have that big of an impact, but it certainly can. The Paris Creperie in Brookline, Massachusetts, launched their open-book program in January 2015, and by the end of that year, their net operating profit increased four times over.

Customers will be more satisfied

Guests want a meal that’s consistent with what they’ve come to associate with a restaurant’s brand. Last year, this post of a customer who got a salad at Applebee’s that, well, didn’t exactly meet expectations went viral.

Simply put, inconsistent meals result in dissatisfied customers. When staff sticks around for more than the average of one month and 26 days, they’ll struggle less to make meals and know what it takes to delight guests. The problem is that unsatisfied workers don’t tend to stick around too long. Open book management provides an incentive for your best employees to stay on the payroll. This also helps keep the dining experience consistent and delightful for your guests.

It’s a move in the right direction

For years, there has been a growing problem surrounding restaurant staff management and retention. Restaurants have spent time and money trying to keep top talent in-house, sustainably pay fair wages, and keep guests satisfied while still turning a profit.

The old adage of “a rising tide floats all boats” certainly applies here — restaurant operators place trust in their employees. In turn, those employees feel encouraged to do their best work, resulting in a top-notch customer experience.

How to implement open-book management

There are two ways to get started with open-book management: self-starting and working with a partner. For self-starting, read up on open-book management and learn some more of the benefits and best practices to enact in your restaurant. For those who will be working with a partner, teaming up with a company that specializes in restaurant open-book management, like ReThink Restaurants, takes a little bit of the pressure off of one sole decision maker in the restaurant. It also means there’s someone checking in regularly to make sure you get the most out of this new management strategy.

As the workforce demands more clarity, meaning, and purpose from their jobs, open book management is a perfect way for restaurants to answer this call while bettering their operations overall. Open the book and get started!

AJ Beltis
Guest Contributor

AJ Beltis is a blog editor, content creator, and podcast host for Toast POS – the leading restaurant technology company in Boston. You can find AJ at the movies, on a brewery tour, and if you look hard enough, on an episode of Nickelodeon’s "Slime Time Live" from 2003.