Your Team Thinks You're Rich. Show Them the Numbers.
Ask your team how much of a $5.50 flat white the business keeps. Jack Stack's Great Game of Business says the answer belongs on the wall. Here is open book management for one cafe.
Try this at your next staff meeting. Ask the team one question. When a customer pays $5.50 for a flat white, how much of it does the business keep?
Write every answer down and don't correct anyone yet. Don't be surprised if the guesses come back at $2, $3, even $4. From behind the machine it looks like a lot of money going into the till and not much going out.
For a cafe doing okay, the real answer is closer to 75 cents. And if your team thinks it's $3, every conversation you have about milk waste, wages or a slow Tuesday sounds like you being tight. You aren't. They just can't see the numbers you see.
In 1983 Jack Stack and 12 other managers bought a failing engine rebuilding plant in Springfield, Missouri, from International Harvester. They put in $100,000 of their own money and borrowed $8.9 million. That's 89 dollars of debt for every dollar they owned, with 119 jobs riding on it. They could not afford one bad month, so they tried something almost nobody did back then. They taught every person on the floor to read the numbers, and turned the business into a game where everyone could see the score.
Stack wrote it up in The Great Game of Business. The idea has a name now. Open book management.
The Great Game of Business in Three Rules
Stack boils the whole thing down to three rules. They sound obvious. Hardly any small business runs on all three.
One. Know the rules. Teach people how the business actually makes money. Not accounting. Just where each dollar goes once it lands in the till, and which of those dollars they touch on every shift.
Two. Keep score. Put the numbers that matter where everyone can see them, and update them often. Imagine a footy team that only finds out the score from the coach, three weeks after the final siren. Nobody would know when to push. That's how most cafe teams work. The owner gets the P&L a month late and nobody else ever sees it.
Three. Give people a stake in the outcome. When the score improves, the people who moved it share in the win. Stack is clear that this isn't a gift. It's paid out of the gain, so it only costs you money you didn't have before.
The score itself comes from one number. Stack calls it the critical number. It's the weak spot that will hurt the business most right now if nobody fixes it.
We wrote about Jim Collins's one ratio in Good Is the Enemy of Great. That's the long game, the number you build a business around for years. Stack's critical number is shorter and sharper. It's this quarter's problem, and once it's fixed, you pick a new one.
Where the $5.50 Actually Goes
The first lesson is the one from the staff meeting. Here is a worked example, using the ranges we laid out in Starting a Cafe in Perth. Your own numbers will be a bit different. The shape almost never is.
| Where it goes | Share | Out of a $5.50 flat white |
|---|---|---|
| GST | 1/11 of the price | 50c |
| Coffee, milk, cup and lid | About 30% of sales | $1.50 |
| Wages and super | About 38% | $1.90 |
| Rent | About 10% | 50c |
| Power, insurance, repairs, the rest | About 7% | 35c |
| What the business keeps | About 15% | 75c, before tax and loan repayments |
Walk your team through that line by line and something shifts. The first 50 cents was never yours. It belongs to the tax office. The biggest slice goes to the people standing in the room, which most of them have never thought about.
Then do the maths that actually changes behaviour. If the business keeps 75 cents a coffee, a flat white remade because the first one was wrong costs about $1.50 in coffee, milk and cup. That's the whole profit on two good ones, gone before the customer has taken a sip. Nobody needs a lecture after that. The numbers do the talking.
Pick One Number and Put It on the Wall
Once the team can read the rules, give them a game to play. Pick a critical number they can move with their own hands. Rent is no good. Nobody on the floor can change the lease.
Good ones for a cafe look like this. Wages as a share of sales on a Saturday. Litres of milk poured down the sink each week. Average spend per customer. Food thrown out at close. Ask the team which cost they touch most on a shift. They usually know before you do.
Make a scoreboard. A whiteboard out the back next to the roster is plenty. Same spot, updated on the same day every week. If you've set goals the way we described in A Goal You Can't Grade Is Just a Mood, the critical number can sit as one of your key results.
Huddle once a week. Stack's teams meet weekly to check the score and forecast the next one. In a cafe that's ten minutes before open on a quiet day. What was the number. Where do we think it lands this week. What are we doing about it.
Put something on the line. Here is an example, so measure your own. Say the team tips 20 litres of steamed milk a week, at about $2 a litre. That's $40 a week, about $2,080 a year. Stack would call a short push to fix it a MiniGame. Run it for six weeks with one goal, halve the waste. If you get there, the saving is about $20 a week, the profit on about 27 coffees, and half of it goes into a team kitty for a dinner out at the end.
That's small money. It doesn't need to be big. It tells everyone the score is real and that they're on the team that wins it.
Two warnings. You don't have to share everything. Your own pay and your tax return can stay in the drawer. Start with sales, the big costs and the critical number. And share the bad weeks as well as the good ones. A scoreboard that only shows up when the news is good is not a scoreboard, and the team will work that out quickly.
The Exercise: Teach the $5.50 Lesson
One staff meeting, about 30 minutes. Bring a marker and one A4 sheet.
One. Ask the question. How much of a $5.50 flat white does the business keep? Write the guesses on the board. Leave them up.
Two. Walk the table with your own numbers. Take last quarter's figures, round them off, and fit them on the A4 sheet. GST, cost of goods, wages, rent, the rest, what's left. Show the real answer next to their guesses.
Three. Pick one critical number together. Let the team suggest it. A number they chose is a number they'll chase.
Four. Put the scoreboard up. Before the meeting ends. Write in this week's number so the game has already started.
Five. Name the prize. Say what the team gets if the number moves, and by when. Then pay it on the day you said you would.
Your team already plays a game every shift. They're just playing it without the score. Show them, and watch how fast they start keeping it for you.
Further reading: The Great Game of Business by Jack Stack
Inspired by The Great Game of Business by Jack Stack. If this hit home, the book goes deeper.
Keep reading: Good Is the Enemy of Great. Your Cafe Is Proof. · A Goal You Can't Grade Is Just a Mood
If you want a Perth coffee roaster who thinks about your business the way we write about it, let's talk.
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