Succession planning for restaurant owners

RM: Grano was created as a cultural expression as much as a culinary and commercial enterprise. It was an attempt, unconsciously, by (my wife) Lucia and I, to address the disconnect between the Italy of post-WW II immigration and that of contemporary Italy which benefitted by an economic boom and modernization. It seems fitting, then, that such a personal enterprise should include offspring born above the shop and immersed into it.

TG: My oldest son Tasker, at the very young age of six, decided that he wanted to be involved in our company. At age 10, after my wife and I had divorced and he had moved to Florida with her, Tasker declared as he boarded the plane that he would be back to join me in the restaurant business. True to his word, the day after he graduated he moved to Vancouver where he started working in my Hard Rock Café there and has been working in the business ever since. He is now Managing Director of our company. My younger son, Sterling, is currently cooking and waiting tables and will be attending the Northern Alberta Institute of Technology in September for a business management program. Ultimately, it was Tasker’s and Sterling’s own decision to enter the industry.

What skills or characteristics do many in today’s younger generation have that are beneficial to becoming successful in the foodservice industry?

BA: Part of becoming successful in today’s foodservice industry is the need to work “smarter” vs. “harder.” Our business has become increasingly complicated over the years, and working hard is only one small part of the equation now. Our younger generation is built to look at innovative ways to approach our business challenges, and our fast-paced, multi-faceted industry provides many opportunities to test new ideas.

RM: Youth is not wasted on the young! By their very nature they are creative and experimental and see things through eyes and spirits not informed by 30 years of doing the same activity.

TG: The younger generation today is extremely different from when I was a kid. I used to work 18 hours a day, six or seven days a week, for years and years. I feel that some of the younger generation may not be prepared to put into the industry what is required to ensure that our customers are looked after. However, I also think that there are a lot more opportunities available to them today for them to consider it as a true profession. There are many training systems and educational programs that weren’t available when I first got started in the business. This industry is changing daily, and I believe that formal training and education is an absolute necessity. As a company, we are constantly training and upgrading our staff’s skills and I think it is imperative that we help people acquire the right skills to succeed in the industry.

What are the biggest challenges to having children or family involved in the business?

BA: I suggest the new generation does not have a balanced perspective of the total commitment the business has required throughout the years. There were many struggles and challenges in the early stages of the business that the children are not aware of – they see the business from the current mature or advanced phase. Also, with family members, there are more politics involved in the management of the company, as discussion within family tends to be more honest, emotional, and abrupt than non-family.

RM: On occasion, blood and olive oil create a challenging business “condiment.” It is easy for a parent or child to say things to each other, sometimes bordering on toxic, which a normal employee never would or could. There is an emotional history there.

TG: I have had very few challenges because I have been fortunate to work with family members who really want to be in the industry.

What advice would you give to other business owners who want to pass the torch to their younger family members?

BA: I suggest that younger family members must earn their opportunity to become involved in the business – a sense of entitlement by family members will not work. This industry is tough, and an owner’s desire to pass the torch must be outweighed by the family members’ commitment and passion to succeed.

RM: Potential familial involvement in our business has to be a mutual undertaking with the emphasis on the young person’s willingness. In our case, all four of our children were involved on weekends, during summer vacations and such, however only two, Bianca and Luca, are now involved on a full-time basis. They along with their mother, Lucia (chef at Grano) and aunts, Maria, Flora and Carla, have and continue to contribute to the blood-and-olive-oil mixture.

TG: My best advice would be to ensure that their children want to be in this business. Do they want to be in the business because Mom and Dad are successful or making a certain amount of money? Or are they getting into the business because they are passionate about it? If you do not have passion for the public and the industry, well, you cannot teach that. You cannot convince your children that they should buy into whatever program you may have. Making money should be secondary.

Family successions: Managing the emotions

According to Theodore Homa, Senior Partner, BDC International Consulting Services: “Emotional issues can create a volatile dynamic in family businesses. These entrepreneurs often have made personal sacrifices to keep their companies afloat, so it’s hard for them to separate business and personal relationships,” he says. “In the end, those emotions can get in the way of making decisions that are good for the business.”

Homa provides these pointers to help business owners proactively manage emotional issues in family successions:

  • Give yourself a lot of lead time to plan and execute – realistically at least two years. Family business transitions take much longer than one realizes.
  • Formalize your family succession plan to avoid disagreements down the road. Maintain an open dialogue with family members about your plans and get them involved. Keeping them out of the loop can simply sow family discord.
  • Create trust in your decisions, especially when it comes to the transfer of leadership. When you choose who will take over the helm, communicate a clear action plan to family members and employees. Reassure them that you have the mentoring and training in place to develop your successor in all aspects of the business.
  • Define roles and responsibilities and even put them in writing. For instance, a family member might be a stakeholder in the business, but that doesn’t mean that he or she automatically has the right to be involved in daily operations. By clarifying these roles, especially in areas such as what is the purview of management in running the business on a daily basis versus what is required for governance of the business, you can avoid unnecessary misunderstandings.

Excerpted from Family Successions: Managing the Emotions, www.bdc.ca

Full article: www.bdc.ca/EN/advice_centre/articles/Pages/family_successions.aspx?ref=related-articles.