January 8, 2018

Hudson's Rail Trail Flatbread Co. opens up its books to workers

Rail Trail employees helped the company meet its financial goals by a paper-thin $80 last year.
Business partners Michael Kasseris (left) and Jason Kleinerman plan to roll out Rail Trail’s open-book style to sister company New City Microcreamery this year.

Austin Bonnell, an 18-year-old busboy at Rail Trail Flatbread Co., noticed the other day he was throwing away a lot of fries.

Several dishes at the Hudson eatery come with fries, so he figured the company was losing money with each fry thrown into the trash. He noticed the same thing with salads. He told a manager, who relayed that to the owners.

Now, the restaurant is portioning less of each.

Every employee at the restaurant – and soon two others across the street owned and operated by the same group – is taught the economics of running a restaurant, and to a greater extent, their own life, thanks to an open-book management style.

The restaurant is working under a program developed by Boston-based Rethink Restaurants, a consulting firm bringing open-book management to popular restaurants, including seven in Massachusetts, according to its website.

The program is expensive – even after a $75,000 state workforce training grant – but in spite of those costs, Rail Trail is on track to realize a profit margin of more than 20 percent in 2017.

Financial impact of jobs

The open-book management style gives employees the information they need to do their job as effectively as they can with the knowledge of the financial impact of their every move, said Jason Kleinerman, an operational partner at Rail Trail.

The restaurant's financials are displayed on a wall in a classroom and storage room next door where quasi-business classes for employees are held routinely.

All Rail Trail employees know the cost of the products they serve customers: napkins, French fries, drinks. The restaurant believes this increases efficiency.

The philosophy has created a symbiotic work environment in which employees work more like a team rather than independent contractors hoping for a big tip, said Kleinerman.

"The main focus is to teach them how to understand revenue, profit, cogs, overheads and how to calculate those things," Kleinerman said. "Things you'd learn in general business courses."

If financial goals are met, each employee gets a nice little payday at the end of the year.

Server Jenny Webb said the restaurant made its goal last year by a mere $80 - probably made possible by a few extra beers or cocktails sold.

"Every little thing we're doing counts," she said.

Sarah O'Malley, another server, said she's now very much aware napkins cost money, and her table doesn't really need a stack of napkins.

Good profit

The strict attention to detail, however, doesn't compromise on quality or guest experience. In the same room next to the financials, hang posters of the company's core values: good profit, continuous improvement and guest advocacy.

Good profit, said Kleinerman, means profit coming from sound, ethical business decisions taking into consideration guests, staff, the environment, the community and vendors.

"If a vendor was having a bad year and we could squeeze him to get a product at a lower cost, we wouldn't do that," he said. "That's not good profit."

Instead, good profit means running the restaurant as efficiently as possible right down to the last penny with complete employee buy-in.

Now, Kleinerman and equity partners Karim El-Gamal and Michael Kasseris are bringing the management style across the street in February to their two other businesses: New City Microcreamery and speakeasy Less Than Greater Than.

Employee buy-in

Rail Trail and its sister restaurants have more than 100 employees serving up flatbreads, ice cream and cocktails, and most of them are from Hudson, Kleinerman said.

"Our turnover is less; and we're creating a stable income for some people, and they're able to afford better housing and reliable transportation," Kleinerman said. "That's really a great thing to be a part of."

In a way, the philosophy has permeated the lives of employees and their families by introducing the knowledge and discipline it takes to balance a checkbook while saving money, said Kasseris.

Rail Trail is often credited with helping to begin downtown Hudson's transformation from a sleepy area mostly empty after 5 p.m. to a bustling area of commerce and nightlife. The open-book management style plays into the culture and atmosphere the restaurant exudes, Kasseris said.

"From the youngest kid to the oldest employees … it starts to trickle through everyone's attitude and permeate the whole organization and their families," he said.


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