Recipe for Success

We're having lunch at one of New York's hottest new restaurants, Craft. The broiled diver scallops are divine. The loin lamb chops, sublime. The foie gras terrine inspires a When Harry Met Sally moment of true bliss.

Celebrity chef Tom Colicchio -- recipient of the James Beard Foundation's 2000 award for best New York City chef -- sidles over. We gush. We rave. We clink our glasses in his honor.

But Colicchio, though polite, is only mildly interested in our food reviews. He has more pressing topics on his mind. He wants to talk software.

Chef Tom Colicchio

He wants to explain how he can wake up in the morning, boot up his laptop, and find out which menu items topped the list last night at Craft and his other restaurant, Gramercy Tavern. He wants to discuss how he can immediately determine the number of bottles of cabernet left in the cellar. He wants to demonstrate how he can track whether his fish supplier is charging more for sea bass at Craft than at Gramercy -- and whether his sous chefs are ordering too much venison and not enough lamb.

The new Web-based software that allows Colicchio to accomplish all that before hopping in the shower comes from a New York-based company called RestaurantTrade. Its operating system enables restaurants and their suppliers to simplify and streamline the messy procurement, inventory, and management functions that are critical to the day-to-day operations of the business.

"My staff saves three hours each morning on wine inventory alone," Colicchio says. "You used to be able to access information about inventory, pricing, and customer trends, but it came in big reports that were very laborious to produce and that were very tiresome and confusing to study. Now that I'm running two operations, it's all about the accessibility of that information."

Begin with a "wow" idea. Leaven with enthusiasm. Add zest.

Unless you've worked in the hospitality trade, it's hard to grasp just how Jurassic the business side of the industry really is. In most restaurants, for example, a monthly inventory is conducted manually -- jotted down by hand on clipboards, entered into spreadsheets, and then printed out for analysis. Bleary-eyed chefs place orders for the next day's ingredients late at night, on suppliers' answering machines. Suppliers announce new specials through a flurry of faxes, which generally end up in the wastebasket. Orders arrive in the morning, are inspected -- frequently found in error -- and sent back for another try.

And don't even ask whether patrons liked the new monkfish entrée or whether the pinot grigio sold faster than the sauvignon blanc. Only a particularly anal bean counter could extract relevant data from the archaic point-of-sale system used by most establishments. To get the information they require, most restaurateurs need to run 8 to 12 reports detailing the average customer check, the total sales, the number of comps, and more.

In short, the entire industry is a nightmare of inefficiencies. It needs someone with the head of an accountant and the heart of a chef to straighten things out.

Enter Damian Mogavero, the tall, dark-haired CEO and idea man behind RestaurantTrade whose enthusiasm for the business bubbles over like champagne in the hands of a tipsy sommelier.

Mogavero developed a passion for the hospitality business as a 16-year-old busboy at a Hyatt Hotel in New Jersey. He explains, "The general manager of the hotel saw that I took an interest in my job and said to me, 'Damian, if you really want to succeed in this business, you only need to know one thing: Exceed customer expectations.' Since that day, I've had a love affair with the business. For me, producing that wow feeling is what it's all about."

But Mogavero got sidetracked on his way to a career in the industry. After learning the art of deal making at investment bank Dillon, Read & Co. and earning an MBA at Harvard Business School, he landed a job as CFO of the Matthew Kenney Group of Restaurants, in New York. That's where he discovered the financial chaos raging behind the scenes at even the toniest dining spots.

"It was really a shocker to me," he says. "Matthew Kenney ran four restaurants and a catering company, yet the company had no tools to manage food, beverages, and labor costs.

"Chefs would say to me, 'Damian, I'm not in the restaurant business anymore. I'm a paper pusher. I spend more time doing administrative work than I do cooking food. I'm playing phone tag with my suppliers while trying to take inventory and figure out my food and labor costs. I want to come up with new menu ideas. I want to cook. I don't have time to do this.'"

Mogavero was appalled. He knew the daunting statistics that plagued the $169 billion restaurant industry. A study by Efficient Foodservice Response pegs losses at $14.3 billion each year due to inefficiencies. The Center for Foodservice Education estimates that nearly 90% of independent restaurants fail within the first five years.

"As a chef or manager, how can you exceed guest expectations if you're bogged down with all this paperwork and working with four points of margin?" he asks.