What the Cheesecake Factory can teach consultants about profit margins

A few years ago in the "before days" I was visiting friends in New York when we decided to visit one of the most exclusive sushi restaurants in the city.

I was able to snag a late night reservation which was lucky - after all, there were only 10 seats!

We squeezed ourselves onto the countertop stools and prepared for the magic. The decor was minimal, but chic.

There were no menus and apart from allergy restrictions, the chef decided what you were eating.

They call this Omakase in Japanese.

That phrase literally translates to, "I leave it to your care."

Omakase is a premium experience. Meals generally start around $150 and go up from there. The sky's the limit.

The staff was small, the customers were plenty and the experience was so good they had a waiting list for months, purely from word of mouth.??

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Contrast that experience with the four, yes FOUR, menus at The Cheesecake Factory I was staring down last week.

Their menus read more like a Broadway playbill, with everything from something called Skinnylicious! Burgers! Chow Mein! Bulgogi! Tex-Mex! Dolmas! Steakhouse!

The interior is just as scattered, one part Grecian palace, one part ancient Egyptian columns, Victorian frescos and austere wooden paneling.

If Panera, a roller skating rink and Medieval Times had a baby - it would look something like Cheesecake Factory.

The Cheesecake Factory wants to be everything to everyone and has the financial backing to pursue that strategy.

And Americans love it.

The cheesecake, fwiw, is pretty good.

Despite all the clamor, their profit margins are only about 2%.

They spend so much on labor, food and overhead that there's very little left.

The average profit margin for a Japanese restaurant like the one I described earlier? About 10%.

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I was just on a call last week with a colleague of mine who was telling me about a very well known coach that had an entire staff under them, and looked really successful on the outside, with miles of programming to sell.

What the public didn't see was that coach declaring bankruptcy, because in spite of running a $1+ million dollar business, they were losing money on all the overhead and ads!

That's what I call running a "Cheesecake-style" business without the financial capital to keep it afloat.

As consultants, we are wise to run an "Omakase-style" business - smaller staff (if any), crystal clear service offerings, and a well-defined target market.

Omakase-style businesses don't need to flashy ads, constant promotion or the expensive overhead of a Cheesecake-style business.

Our menu of services doesn't need to be a mile long - maybe we just do one or two things really well that we become known for.

Omakase businesses work with clients who "leave it to your care" because you are so trusted in your specific set of service offerings.

Omakase clients pay a premium because you're in a category of one.

The biggest mistake I see is consultants doing is trying to run a "Cheesecake-style" business on an "Omakase-style" budget.

They run themselves into the ground trying to be everything to everyone, refusing to choose a target market for fear of being limited, and boasting a menu of services as long as my arm with prices that barely cover costs.

The door doesn't ring because unless you sink $1000s into advertising, you just look like everyone else.

So you try to do more social. More Instagram. More commenting. More blog posts. More more more.?

And it doesn't move the needle much, does it?

In fact, you may even hear from people, "I see you everywhere! Looks like you're doing great!"

But they?rarely hire you.

It's super stressful and demoralizing, isn't it?

It's a recipe for burnout.

If you want to run an "Omakase-style" consultancy that consistently earns $20,000 months in just 30 minutes a day, and keeps more of the profit in your pocket, this is what we do inside of Elevate, my group program and mastermind.

Doors are open until January 31st, 2022 and I have three seats left.?Click here to learn more.?Elevate is?by application only, but there's still time this week to chat with me if you feel this might be a good fit for you.??