Brewing Success with RDMS’s Tom Rutledge | Coffee Chat with R365’s Accounting Channel Partners
BRI: Hi everybody, welcome to our coffee chat with channel partners. My name is Bri Holm and we are live from our first stop in our restaurant transformation tour- San Francisco, California. I am here with Tom Rutledge from RDMS Group. RDMS is one of our top channel partners here at Restaurant365, so we have the honor and the privilege of talking to Tom today about how RDMS works in this space, how they’re working with Restaurant365, and we have a ton of great questions and content lined up here.
So, Tom, tell me a little bit about RDMS.
TOM: Sure. So RDMS started about 10 years ago, we began in San Francisco; the majority of our portfolio is really here in California. We are a fully outsourced restaurant accounting solution, so we handle all aspects of the fun stuff- the accounts payable, payroll, sales tax filings. The fundamental goal of what we’re doing is to give operators the details they need to operate in a pretty complicated climate. And we bring a lot of technology to the table- our goal is, really, they can focus on the guests and the staff and we provide them with all the information they need to make the best decisions possible.
BRI: Awesome. Well, you have a really unique background, so tell everybody about how you got to RDMS, how you started RDMS –
TOM: Sure.
BRI: -but also, life before RDMS.
TOM: Absolutely. Background and education is in finance, and from there, I realized I didn’t like the day-to-day work that that job was. Always had a passion for restaurants, was working in restaurants in college. When the early-life crisis came and I realized I made a bad decision as far as my career path, I went full tilt, moved from New York to San Francisco, went to culinary school. Thought I’d be the next popular chef, and realized I didn’t really have that skill set, but the finance was still there. And went from the kitchen to the front of house, ran restaurants and restaurant groups of various sizes, but was always plagued by not really knowing good information at the right time to make decisions. I had worked for another restaurant accounting firm and saw what was possible, and met my business partner at that time while we were working together. We went our separate ways, but eventually, we said this is our passion, it brings everything we like- dining, the accounting, the front of house, everything together. So we opened RDMS, and we started small and hustled up the first couple clients, and it’s really been all word of mouth that has taken us up and down the coast and all over the country, really, as far as being able to do the outsourced accounting.
BRI: That’s awesome. So are most of your clients today in the California region?
TOM: We are. We’re primarily here. We are- We have projects all over the place- Texas, California, Washington state, some projects in New York, but we’re- we’re mostly here. We focus- as a boutique firm, we focus on the independent operator, so groups 1-15 units, and we like getting to know the people we work with. So everyone’s a quick flight or a quick drive away.
BRI: Awesome. Tell me about your experience with Restaurant365. How long have you been working with us?
TOM: We made inquiries around 2017-
BRI: Okay.
TOM: -we were kicking the tires. We had- you know, we were full-go. It’s hard to move accounting software for one unit, let alone an entire firm. We were playing with the software, we were very heavy C2it users throughout the entire time. We were using a different accounting platform. Around 2019, we really started to make an aggressive move to 365, and then COVID made it an obvious choice for transition, so we’ve been really full tilt since 2020. We brought everybody over in rapid succession, so we’re 100% 365 now.
BRI: Since you brought it up, tell me about the need for something like a Restaurant365 when a COVID happens.
TOM: Yeah. So, from an accounting standpoint, we became de facto COVID processors, all the PPP, EIDL, and every other acronym that’s out there. So it became a full-time job, but we couldn’t stop doing the accounting, and the efficiencies gained from putting everything in one place, and being able to get the clients involved more than we could previously changed the game. So we were able to not have to change our accounting firm structure to handle all of this COVID work in addition to all of the accounting work. If we didn’t gain those efficiencies, we would’ve had to get staff that we probably couldn’t afford to bring on for a short time just to deal with COVID. So it was right time and right place, we were pretty lucky in our transition timeline.
BRI: What would you say, from like, talking about efficiencies and value, what would you say really sets RDMS apart from maybe other firms out there?
TOM: I would say we kind of- we look at ourselves as a service firm that uses technology, not a technology firm that provides some service. So, really, because we’re constantly looking at what the industry has to offer and because we have such a strong backbone in providing the information timely, we’re really focused on workflow. Our clients know exactly where they stand with their books. We work very aggressively to have the right communication channels so we can get back to people appropriately. But fundamentally, accuracy- caring is a big part of it. It is a service-based industry. We’re also operators, so we really take the perspective of the operator in everything we do, and we build everything we can to fit their lifestyle as opposed to just do debits and credits – is the biggest change.
BRI: Yeah. I would say that’s a huge value add, especially with all the firms that we work with here at Restaurant365. I think one thing that kind of positions you guys in a different spot, if you will, is your background in that operations. So tell me about that, tell me about how are you providing that sort of service to your clients-
TOM: Sure.
BRI: -and what does that look like?
TOM: Everything we have built came from being an operator. It came from the perspective of “I have to wake up in the morning, unlock the door, deal with the staff, deal with the customers, provide great service, keep the quality going.” The last thing I’m thinking about is “did the propane bill get submitted and paid?” And- but if the propane doesn’t show up, and my patio can’t be open, it’s a nightmare. So we take that compassion for what it means if we don’t do our job every single day, and really fundamentally from an operator’s perspective, we try to stay out of the way. We’re not clairvoyant, but we make it as easy as possible. We’re not asking people to do systems that take them out of their primary function. We’re putting everything at their fingertips, we’re making it- we’re not asking them to do our job in any capacity. We’re really working overtime to take as much burden off of them as possible because we know what they’re dealing with.
BRI: That’s great. What would you say are some common mistakes from restaurant operators when it comes- either financially or from an operations side?
TOM: You can’t really take your finger off the pulse ever. Everything matters. The numbers, every day, if you’re tired, so you let the servers stay a little bit longer, if you’re not scheduled correctly, did you have a plan for how the menu has been adjusted, do you have a plan- did you cost that menu before you adjusted it? There’s so slim margin that paying attention to prime costs, understanding your benchmarks- I think a lot of restauranteurs get into trouble before they even open their doors. There’s a large level of- you had wild expectations that weren’t based in reality when you opened, or your lease is putting you in a position that is making it really complicated, even if you’re profitable- it’s going in that direction. So we like to find people before they even open, but even if they are already opening, get systematic. You know, it’s not a free-flow kind of business. You can’t do it purely for the romance. You have to have- what are you doing on Mondays, what’s your team reviewing on Tuesdays, when’s your scheduled call, when are you reviewing your numbers, what time of the year are you doing menu changes and how far in advance are you costing things out? It’s staying on top of the pulse, but in a systematic way. Systems tend to be the biggest miss by a lot of operators that are starting out.
BRI: Yeah. Where does Restaurant365 come into play with that for you guys?
TOM: It’s our main communication channel. We have a very systematic way in which we approach our clients. They know that on Monday, we’re doing these things, on Tuesdays, we’re doing these things, that they can look at these numbers on Wednesday- and we try to get them to eliminate as much software as they can but still get best in class. So if you go to the average restaurant, anywhere up and down the street here, you’re going to find a scheduling software, a payroll software, an accounting software, reservation software, an event software- and then, none of it talks together. So if you have an ecosystem to which you can train a person to be in one place- or as limited places as possible -that’s really what people need to be focusing on and the change they have to make.
BRI: Absolutely. And that’s the name of the game for Restaurant365, right?
TOM: Correct.
BRI: Is bringing everything into one spot. So tell me a story, maybe about a customer that you’ve brought on-
TOM: Sure.
BRI: -to Restaurant365, or just a customer that you’ve helped, maybe, from startup to today.
TOM: Absolutely. You know, it’s the best part of the job. You know, and a lot of the reason we’ve stayed in California is to be able to help people. They’ve put, often- especially in the independent world, they put everything into it. They’re working 7 days a week, they’re open to close. We have some clients that opened right before COVID hit. And those are the most heartbreaking stories most of the time. There were a few that really went really into beautiful things, hired incredible people, built beautiful situations, and then needed to pivot super hard because their beautiful dining rooms closed. They had no outdoor patio, they were not built for delivery. So to- we have more than a few stories to which we came in, identified all of their issues, reviewed their leases, got lease adjustments. You know, a lot of these people didn’t qualify for PPP in COVID and EIDLs in a few instances. And one client in particular, we actually found COVID came in. He had no opportunity. We ended up renegotiating the lease into a larger space, redid all of the planning of what was going on. By using 365, we did all the proforma development, all the scheduled movements, and we were on top of those numbers from opening, and his sales have been 3 times his prior space. He was truly a COVID success story. If he didn’t have access to the scheduling side of things to looking at his invoicing, his accounts payable, getting the daily and weekly reporting, he would simply have closed probably a year after signing a lease. So those are our favorite stories.
BRI: That’s great. So… kind of on that same topic. We’re in a unique market here in San Francisco in the Bay Area, especially in the restaurant industry. Tell me about that.
TOM: California provides some unique challenges. San Francisco does what it can to make it a little bit more fun. So in this kind of city, we have exorbitant rents, we have an incredibly high cost of living, so a lot of this staff that lives here- or that works here, I should say -can’t really afford to be anywhere close. So the talent pool- and there are some extraordinarily talented people -but they’re competing with millionaires who can price them out of the market very quickly. So they’re taking really long commutes. You have to really create a wonderful environment for them to work in. You have to provide them the fair and meaning wage. When it comes just down to the numbers, we’re paying New York City rents, but we have a third of the population, so we’re not able to bring in the same volume from top-level sales. The minimum wage here is high, it’s gone to over $18 in the middle of this year. Then we have things like the mandatory healthcare- and it’s phenomenal to take care of the staff, but as an operator, you have to be very clever on how you afford these things. So the- San Francisco specifically has a healthcare ordinance which adds $2.27 currently on top of a very high minimum wage. So we’re looking at over $20 an hour for any minimum wage worker. In comparison to other parts of the country, where they’re paying $5, $6, or $7- it’s dramatic. If you add to that, we have mandatory 401K. Our cost of goods are not cheap. It’s just- California is really complicated. Now it doesn’t mean we can’t provide excellent experience and good value, but there’s no room to miss. You can also see that in a lot of the- a lot of the celebrity talent, a lot of the- really, people who want to try avant-garde stuff and push the envelope. San Francisco used to be the place for that. California is- we have incredible produce. We have incredible ranches, resources here are insane. It’s a wonderful place to come and eat still, but a lot of the talent who couldn’t risk taking… large leaps into financial- the unknown, they’re moving to other cities. So to attract people back, you have to just bring an airtight solution. You have to have incredible controls, both operationally and financially. So when we can bring part of that to the table, financially, and maybe add some operational consulting, we’re really excited to see what people are doing.
BRI: That’s awesome. Well, I have some rapid-fire questions for you.
TOM: Bring it on.
BRI: Are you ready for them? What is your favorite restaurant?
TOM: Oh, it depends on the weather, the time of day, what I’m wearing, I can give you a million places. Kokkari in San Francisco is incredible. If you ask me to go there today, I would be there in a heartbeat. Sorella, which is in downtown- it’s the sister restaurant of Acquerello, is one of the best drinks and pasta you can find around the Bay Area. I could- We could spend- This is rapid-fire, we could be here for two hours. But those two are- don’t miss those two.
BRI: Alright. Favorite fast food restaurant?
TOM: I’m a taco guy. I was a New York deli guy. It’s hard to find a sandwich here. There are a few places, but if I was going to go to anywhere in San Francisco for a quick taco bite- which I am going to just lump into financials -Tacolicious crushes. They do such a good taco.
BRI: Tacolicious. Okay. What is your coffee order?
TOM: Phil’s. Ecstatic. Large. Black.
BRI: Love that. What’s your favorite Restaurant365 report?
TOM: Oh, weekly ops statement. The ops statement blows my mind. We used it at C2it all the time, but the drill-down capability is- and cogs allotment. I’m going to give you two because I live and die by both of those.
BRI: That’s great. Okay, last question: what is- if you could be one menu item at a restaurant, what would you be?
TOM: Oh, my goodness… I love that question, I don’t think I’ve been asked that specific question. I would go with cassoulet.
BRI: What is that?
TOM: Cassoulet is a French dish- beans, sausage, duck leg, bacon, joue, breadcrumbs, baked, everything that’s delicious and fantastic.
BRI: And that’s you in a food item?
TOM: That is- I put you to sleep- that is me.
BRI: Amazing. Well, Tom, thank you so much for being here-
TOM: Absolutely.
BRI: -it’s an honor partnering with RDMS, you guys are a fantastic organization, so thank you so much for your time.
TOM: We appreciate it.
BRI: Thanks, everyone.
