The Restaurant Biz Blog

WhenToGO-MOBILE

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Sometimes funny, but mostly about what makes the retail and restaurant industry tick, each Friday the WhenToManage team plays on our company name with a WhenTo(DO). This week's WhenTo(DO) is on the mobile front, or when should your restaurant go mobile? According to the technology website cnet.com, in the first quarter of 2010 over 314.7 million mobile phones were sold, a 17 percent increase year over year. Clearly, mobile is on the rise and now you're thinking: what does it mean to my business and how do I "use" it??? Good question, but one that doesn't have an end-all-be-all answer. The smartphone and mobile space is clearly evolving. Not to mention, all the "pads" that will soon launch. So the answer is stay on top of the trends! As committed and former restaurant executives, managers, cooks and servers, we also have some ideas on how mobile can help, and our software does just that, help...

Recipe Costing for Profit

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In a previous blog post, I wrote an overview on recipe costing, since this is so important we are going to expand on this further.

When you ask a restaurant owner/chef about recipe costing, the usual answers are: "We don't have time to do that" or "By the time we get done it won't be accurate any more" or "How will that help, we're doing okay". All of these responses beg the questions: has the potential, ideal or theoretical cost been established? What is it? What method was used to determine the projected cost?

Proper recipe costing is a somewhat tedious and time-consuming task; however, when compared with the potential dollars lost through undetected high food cost, it is time and money well spent. Large restaurant operations frequently prepare budgets without thorough research into the various components that constitute the overall food cost.

Before attempting to cost out recipes, it is necessary to run yield tests not only on the center-of-the-plate items, i.e., meat, fish and poultry, but also the vegetables, starches, sauces and garnishes. It is important to note that when doing butcher tests and fish tests, not only is the net cost of product of interest, but so is the time necessary to do the preparation.

This is especially true if the chef or the sous chef or some other highly trained, highly paid individual is doing the butchering. That person's time, while not part of the food cost calculation, is part of the labor cost, and one must ask if that is the best use of time and talent. It is appropriate at that time to study the total cost of doing the butchering in-house vs. buying portion-controlled products, taking into consideration the ability to use the byproducts, quality control issues, consistency of yield and net cost of the plated product.

The time spent cutting meat, fish and poultry also has a direct relationship to the sales abstracts when preparing production charts for the kitchen staff to maximize utilization of labor hours. Too often, operators take shortcuts by attempting to cost recipes using the gross cost of ingredients, resulting in artificially low costs - and then wonder why they cannot achieve their cost objectives.

Costs must also be included for tabletop gratis items such as bread, butter, relish trays or any other complimentary items included with a given meal period function. Random checking of plated items must be done to determine if the production staff is adhering to established portion guidelines.

ESSENTIAL ELEMENTS - Key information needed for recipe costing:

• Date recipe was costed
• Meal period
• Recipe name
• Last update
• Yield
• Portion size
• Cost per portion
• Profit per portion
• Suggested selling price
• Food cost percentage at suggested selling price
• Ingredient description
• Purchase price
• Per unit
• Recipe unit of measure
• Cost per unit of measure
• Extended ingredient cost
• Total recipe cost
• Suggested selling price to achieve specific food cost goals, i.e., 25 percent, 30 percent, 35 percent
• Plating instructions
• Garnishes

Once each recipe is properly costed; a review of the sales is needed to determine how the mix of sales will affect the overall theoretical cost. Then each recipe's cost and selling price are entered into a spreadsheet, the only ongoing task is to enter the mix of sales for the period under review to determine the food cost potential for that period. This period can be by day-part, by day, by week or by month.

Any time the cost of recipe ingredients changes radically, recipes are added or deleted from the menu, special pricing is offered to clients or there is any other factor that could change the relationship among recipe costs, revenue and sales mix, you should calculate a new theoretical cost. You must remember that this "ideal" cost assumes there is no waste, over portioning, pilferage, spilled food, employee consumption of food, etc. In reality this does not exist in day-to-day operations; however, well-run operations frequently can maintain costs within one or two percentage points of potential through diligent cost-control systems.

Without the knowledge gained through recipe costing and the subsequent application of those individual costs to the sales mix to determine what costs should be. It would be nice to say that recipe costing would solve all the problems; however, it is only one piece of the puzzle, an important one, that constitutes the total picture of any well-run food and beverage operation.

Before any management team can determine what it wants its food costs to be in the future, it must determine what they are today and then decide the most prudent approach to achieving its food cost goal. At the same time it must continue to provide guests with perceived value for their catering dollar. Recipe costing is a necessary first step to that end.

There are also many inventory software solutions on the market today that can help automate this process and give you accurate and timely inventory costing reports.

Interested in learning about how we can help you manage your food costs? Join us for a demo of our inventory system.

Become a fan on our Facebook page or follow us on Twitter to keep updated on new product features, industry news, and tips on topics like inventory management.

Top 3 Areas for Reducing Food Costs

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This is a follow-up to a series of articles I've been posting on controlling food costs in your restaurant.  The focus and time required to manage cost can seem daunting, so this week I just wanted to list a few key areas you can start with and can grow from there.  Next week we will be talking about recipe costing.    

The Kitchen:

• Reward staff when food costs are met
• Implement a meal plan, which allows your staff to eat at discounted prices to keep them from sneaking food here and there.
• Use spatulas to scrape every drop out of bowls and cans.
• Include portioning in your advanced prep instructions. Busy cooks may not have time to portion properly during a rush.
• Keep your knives sharp.
• Use the correct size of dish for each menu item to avoid the temptation to over-portion in order to make the plate look full.
• Inspect your garbage cans for food waste. If waste seems excessive, spend time training your staff to reduce the amount of food thrown away.

Planning Your Menu & Specials:

• Plan your specials to use ingredients you purchased on discount or items you would like to move out of your inventory.
• Use trim items from meal preparation to make soup or appetizers.
• When creating your plates, assign larger portions to items that have lower food cost and keep high-priced items to more manageable sizes.
• Use ingredients in several dishes so you can order in bulk. But beware of overstocking, as this may result in spoilage.
• Is your dishwasher throwing a lot of food away? If so, consider reducing your portions.

Ordering Food:

• When possible, buy fresh produce locally, direct from the grower.
• Stock enough supplies to avoid trips to the local discount or grocery store.
• Regularly schedule requests for quotes from both your current suppliers and new suppliers. Always get at least 3 quotes.

• How Do You Control Food Costs?
• Inventory Forecasting: You Can't Manage If You Don't Measure
• How Does Food Waste and Theft Happen in a Restaurant

Interested in learning about how we can help you manage your food costs? Join us for a demo of our inventory system. 

Become a fan on our Facebook page or follow us on Twitter to keep updated on new product features, industry news, and tips on topics like inventory management.

How Does Food Waste and Theft Happen In A Restaurant?

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Whether you run a quick service or a fine-dining restaurant, the amount of money you make depends to a degree on how well you manage your inventory. Food cost is often a restaurant's largest single expense in the overall cost of running a restaurant.

It's common for restaurants to lose money through poor inventory management. Start-ups are particularly exposed to this cash drain, since they often do not have their financial control systems secured. But even the most well-managed, well-established restaurants have ongoing challenges with waste and theft.

Consider all the challenges of dealing with food. Your have a lot of inventory items and most of it is perishable with a limited shelf life. Failure to use a product within its shelf life results in throwing it into the trash and there go some of your hard-earned profits.

The more people involved in taking "raw" inventory and converting it to the delivered product, the more difficult it is to control loss, waste and misuse of inventory. The typical restaurant has dozens if not hundreds of raw and partially prepared food products in storage. You're stocking lots of desirable products to which many people have access. Depending on size, nature, volume and recipes in your business, there's a good chance that you'll have between 200 and 500 different raw food products in your storage rooms that are of value to everyone. The more products you have, the more challenging it is to control their use. The more of anything you have, the less likely one or two items will be immediately missed.

Manual counts, stock rotation, and portion control can help you control costs and ensure consistency. You will see the results in your profits at the end of the day. Whether you are using manual methods or examining your inventory in detail with software, when your employees see that you're keeping close watch on inventory, waste naturally decreases. Letting your staff know that you are tracking inventory carefully can have other benefits as well.

Adjusting for waste
Does your staff keep track when food is burned or spilled? To account for inventory properly, you will need to adjust stock levels whenever there is waste in the kitchen. You may want to have your staff report mishaps to the manager on duty and adjust for waste as it happens. Or you may prefer to use a waste worksheet in the kitchen and enter the adjustments into the software daily or weekly.

Stocking
Review your stocking procedures to avoid spoilage: organize your storage in such a way that products don't stay hidden in the back. Crowded, messy areas act like black holes for missing product and make it difficult to conduct counts. Make sure stored food is properly wrapped, covered, and labeled with a date so that it can be used before it spoils. Have a rotation policy in place for your stock. Food that comes first should be used first. Have your staff stock new items at the back of the fridge or freezer.

Counting
Regular physical stock counts are necessary for the smooth running of your inventory program. Physical counts are essential because they determine your actual usage. Conduct a daily inventory of 8 to 10 key food items. Spot inventory checks should be done in full view of employees as well, which keep the staff mindful that a theft would be hard to pull off. How often should you count? The recommended inventory period is one week, certain items you may want to count daily. This takes time but its time well spent especially if you suspect theft.

So ask yourself you if you are doing the following and if not it's a good place to start.

• Do you have consistent recipes for all your menu items?
• Are you portion-controlling your most costly items?
• Are you keeping no more than a week's stock on hand and systematically rotating perishable product to limit waste?
• Are you doing a physical inventory at least once a week?
• How much money do you have tied up in inventory? To limit waste and spoilage, industry consultants recommend keeping no more than a week's worth of stock on hand.

 
Related Articles

• How Do You Control Food Costs?
• Inventory Forecasting: You Can't Manage If You Don't Measure

Interested in learning about how we can help you manage your food costs? Join us for a demo of our inventory system. 

Become a fan on our Facebook page or follow us on Twitter to keep updated on new product features, industry news, and tips on topics like inventory management.