The fastest road to a lower food cost percentage is through the divisor. You will earn your biggest profits on busy days. A well trained service staff can help maximize revenue and place a big number where you need it in your food cost formula.
Think of days when too much food was prepped. Remember the busy nights with disappointing results. Perhaps the productivity of service staff is to blame.
Try the following exercise and see if you gain a new insight. You need the hours worked per server and the revenue produced. It's important to create a fair analysis. Focus on one meal period per spreadsheet.
Your sheet should have columns for Server, DOW, Meal Period, Hours, Sales and Sales/Hour. Sort the table using the Sales/Hour (descending) as the primary and Hours (ascending) as the secondary. Eliminate the best and worst server. Find the middle (median) server in terms of productivity. Now examine the report for patterns. Are you giving enough hours to the top tier?
Help the best servers make you more money. There is a great tool available to visually view meal period coverage at the Work Schedules website. After a little setup work, you can draw lines on an easy to read chart. Watch the investment in server pay as you paint the lines. The chart constantly recalculates as you add new times.
Click Here For More Information
Tuesday, April 11, 2006
Saturday, April 08, 2006
Standard Recipe Costing 101
I received an email today regarding standard recipe costing resources:
"Good Day Mr. Dunbar,
I am a culinary student at the Mount Saint Vincent University, Halifax. Canada.(www.msvu.ca). I found your blog very interesting, and was wondering if you have articles/websites/links where I can learn the concept of food costing right from making the standard recipe to how portion sizes are determined and prices fixed. I have tried many websites but they always fall short of providing the complete info. Your help will be greatly appreciated. Warm Regards. "
My father was an Air Force Cook during the Korean War. He worked in a large mess hall with over 5,000 airmen and in the Officer's Club. The Air Force issued a great cookbook with hundreds of recipes. All the recipes were designed to yield 100 portions.
During my college years, I used the Air Force cookbook to help me with two small businesses. I ran a non-profit board plan for 12 students during the school year. The book helped me develop menu plans and shopping lists. I divided all the ingredient amounts by 6.
We also had a clam bake operation during the summer. The recipes for chowder, cocktail sauce and salad dressings were used at each event.
Today, you can get a great substitute for the military cookbook. Go on Amazon and order Food for Fifty (12th Edition)
.
This book has a chapter on Recipe Information and she discusses yields, standards and other
basic techniques. The chapters are laid out by category (i.e. Meat, Fish, etc.) and there are lots of recipes for 50 portions. Throughout the book, there are tables on cooking temperatures, pan equivalents, ingredient substitution and other useful recipe data.
The notion of standard pricing is actually a complex subject. If you cost out a standard recipe using today's cost, the actual recipe cost will constantly change with market conditions. There are three schools of thought on standard prices: today's price method, market-based standards and CPI-based standards. The best place to start is today's price method.
Eventually, you can start to study market prices and develop more sophisticated standard prices.
"Good Day Mr. Dunbar,
I am a culinary student at the Mount Saint Vincent University, Halifax. Canada.(www.msvu.ca). I found your blog very interesting, and was wondering if you have articles/websites/links where I can learn the concept of food costing right from making the standard recipe to how portion sizes are determined and prices fixed. I have tried many websites but they always fall short of providing the complete info. Your help will be greatly appreciated. Warm Regards. "
My father was an Air Force Cook during the Korean War. He worked in a large mess hall with over 5,000 airmen and in the Officer's Club. The Air Force issued a great cookbook with hundreds of recipes. All the recipes were designed to yield 100 portions.
During my college years, I used the Air Force cookbook to help me with two small businesses. I ran a non-profit board plan for 12 students during the school year. The book helped me develop menu plans and shopping lists. I divided all the ingredient amounts by 6.
We also had a clam bake operation during the summer. The recipes for chowder, cocktail sauce and salad dressings were used at each event.
Today, you can get a great substitute for the military cookbook. Go on Amazon and order Food for Fifty (12th Edition)
.This book has a chapter on Recipe Information and she discusses yields, standards and other
basic techniques. The chapters are laid out by category (i.e. Meat, Fish, etc.) and there are lots of recipes for 50 portions. Throughout the book, there are tables on cooking temperatures, pan equivalents, ingredient substitution and other useful recipe data.
The notion of standard pricing is actually a complex subject. If you cost out a standard recipe using today's cost, the actual recipe cost will constantly change with market conditions. There are three schools of thought on standard prices: today's price method, market-based standards and CPI-based standards. The best place to start is today's price method.
Eventually, you can start to study market prices and develop more sophisticated standard prices.
Wednesday, April 05, 2006
The Human Side of Food Cost Control
We ran feeding on large scale construction sites, mines and oil exploration and extraction projects. In our industry, chefs were not ranked by the number of stars or diamonds they received in the press and travel guides. They were very visible and each desirable chef was well known in the industry circles.
The two main criteria for chef selection were previous experience in our segment (with a specific focus on the number of workers served) and the second was ability to hit cost targets.
Often, we had contracts which required union employees. Back in 1981, it was quite possible for a dishwasher to earn $600/week plus fringe benefits. The top chefs could make $2,000/week. On our largest project, we had a team of 3 (Horst, Manfred and Hans - all trained in European hotels) and we rotated them in six week shifts. They were all happy to have one third of the year off.
All three were very capable of meeting or beating our very narrow cost guidelines. They received as much help as they wanted in vendor negotiation and operations research.
It was also common for our employees to save large sums of money and to return home to start a catering company or open a restaurant. When I first went to Alaska, there was a calendar in the room with an X on each day. The prior occupant was off to Harvard having saved money for three years. Not all of our employees were savers. Casino companies ran frequent junkets from Anchorage to Las Vegas and from Edmonton to Reno.
Once in a while, we would lose a key person in the operation and costs would explode. Serving over 2,000 men 5,000 calories per day with steak twice a week for $8/manday presented a challenge few could meet.
Once we lost a baker. Bert returned home to the Bay of Fundy to open a bakery. He was replaced by Mohammed (his right hand man for years) and we hit the site to support the transition team. Fortunately, Bert had done a great job of training and both the client and the GM were thrilled with the new team. A great baker was essential to hitting a cost target since flour and sugar are lower cost ingredients.
When Horst would take his break, the food cost always ticked up 25 cents a manday (our entire billing was based on mandays). This adds up over six weeks with 2,000 men per day($21,000 - if you're keeping score). We were fortunate to have him onsite for half the year. We worked out an agreement with the union to insure his presence during peak periods. The camp would swell to over 4,000 men when the apparatus required cleaning (these shutdowns were always mentioned in tiny Wall Street Journal articles). The oil consortium wanted the production back at peak ASAP.
This one person was worth over $100,000 per year to our company! His contemporaries were excellent. If the entire team had left at once, we would have suffered a $250,000 food cost reversal in a year.
Today's press would never run an article on how a particular chef managed to lower food cost by 6%. In fact, in most of my initial consultations the owners spoke of how high their costs were in relation to volume. Just to be specific, I sent a newsletter to owners of 500 highly rated restaurants (3 stars or diamonds plus).
To me, Horst was a 5 star chef. Manfred and Hans were 4 star chefs. Most of our projects were smaller and were staffed by talented people. Some of these were specialists in projects with less than 100 patrons. They would do the work of two people and save the company significant labor.
Click Here For More Information
The two main criteria for chef selection were previous experience in our segment (with a specific focus on the number of workers served) and the second was ability to hit cost targets.
Often, we had contracts which required union employees. Back in 1981, it was quite possible for a dishwasher to earn $600/week plus fringe benefits. The top chefs could make $2,000/week. On our largest project, we had a team of 3 (Horst, Manfred and Hans - all trained in European hotels) and we rotated them in six week shifts. They were all happy to have one third of the year off.
All three were very capable of meeting or beating our very narrow cost guidelines. They received as much help as they wanted in vendor negotiation and operations research.
It was also common for our employees to save large sums of money and to return home to start a catering company or open a restaurant. When I first went to Alaska, there was a calendar in the room with an X on each day. The prior occupant was off to Harvard having saved money for three years. Not all of our employees were savers. Casino companies ran frequent junkets from Anchorage to Las Vegas and from Edmonton to Reno.
Once in a while, we would lose a key person in the operation and costs would explode. Serving over 2,000 men 5,000 calories per day with steak twice a week for $8/manday presented a challenge few could meet.
Once we lost a baker. Bert returned home to the Bay of Fundy to open a bakery. He was replaced by Mohammed (his right hand man for years) and we hit the site to support the transition team. Fortunately, Bert had done a great job of training and both the client and the GM were thrilled with the new team. A great baker was essential to hitting a cost target since flour and sugar are lower cost ingredients.
When Horst would take his break, the food cost always ticked up 25 cents a manday (our entire billing was based on mandays). This adds up over six weeks with 2,000 men per day($21,000 - if you're keeping score). We were fortunate to have him onsite for half the year. We worked out an agreement with the union to insure his presence during peak periods. The camp would swell to over 4,000 men when the apparatus required cleaning (these shutdowns were always mentioned in tiny Wall Street Journal articles). The oil consortium wanted the production back at peak ASAP.
This one person was worth over $100,000 per year to our company! His contemporaries were excellent. If the entire team had left at once, we would have suffered a $250,000 food cost reversal in a year.
Today's press would never run an article on how a particular chef managed to lower food cost by 6%. In fact, in most of my initial consultations the owners spoke of how high their costs were in relation to volume. Just to be specific, I sent a newsletter to owners of 500 highly rated restaurants (3 stars or diamonds plus).
To me, Horst was a 5 star chef. Manfred and Hans were 4 star chefs. Most of our projects were smaller and were staffed by talented people. Some of these were specialists in projects with less than 100 patrons. They would do the work of two people and save the company significant labor.
Click Here For More Information
Saturday, April 01, 2006
Seasonal Operations-Profit Analysis
There are many beautiful areas of the world where tourists flock for the peak season. Heavy volume may last for 3 months at the beach resorts, 4 to 8 months at the golf and ski resorts. During the busy season, it's important to cover the annual costs of management, fixed asset maintenance and financial expenses, and all other fixed monthly payments.
As an example, let's say we have a manager with a base salary of $52,000 and fringe benefits of 20%. This manager works year round and is paid equally throughout the year. Our imaginary resort has a 13 week peak during which room rates and visitor counts balloon. The peak season produces 75% of annual revenue.
For financial reporting, the books will reflect his weekly expense of $1,200. If the wizards keep a separate set of management accounting records, they would see he actually costs $3,600 per week during the peak. Conversely, he's worth about $400 per week during the slow period.
Most managers will take their vacations during the slow period. Often they will be permitted to work fewer days each week. On the other hand, I have seen seasonal operations where these key people are burned out during the slow season filling in gaps left by hourly workers. These unfortunate managers log lots of overtime during unprofitable times and then work round the clock during the peak.
Regardless of how you view the manager's role, it's important to realize the peak months are not as good as they seem. The slow months are not the disasters they appear to be either.
You would not even open your doors or hire one person if it were not for the opportunity during the peak season. By charging your fixed expenses to the cost based on volume, you can spot weak spots during peak times*.
Two bad weeks during the peak can become a catastrophe for many resorts. You read articles on places where you can't get a seat for dinner unless you camp out overnight going Chapter 11. Owners tend to spend money too liberally during the peak times. They see huge profits regardless of a few slips.
* Special Note: Do not perform these allocations on the formal set of accounting records. These are for operations management review only.
As an example, let's say we have a manager with a base salary of $52,000 and fringe benefits of 20%. This manager works year round and is paid equally throughout the year. Our imaginary resort has a 13 week peak during which room rates and visitor counts balloon. The peak season produces 75% of annual revenue.
For financial reporting, the books will reflect his weekly expense of $1,200. If the wizards keep a separate set of management accounting records, they would see he actually costs $3,600 per week during the peak. Conversely, he's worth about $400 per week during the slow period.
Most managers will take their vacations during the slow period. Often they will be permitted to work fewer days each week. On the other hand, I have seen seasonal operations where these key people are burned out during the slow season filling in gaps left by hourly workers. These unfortunate managers log lots of overtime during unprofitable times and then work round the clock during the peak.
Regardless of how you view the manager's role, it's important to realize the peak months are not as good as they seem. The slow months are not the disasters they appear to be either.
You would not even open your doors or hire one person if it were not for the opportunity during the peak season. By charging your fixed expenses to the cost based on volume, you can spot weak spots during peak times*.
Two bad weeks during the peak can become a catastrophe for many resorts. You read articles on places where you can't get a seat for dinner unless you camp out overnight going Chapter 11. Owners tend to spend money too liberally during the peak times. They see huge profits regardless of a few slips.
* Special Note: Do not perform these allocations on the formal set of accounting records. These are for operations management review only.
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