One of the toughest challenges in our industry is staffing a year round operation with a short, very busy tourist season. There are seasonal challenges. It's necessary to grow the staff before the peak days for training purposes. Often the best staff from the peak season are asked to help either part-time or full-time in the decline. Unfortunately, it is sometimes necessary to cut battle tested help during the low months.
I have seen some excellent strategies in play at seasonal operations. The common denominator is a strong core staff onboard year round. Most of the top operators have a flex-staff available whenever they are needed. These part-time people are typically well compensated and fill in gaps at big parties or special events. A number of savvy operators take advantage of college internships when hiring for the peak season.
During this month, I have received quite a few emails from those who wish to remain anonymous. I want to encourage all readers to participate in this dialogue. Specifically, tell us what works and does not work in your seasonal staffing strategy.
We had to staff the 1988 Winter Olympics in Calgary to handle food service and housekeeping for the media and the Nordic athletes at Canmore. The two weeks took place during the school year and little help was available from local students. Housing of out-of-town help was cost prohibitive. Our contract specified top notch food service at each venue.
To give every detail of our strategy would take too long for this blog. We rented trailers used in the arctic to house personnel and borrowed old school buses from local districts to bus our help. The workers were recruited from all over Canada. Most of the staff would have been chefs at their normal workplace. These pros were happy to help out Canada in it's bid to host a memorable two weeks for the athletes.
The Nordic athletes like lots of carbohydrates. You can't offer too many grains and starches. Macaroni and cheese is a favorite. They really do not load up on sweets. The diet is very nutritious and I would imagine marathon runners would be at home in a Nordic camp.
Our chefs adapted rapidly to the demands and produced high quality meals which satisfied the athletes. Our team received accolades for the wonderful quality and attention to patron wishes. In the end, it was tough to see all the talented people leave our company and return to their positions around the country. Seasonal operators do this each and every year.
Click Here For More Information
Saturday, April 29, 2006
Wednesday, April 26, 2006
Pooling Tips - Team Building
Many of my clients have a policy of pooling tips. Does this policy reward mediocre performance equally with superior performance? Maybe. If you are a member of the wait staff in a pooled tip environment, when a customer requests attention you will be less likely to answer: "I'm not your waiter." If the entire staff really gets into the whole team approach, happier customers could be the result.
At the core of this policy is a sincere desire to force the wait staff to play team ball. Sometimes it works. I have observed fantastic team play in many dining rooms. When a team member wants to go along for the ride the formula can breakdown. Rarely will the POS system show the flaws.
Let's say I am an ambitious and lazy waiter and I want to maximize my income and minimize my workload. The easiest way to accomplish this goal in the pooled tip environment is to feed orders into the POS system. Since productivity reports are based on sales per clocked hour, I need only focus on persuading customers to order more. I would perform many of the other tasks less enthusiastically. My sole objective is to maximize a number on a report.
So now we have this super waiter with 20% more sales who may be neglecting basic customer care. I saw this in action at a highly rated restaurant with two small dining rooms. The restaurant is closed today. The infighters on Survivor were tame compared to those on this wait staff. Management praised the three people with higher sales per hour for superior technique with the clients. Fellow staff members despised these service laggards. Privately, they would complain about how they always have to offer the check, run the credit card, refill the water glasses, pickup orders, etc. for these sales wizards.
It would be great to have a POS system with fields for all the various activities involved in the client service puzzle. They currently do not report on many customer friendly activities designed to bring patrons back time and again.
In the restaurant I observed the initial impact on total sales was positive. It took slightly over one year of team dissonance to start the downward direction in revenue.
A much better approach to a tip pooling solution involves position. Designate extroverts to handle most revenue building activities. Make sure they are not focused only on orders. They should be handling all drinks including water. If the table opts out of bottled water, they should handle the tap water refills. I like one restaurant's policy of having an assistant manager present the check with feedback on the service.
Reward the quality control individuals who handle delivery tasks well. They can prevent many complaints from ever happening in the first place. They will point out hot items which are cold and sloppy plates. I'd have this group check on meat doneness and special requests. The POS system will point out voids, returns, etc. Have this group work to lower this activity.
Customer satisfaction is highly correlated to fast service, low returns and short waits for check and credit card approval. If you build a great team, tip pooling can be a windfall for all players. Higher sales will translate into lower food cost and higher profits.
Click Here For More Information
At the core of this policy is a sincere desire to force the wait staff to play team ball. Sometimes it works. I have observed fantastic team play in many dining rooms. When a team member wants to go along for the ride the formula can breakdown. Rarely will the POS system show the flaws.
Let's say I am an ambitious and lazy waiter and I want to maximize my income and minimize my workload. The easiest way to accomplish this goal in the pooled tip environment is to feed orders into the POS system. Since productivity reports are based on sales per clocked hour, I need only focus on persuading customers to order more. I would perform many of the other tasks less enthusiastically. My sole objective is to maximize a number on a report.
So now we have this super waiter with 20% more sales who may be neglecting basic customer care. I saw this in action at a highly rated restaurant with two small dining rooms. The restaurant is closed today. The infighters on Survivor were tame compared to those on this wait staff. Management praised the three people with higher sales per hour for superior technique with the clients. Fellow staff members despised these service laggards. Privately, they would complain about how they always have to offer the check, run the credit card, refill the water glasses, pickup orders, etc. for these sales wizards.
It would be great to have a POS system with fields for all the various activities involved in the client service puzzle. They currently do not report on many customer friendly activities designed to bring patrons back time and again.
In the restaurant I observed the initial impact on total sales was positive. It took slightly over one year of team dissonance to start the downward direction in revenue.
A much better approach to a tip pooling solution involves position. Designate extroverts to handle most revenue building activities. Make sure they are not focused only on orders. They should be handling all drinks including water. If the table opts out of bottled water, they should handle the tap water refills. I like one restaurant's policy of having an assistant manager present the check with feedback on the service.
Reward the quality control individuals who handle delivery tasks well. They can prevent many complaints from ever happening in the first place. They will point out hot items which are cold and sloppy plates. I'd have this group check on meat doneness and special requests. The POS system will point out voids, returns, etc. Have this group work to lower this activity.
Customer satisfaction is highly correlated to fast service, low returns and short waits for check and credit card approval. If you build a great team, tip pooling can be a windfall for all players. Higher sales will translate into lower food cost and higher profits.
Click Here For More Information
Friday, April 21, 2006
Do We Count The Employee Purchases?
During my college years, I worked in a variety of hotel and restaurant positions. There were plenty of jobs available in the Saratoga Springs, NY area in summer. I worked as cook, cashier, bellhop, busboy, night auditor and desk clerk. When the summers ended, I would continue my night auditor job on weekends during the school year.
As I gained more of the innkeeper's trust, he gave me other reports to review. Eventually, I was given the weekly food cost report and the supporting documents. The single issue I had with the entire food cost calculation was the lack of accuracy.
At this same hotel, cash was always tied to the penny. Every desk clerk and night auditor had a personal money drawer in the safe. Shift changes were never a cause for shortages. Each clerk ran a tape and counted their cash drawer before the deposit in the safe.
In stark contrast, the food inventory figures were often way off. Certain middle pages would be loaded with obvious errors like flour at $20/pound and dry spices improperly extended at ten times the correct value. These errors forced me to devise a simple way to expose obvious mistakes. I created a set of summary figures with totals for each page and category.
One night as I arrived for work a truck was making a delivery. As I parked my car, the delivery truck was moving from the dock. The driver stopped his truck near the assistant innkeeper's station wagon. Soon the back door was open and four cases of meat were loaded into the rear storage area.
The food cost week ended the same day and the inventory was taken the next morning before breakfast. I came on later in the night and the documents were in a big envelope as usual. Before I began work, the innkeeper asked me to come in his office. He told me the costs were quite high and he was very interested in locating the problem. We arranged to have a meeting in the morning just after my shift ended.
My summary numbers quickly pointed to a high meat cost. As I reviewed the invoices, I noticed the previous day's bill from the meat supplier. Since there were only ten items on the bill, I decided to go out in the coolers to count the meat. There were no big events during the day and the dinner was slow.
Virtually all of the meat on the previous day's invoice was gone.
In the morning meeting, I asked the innkeeper: "Do we count the employee purchases?"
He asked me to explain and I told him of the late delivery and the special drop in the station wagon. He asked me to stay quiet regarding what I had seen.
The next week, a trap was set and the thief was exposed. He resigned and the food cost dropped 2 points. The summary statistics exposed the meat problem since there was no longer a hiding place in the spices and flour.
Click Here For More Information
As I gained more of the innkeeper's trust, he gave me other reports to review. Eventually, I was given the weekly food cost report and the supporting documents. The single issue I had with the entire food cost calculation was the lack of accuracy.
At this same hotel, cash was always tied to the penny. Every desk clerk and night auditor had a personal money drawer in the safe. Shift changes were never a cause for shortages. Each clerk ran a tape and counted their cash drawer before the deposit in the safe.
In stark contrast, the food inventory figures were often way off. Certain middle pages would be loaded with obvious errors like flour at $20/pound and dry spices improperly extended at ten times the correct value. These errors forced me to devise a simple way to expose obvious mistakes. I created a set of summary figures with totals for each page and category.
One night as I arrived for work a truck was making a delivery. As I parked my car, the delivery truck was moving from the dock. The driver stopped his truck near the assistant innkeeper's station wagon. Soon the back door was open and four cases of meat were loaded into the rear storage area.
The food cost week ended the same day and the inventory was taken the next morning before breakfast. I came on later in the night and the documents were in a big envelope as usual. Before I began work, the innkeeper asked me to come in his office. He told me the costs were quite high and he was very interested in locating the problem. We arranged to have a meeting in the morning just after my shift ended.
My summary numbers quickly pointed to a high meat cost. As I reviewed the invoices, I noticed the previous day's bill from the meat supplier. Since there were only ten items on the bill, I decided to go out in the coolers to count the meat. There were no big events during the day and the dinner was slow.
Virtually all of the meat on the previous day's invoice was gone.
In the morning meeting, I asked the innkeeper: "Do we count the employee purchases?"
He asked me to explain and I told him of the late delivery and the special drop in the station wagon. He asked me to stay quiet regarding what I had seen.
The next week, a trap was set and the thief was exposed. He resigned and the food cost dropped 2 points. The summary statistics exposed the meat problem since there was no longer a hiding place in the spices and flour.
Click Here For More Information
Monday, April 17, 2006
The Chemistry of a Bid Team
In Canada, executives wear more hats than their American counterparts. Due to the lower population density, headquarters staffs need to be more flexible. It is common to find managers assigned to specific zones with regional support staff in relation to the business level. These managers typically handle almost all tactical decisions. Corporate staff positions often involve dual responsibilities.
In the contract feeding business, the top regional executives are brought together with key HQ staff for major contract bids. In our group, we had a union contract specialist, a staffing wizard, a team of vendor negotiators, and our corporate chef. On remote site projects, our chef would determine the food cost per manday. This one number would normally determine the probability of winning the contract. There was always plenty of discussion and vendor analysis before this decision was intense.
Shortly after I was hired, I was honored with an invitation to join the bid team on a crucial project for our lower 48 division. There were people from Alaska, Vancouver, Edmonton, Denver and New York. This project required water treatment and we had a specialist from Toronto to handle this activity. As the junior member of the group, it was my job to extend manning charts and check all calculations. Two other people were available for similar work.
The team was housed in the Brown Palace Hotel in downtown Denver and we had most meals delivered to a dining area we setup in a suite. We had 5 days to digest project specifications, size up the competition, review notes from the orientation meeting, solicit quotes from dozens of local vendors, review contract menus, analyze housekeeping standards and forecast occupancy levels by season and construction phase.
We stayed up most nights until 2 AM. The night before bid submission, a group of presentation pros arrived and started merging the dog and pony with the financial data. Everyone stayed up all night the final night checking for typos.
During that hectic week in Denver, I saw the absolute meaning of a crisis. The winning bidder's staff would all get promotions and new responsibilities. Losing companies would regroup and hope for better luck in the future. For the locals, this bid meant their jobs were on the line.
Being part of a winning bid team is an exhilarating experience. For four of us, this project literally launched our careers with Sodexho.
There are very few people who are adept at both purchasing and production. Fewer still are pros at market timing and staff management. Even the tiny group with highly developed skills in timing, negotiation, forecasting, menu analysis, scheduling, management, and food production have a rough time trying all these activities at once.
Find out what you are best at and become a specialist in at least two areas. Make allies in your company and collaborate whenever possible. Team building is an inexact science. Timing is important.
Click Here For More Information
In the contract feeding business, the top regional executives are brought together with key HQ staff for major contract bids. In our group, we had a union contract specialist, a staffing wizard, a team of vendor negotiators, and our corporate chef. On remote site projects, our chef would determine the food cost per manday. This one number would normally determine the probability of winning the contract. There was always plenty of discussion and vendor analysis before this decision was intense.
Shortly after I was hired, I was honored with an invitation to join the bid team on a crucial project for our lower 48 division. There were people from Alaska, Vancouver, Edmonton, Denver and New York. This project required water treatment and we had a specialist from Toronto to handle this activity. As the junior member of the group, it was my job to extend manning charts and check all calculations. Two other people were available for similar work.
The team was housed in the Brown Palace Hotel in downtown Denver and we had most meals delivered to a dining area we setup in a suite. We had 5 days to digest project specifications, size up the competition, review notes from the orientation meeting, solicit quotes from dozens of local vendors, review contract menus, analyze housekeeping standards and forecast occupancy levels by season and construction phase.
We stayed up most nights until 2 AM. The night before bid submission, a group of presentation pros arrived and started merging the dog and pony with the financial data. Everyone stayed up all night the final night checking for typos.
During that hectic week in Denver, I saw the absolute meaning of a crisis. The winning bidder's staff would all get promotions and new responsibilities. Losing companies would regroup and hope for better luck in the future. For the locals, this bid meant their jobs were on the line.
Being part of a winning bid team is an exhilarating experience. For four of us, this project literally launched our careers with Sodexho.
There are very few people who are adept at both purchasing and production. Fewer still are pros at market timing and staff management. Even the tiny group with highly developed skills in timing, negotiation, forecasting, menu analysis, scheduling, management, and food production have a rough time trying all these activities at once.
Find out what you are best at and become a specialist in at least two areas. Make allies in your company and collaborate whenever possible. Team building is an inexact science. Timing is important.
Click Here For More Information
Thursday, April 13, 2006
The All Star Team
Just a few years ago, I was asked to assist a high profile chef in pricing a new menu for a hotel restaurant in New York. My initial impression still remains with me and I believe there are several points to take from the experience.
When I entered the office area (in a small building across the street from the construction) the place was like a beehive. People were going in every direction and there seemed to be endless distractions for all. It was difficult to determine who made decisions and it may have been a committee.
I was asked to wait and I was assigned a seat next to a woman working the phones tirelessly. During my two hour wait, I observed her phone conversations. She was phoning top flight restaurant personnel from across the country. There was a chef skilled in Japanese cuisine, a maitre d'hotel from a world famous hotel. All the waiters were working at well regarded and highly rated dining rooms in New York and elsewhere.
The one thing which seemed lacking was focus. With weeks to go, the menu had not been finalized and the purveyors had not been selected. I was finally introduced to some top notch purchasing managers for both food and beverage. Both had just been hired and this was their first day. They apologized for the chaos. I told them I was used to it.
As the weeks passed and the restaurant opening was days away, some of the all star team had developed strong dislikes for other team members. There were three camps and each had a separate agenda. Each leader had a rapport with the consulting chef and mornings were spent complaining about the idiosyncrasies of the other groups.
To add to the frenetic pace, the same management group was starting work on a second hotel restaurant all the way downtown. Hours and days would go by with many key decision makers waiting for final approval. Often, a decision was made by one top executive only to be rejected by someone slightly higher in the chain of command.
Despite the stellar credentials of the well trained members of this all star team, the company failed and declared bankruptcy. It was surprisingly fast. As a tiny creditor, I received less than 30 cents on the dollar for my final invoice. Fortunately, I had persisted in getting paid as the contract progressed and I only suffered a tiny loss.
When people talk of some of the disappointing performances in the Olympics of the professional teams sent by USA and Canada, I always bring up my experience.
Click Here For More Information
When I entered the office area (in a small building across the street from the construction) the place was like a beehive. People were going in every direction and there seemed to be endless distractions for all. It was difficult to determine who made decisions and it may have been a committee.
I was asked to wait and I was assigned a seat next to a woman working the phones tirelessly. During my two hour wait, I observed her phone conversations. She was phoning top flight restaurant personnel from across the country. There was a chef skilled in Japanese cuisine, a maitre d'hotel from a world famous hotel. All the waiters were working at well regarded and highly rated dining rooms in New York and elsewhere.
The one thing which seemed lacking was focus. With weeks to go, the menu had not been finalized and the purveyors had not been selected. I was finally introduced to some top notch purchasing managers for both food and beverage. Both had just been hired and this was their first day. They apologized for the chaos. I told them I was used to it.
As the weeks passed and the restaurant opening was days away, some of the all star team had developed strong dislikes for other team members. There were three camps and each had a separate agenda. Each leader had a rapport with the consulting chef and mornings were spent complaining about the idiosyncrasies of the other groups.
To add to the frenetic pace, the same management group was starting work on a second hotel restaurant all the way downtown. Hours and days would go by with many key decision makers waiting for final approval. Often, a decision was made by one top executive only to be rejected by someone slightly higher in the chain of command.
Despite the stellar credentials of the well trained members of this all star team, the company failed and declared bankruptcy. It was surprisingly fast. As a tiny creditor, I received less than 30 cents on the dollar for my final invoice. Fortunately, I had persisted in getting paid as the contract progressed and I only suffered a tiny loss.
When people talk of some of the disappointing performances in the Olympics of the professional teams sent by USA and Canada, I always bring up my experience.
Click Here For More Information
Tuesday, April 11, 2006
Productivity and Dining Room Turns
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
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
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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