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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.

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