The Recipes Are Wrong!

Variance reports frequently identify huge differences between actual item usage and the calculated ideal usage. There are many reasons for these major red flags. To eliminate the obvious, you need to review the fundamental calculation of actual usage. Recheck your counts from the two inventories. Go over the invoices for the period. Check for very small and very large quantities. Make sure you did not miss an entire invoice. Pay strict attention to invoices near a cutoff date. Anything received after the ending inventory should be excluded.

Once you have adjusted your actual usage to reflect changes, take a second look at the variance. You need to switch your focus to the recipe model. If an item is butchered, trimmed, cleaned, processed or if the item increases in volume when cooked (e.g. rice, pasta, etc.), you need to check your standard yields. Make sure you haven't entered the reciprocal figure in a subrecipe yield.

The final check is in plate recipes and portion sizes. These quantities should be exact and at this phase allowances for tiny variation should be avoided. Your plate recipe model should not be soft. You need exact portion sizes to tie to POS counts.
Whenever possible, line cooks should use pre-portioned items in the final production.

If you finish your review and find the inventories were accurate, purchases were all in order and the recipe model is accurate, you have an operational problem. There are certain problems which persist in our industry.

Employee consumption of food and beverage items has a bigger impact in slow periods. During the off-season or slow days of the week, employee meal cost will be higher as a percentage of sales. Adjust your expectations to this reality and move on to much greater concerns.

Collusion with vendor delivery staff is the first possible problem. You need to only pay for food actually received. Make sure receiving controls are rock solid. Limit your testing to invoices with large variance items. Problems may occur on certain shifts or on a specific day of the week. Check each invoice for the delivery person and your receiving person. Look for patterns.

Chronic, unintentional food overuse needs to be identified and halted. Training will correct future overuse. Portions of salads, starches (including french fries), garnishes, soups, sauces and all other discretionary prep items need to be clear. If the operation uses forecasts to prepare for a busy period and perishable items need to be discarded, fill out waste sheets and record the reason as bad forecast.

Your storage areas should be easy to count and high cost items should be difficult to steal. Small portions of tenderloin, shrimp, lobster tails and crab may require additional controls. Pull sheets are helpful. Sheets should be completed with initials and checked by the manager each shift change.

Late night and early morning are the times of greatest probability of theft. Delivery times are just as bad as the close. If you have surveillance systems in place, these periods should be highly scrutinized. We have found brazen thieves taking full cases of food to the dumpsters, trunks of their car, etc. It's best to terminate these people at once.

When I first started my consulting practice, there were two excellent articles on theft. The Wall Street Journal had a survey conducted by F.W. Dodge in which they interviewed food service employees. Of the respondents, 44% admitted to theft. I went to see if there was any other sources on employee theft. I found a general psychology article (source unknown) which stated about 20% of workers are very honest and 20% of workers are very dishonest. The middle 60% tend to follow the herd. If they are working with a completely honest person, theft is minimal. However, when they work with thieves, they will often steal to the same extent as their dishonest co-worker.

Over the years, I have seen major mistakes made by honest workers. One person left spare ribs unattended on a grill to check a delivery and they were inedible. Another person decided to pre-cook a huge number of rotisserie chickens for a special promotion on a low traffic day. In both cases, the employees made mistakes which were one time events. Both of my clients said nothing to the employees. They both realized their mistakes and brought them to management's attention in the first place. Keeping records on simple waste sheets encourages this honest loss activity to be quantified and archived for future period comparisons.

It's difficult for me to leave the theft issue hanging and management often can't see how major theft is possible. However, over the years we have found managers with relatives in the pizza business filling a van with flour, cheese and canned tomatoes. A multi-unit chain in New York tracked a vendor delivery person who visited five of their stores trying to sell cases of shrimp as a "cash only" special. Someone lost the shrimp due to poor receiving controls. My first consulting client ever couldn't believe the long time chef was a thief until the employee admitted he stole two blocks of 16-20 shrimp a week.

If you believe you have reviewed and corrected all the items mentioned above and your variances still don't make sense. Review the POS setup for all menu items which call for the variance item. Look for specials, the OPEN FOOD key and buffets. You may even find the item is wrong in the system. Some companies allow managers to overwrite the menu item names on the POS. I'm not a fan of this method. The entire history is ruined with one small change.

If the operation has no issues at all, check the recipe. Maybe it really isn't correct. Sometimes the wizards make mistakes.