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Thursday, September 14, 2006

Ideal Usage Tricks and Techniques

The people who produce variance reports for the weekly and monthly management meetings need to forecast the likely meeting discussion for each red flag item. Common excuses occur over and over and it's necessary to anticipate and eliminate these distractions. The only way for a food and beverage professional to have a positive impact on the results is through proper focus.

Find the real problems ahead of time and structure your handouts (or overhead presentation)to highlight the major issues. Everything else is simply an exercise in excusing poor results. When the acceptance of these anecdotal responses is chronic, the operation will lose control and wide fluctuations in monthly numbers will ensue. Hopefully, a review of the common excuses will help you prepare for the next meeting and the tide will turn.

At the very top of my list is the inaccurate inventory extension. Since you should have complete control over this number, avoid making bad numbers "the reason" and take the extra time to double check all very small and very large extended values. There shouldn't be any spice, flour, pasta or rice valued in the thousands of dollars. Lobster tails shouldn't be valued for pennies. Make a second copy of your Excel file and sort the list in both ascending and descending order. See what comes to the top and ask if it makes sense.

Cutoff issues are always near the top of the list and the actual inventory count should be taken without deliveries. Check your drawers thoroughly and look under the desk for missing invoices. If you keep a receiving log (highly recommended), use the log to make sure you have every delivery included in the proper accounting period. Check with accounts payable for a copy of the latest statement and see if the credits are reported in the proper period. Try to completely eliminate accounting adjustments from the management meeting discussions. It is a distraction and credibility quickly disappears when the numbers don't follow the matching principle.

The operators will have front line experiences which should be the real focus of the meeting and it's important to be prepared to support these topics. Let's say you have a major unfavorable usage number for beef tenderloin. Do your own investigation on customer returns and possible menu specials(POS system data). Check waste reports if you maintain these records. Subtract the waste from the total variance to determine the net amount (variance NOT explained by waste). Try to get to the heart of the variance. There will always be steaks returned by customers due to miscommunication of their cooking preference. Excessive waste and customer returns must be documented and the problems must be solved fast.

Production staff will give better explanations if the topic is presented in a straight forward manner. Imagine the meeting dynamics. It's possible for certain issues to be assigned too much weight. If the waste and returns are minor, report the total variance and show a separate line for the waste and returns. Calculate the net variance and open the discussion with this figure. You may find the real problem involves meat which did not meet specification. Portion control may be lax. There is always a risk of theft. Listen for other explanations and you'll get closer to the true variance issue.

Before your meetings, go back to your recipe model and look for recipes which call the top variance items. Follow the recipe path backwards if there is butchering or trimming involved. Ask yourself if the actual usage is a better figure than the ideal usage. My tenderloin example was chosen specifically for this angle. An untrimmed tenderloin will lose close to 50% of it's weight when being prepared for steaks. If you don't have a butcher yield sheet for the item, print one for the meeting and make it an action plan item.

Once you are in the meeting, get the variance analysis focused by introducing each item thoroughly before the discussion begins. Your credibility will increase as you move beyond traditional distractions involving inaccurate extensions and cutoff problems. Supply everyone with your preliminary analysis and highlight the net variance. As the management team begins to take you seriously, they will come better prepared and some genuine progress will be the result.

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