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Sunday, January 28, 2007

A Lost Opportunity

Peak meal periods are very demanding times for restaurant management and staff. These periods are responsible for the success or failure of a venture. When handled well, profits will soar. Those who treat peak periods as something to endure may be missing enormous profit potential.

During my college years, I worked one summer as a line cook at a fast paced breakfast concept. The job entailed cooking eggs to order on four burners with four egg pans. Each Sunday, the place was mobbed from 10 AM until noon. When the peak hit, orders would get delayed due to the policy of cooking bacon at the last minute. The two owners would fly into the kitchen and begin their version of grill gymnastics trying to speed the process of cooking the bacon.

At the time, I was treated as a know-it-all college kid with zero "real world" smarts. After three weeks, I asked permission to attend the management meeting after an incredibly bad shift. Politely, I suggested the chef should pre-cook several layers of bacon in the oven. This created a huge stir. However, after much discussion regarding why the idea would not work it passed. As a compromise, it was agreed the bacon would be allowed to cook until 3/4 done.

In the weeks to come, I noticed my case of eggs would be nearly wiped out instead of half full as it was before the change. Quick math put the added sales at 144 eggs or 72 orders. Back in the late 1970's, we charged $3 for the popular 2 egg special. The owners rang up $216 in extra revenue and the chef and I were left alone.

Since the staff remained the same, the gross profit of $144 (food cost was 33%) went to the net income line.

Early one Sunday, I asked the chef how long he had worked at the restaurant. He told me he had been there in various positions for over 10 years. I quickly figured the pre-cook approach (taught in my classes to all students) would have put an extra $75,000 into the operation. Looking around at the run down equipment and inadequate refrigerators, I thought this was a huge lost opportunity.

Every operation has some hidden idea which someone on the line can see clearly. Be sure to include the whole team after a particularly chaotic meal period. Great ideas can come from these discussions.

Wednesday, January 24, 2007

Pretend You Own The Place

Whenever I have a difficult decision, I always take the perspective of the owner. If you're not the owner, pretend you are the owner.

In my early food service management courses at SUNY Cobleskill, we were taught food cost should be 32 or 33% and labor cost should hit between 25 and 27%. If a business could keep consumables at 8 to 10%, their gross profit percentage would be around 32%. The 32% could cover marketing, advertisements, garbage pickup, phones, office supplies, snow removal, licenses, property taxes, mortgage, rent, equipment rental, leasehold improvements, repairs and maintenance, smallwares, pots and pans, linen, interest expenses, accounting, any number of emergencies and a decent net profit.

If you're working in a profitable operation, the team has figured out a way to cover all the expenses and have something left over at weeks end. Perhaps the food cost is 29% and your labor is a little high to prep fresh produce. Maybe your bar operation makes a huge contribution or a busy season bails out a very lean off season. Very few places hit the targets students learn about each year but it's good to keep these targets in mind.

In every complex restaurant, the kitchen uses cooking wine and the bar uses lemons, limes, oranges, onions, olives, celery and other food. The wait staff works slicing cakes and pouring coffee and the kitchen staff produces food for the wait staff to eat each shift. Accountants pour over all the documents and create reports to keep the operation in line with the budget.

When the targets are hit, people calculate bonuses and all is good. Unfortunately, many operations miss their targets and begin a slicing and dicing process on their financial reports. Suddenly critical operating costs become hidden in an allocation jungle. Certain departments falsely believe they are winning some internal game while the overall unit is in decline.

Investors often assign a value to a going concern based on the operating cash flow times a factor. If you have an operation producing $200,000 positive cash flow each year, you'd try to get at least $2,000,000 (ten times) for the business. A failing business is treated like yard sale. Assets are often reduced to their salvage value. Auctioneers sell POS systems, ovens, tables and chairs at pennies on the dollar.

After missing the targets for three straight months, most operators should face the facts. Inventory valuation, allocation of lemons and cooking wine, extra-departmental labor cost credits won't hold the answer to the dilemma. Pretend your the owner and look for the real issues. Don't hide behind allocations.

Tuesday, January 09, 2007

Slow Cooked BBQ Requires Careful Planning

BBQ is becoming very popular in a lot of new places. My clients with BBQ oriented menus include a professionally managed public golf club and an authentic BBQ in midtown Manhattan (both use a Southern Pride Smoker . While BBQ chicken and ribs are found just about anywhere, pulled pork, tritips and Texas-style brisket are relatively new to many regions of the country.

Proper BBQ takes time. The meat needs to marinate for hours and the smoky flavor is provided by hours of slow cooking in a warm pit or smoker. If you expect a crowd on the weekend, the meat order needs to be complete on Wednesday (at the latest). After an early delivery Thursday morning, preparation begins with trimming excess fat, cartilage and deckle. The meat may be cooked on the bone or boneless.

After the trimming process, the marinating begins with a dry and/or wet mop. The marinated meat will need to rest for a day or more in many operations. With the slow cooking process in the near future, veteran BBQ artisans are already watching both the calendar and the clock.

Since purchasing needs to take place days ahead of service, proper forecasting is at the heart of BBQ operations. When buying the meat, it’s necessary to be completely fluent with trim factors and yields. Let’s look at three popular BBQ items and discuss the yields one may expect:

A big Beef Brisket 118 will weigh about 20 pounds. Some brisket buyers choose the boneless version – Beef Brisket 120 – weighing in at about 12 pounds. Some favor smoking the brisket with bones. Others like the less fatty, fully trimmed version.

The bone in version will yield about half when fully cooked and the boneless will yield about 2/3. Our 20# purchase will yield 20 generous 8 ounce servings for platters or 40 sandwiches. If you allow your customers to specify lean only, the yield falls substantially.

Pulled Pork:
If you like to use Fresh Ham, Boneless 402B, you’ll be purchasing large pieces weighing between 20 and 30 pounds. A Boston Butt, Boneless 406A will weigh about 8 pounds and is really shoulder meat.

Both cuts will yield over 2/3 fully cooked but will plummet to half if the customer specifies lean only.

Most BBQ operations carefully choose the rib specifications. A rack of Back Ribs can average anywhere from 1.25 pounds to over 2.25 pounds. A rack of St. Louis Spareribs can weigh between 1.5 and 3 pounds. Some operators prefer the heavy, untrimmed racks which can be over 5 pounds. The skeletons are identical but age and feed vary. Customers usually order ribs by the rack, half rack or by the number of bones (not by weight).

My clients study their sales data carefully using the prior week, previous year and weather forecasts before placing their pre-weekend orders. They forecast the servings and use models to calculate the optimal order. Since ribs are often sold frozen, many well managed BBQ operations use long term predictions to go long when prices are favorable. All this math is rewarded with great profits since the best tasting BBQ is served straight from the smoker.

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Monday, January 01, 2007

Cost Per Serving vs. Servable Pound

My standing rib roast cost a lot less this year. Overall, I paid $40 for a 4 rib roast which was nicely marbled and labeled certified Angus beef. Trimming was minimal (about 4%) and I dry aged the meat for 4 days in my refrigerator. Dry aging can reduce a roast's weight by 10% to 15%. My roast lost 9% of the weight during the aging process.

Once the slow roasted meat hit 125 degrees, I pulled it from the oven and let it rest for 20 minutes. Next, I carefully removed the bones for a French Onion Soup the next day. The net weight after trimming, aging, roasting and boning was exactly 60% of the original weight.

Since my guests included 6 people with a medium rare preference and 2 with a medium preference, I offered the end cuts to the two medium fans. Everyone enjoyed the rib and asked for my secret. (a great thermometer!)

My cost per serving was $5. The various yield tests I performed were simply to document the shrink for this specific roast. I knew my cost was $5 per serving since I was feeding 8 people with a $40 roast. I could have served half the portions on the bone (one on, one off) and the cost per serving would still be $5. The cost per servable pound would be lower with the bones.

My preference for costing prime rib is the cost per serving method. The actual weight can be impacted by loss of moisture during storage and cooking, trimming process and serving method. Cost per servable pound may vary but the cost per serving was decided when I purchased the meat.

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