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Friday, February 09, 2007

Disbelief and Denial

I really grow concerned when I find an operator who just does not believe cold hard facts. The majority of food service managers attack a poor food cost performance from the "it can't be true" viewpoint. Fewer than half of these professionals actually see the issue and develop a game plan to correct the situation. Those who don't believe the numbers or don't want to believe in reality spend valuable time explaining away the bad news.

Since many operations calculate their food cost percentage on a monthly basis, it is entirely possible to eliminate any chance of hitting budget targets with one serious problem. If you operate in a seasonal resort town, the chance of a single problem wiping out an entire year's profits is possible.

Many managers treat the initial report of bad news as an error in calculation. When purchase details are brought to their attention, they might point out cutoff problems with vendor credits, inventory valuation errors on slow moving items, anectdotal tales of difficult to please patrons and many other irrelevant issues.

The chance of curing the illness in month two is zero.

As month two proceeds, the operation continues to be adversely affected by the critical problem. Let's give an example to illustrate. Our poor performance unit is serving a center of the plate portion which is 50% greater than the standard on the most popular entree. This serious problem has now made hitting our food cost target impossible for two months running and we have only one month left to go in our busy season. When will the problem be discovered? Most likely the issue will be ripped apart in the off season when management has some free time to analyze the matter.

The only thing which will become apparent from reading the bad news in month two will be the inaccurate diagnosis in month one. Accountants will poor over the details of statements. Invoices will be tracked down in desk drawers. Inventories will be combed for incorrect cost data. Employee meal policies will be scrutinized. Inter-departmental transfers of lemons, cherries, cooking wine and paper goods will be compared to previous periods.

If we're extremely lucky, someone may weigh a couple of steaks at random and find we are serving an 18 ounce portion instead of a 12 ounce size. Chances are low if the scales are not put to use. Even if the problem is discovered, some managers feel they can't cut back the size or increase the price because they risk customer ire.

Through the initial emotions of disbelief and denial and a feedback system designed to report bad news monthly, our season has ended with insufficient profit to cover overhead costs during the long off season period to come.

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