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Tuesday, April 28, 2009

Food Cost Techniques - Counts

Most food service people are out in their storage areas each and every day. If they stopped to keep a record of their observations, they would have an incredible tool for solving the usage riddles each week. The normal tendency is to check the stock level of the highest volume items frequently. These same items make up a major portion of the cost of goods sold.

Production teams communicate with clipboard lists. The current shift needs to leave a sufficient stock of batch recipe items for the next shift. These clipboard sheets document the movement of major production items. Don't let the data go to waste.

So how do you make the data come alive? Match it with sales activity. Test your forecasts against the actual demand. Did you over produce? under produce? or were you in the zone? Keeping records will help you get in the zone and stay in the zone.

The keys to turning your walk around spot counts into an effective tool are record keeping, feedback and adjustments.

Thursday, April 23, 2009

Food Cost Tips and Tweets

I started a daily food cost tip tweet on Twitter a week ago. All readers are welcome to join Twitter and follow my tweets.


These tweets all start with #FCTip: which you can enter on Twitter's search to see the earlier days. Earlier today, I discovered Ping dot FM which allows the same micro-blogs to be posted here on the Food Cost Control blog, on Twitter, my FaceBook page, LinkedIn and Plaxo.

Wednesday, April 22, 2009

Food Cost Techniques - Receiving

The second biggest opportunity for saving money in a restaurant is available at the loading dock. Receiving controls can save you a bundle. The amount of savings is directly proportional with the number of miles from the supplier. If you are the last stop on the delivery route, the morning's rejects may find their way onto your doorstep.

We once followed a rejected case of salmon all over New York when I was working with a local chain. The driver tried to unload the case at each and every location. Good noses and lots of phone calls kept the spoiled fish from our walkin coolers. Do you let the delivery man load the goods on your shelves? I recommend you end this practice. Especially in operations with limited deliveries and long lead times, drivers often bring the stock up to the order quantity using items already on the shelf.

Imagine you order 20 cases at the order point which is 5 cases. By the time the driver makes the delivery, you have 3 cases left. You let him put the cases in your storage. He delivers 17 cases and calls you in to check off the delivery and sign the invoice. You count 20 cases and sign. You just paid for 3 cases you never received. This is just slightly better than a phantom delivery.

One site I was sent to audit for an out of control food cost had several assistant managers. I was in charge of the inventory and I assigned everyone a location. Keeping the refrigerators for myself, I began looking for a truckload of eggs. Looking everywhere, I could not locate the eggs. The managers started complaining about not finishing in time. I persisted and increased the heat.

Eventually we located the truckload of eggs at our competitor's project five miles away. The invoice had been rubber stamped with one of the manager's signature. We threw out all the rubber stamps and got a credit for the eggs. The driver and our purchasing manager were in collusion.

In general, try to treat your inventory delivery with the same seriousness shown to the armored delivery of cash. You probably lose more cash in food not received than the miscounted cash delivered.

Wednesday, April 15, 2009

Food Cost Techniques - Orders

The number one component in your weekly or monthly food cost percentage calculation is food purchases. This figure is modified by the net inventory change before you divide by sales. Many operators tell me they don't count inventory any more. I always ask them how they order food.

In every case, food service operators go to their storage locations when determining the order requirements. This activity is an inventory count. Although there may not be a formal report or a careful valuation, the person who checked the stock room, walkin cooler or freezer performed a count. In most cases, these counts are discarded once the food order has been completed.

Do you organize your food orders by category (e.g. produce, meat, seafood, dairy, etc.), by vendor, or by storage area (e.g. freezer, cooler, dry storage, etc.)? Do you have a day of the week organization? Perhaps you order produce twice a week on Monday and Thursday. You might replenish groceries once a week for high volume items and monthly for other items. Maybe you have become aware of a special on a shelf stable item. On the other hand, prices for some high volume items may be sky high this week.

If you phone in your orders, you may be on the phone with someone trying to blowout an over stocked item. Do you change your order on the spot to "take advantage" of this limited time offer? If you answer yes, how do you determine the impact on other items you need to order? The person on the other end of the phone line has taken over your order process.

Most operators have a decent price awareness. Some are acutely aware of any market shifts in their top volume items. These same operators may have a vague idea what the market conditions are on their low volume items. Who has the time to track all this activity? Time is money.

Every operation spends a significant amount of time each week ordering, receiving and storing food items. Much of the information used in these decisions is discarded once the order has been submitted. Spot counts, market prices, last minute deals, emergency orders, short shipments, poor quality rejections, and every day customer preference shifts are processed and the impact is seen in your invoices.

Do you have a feedback mechanism built into your control system to highlight ordering issues? If you don't have any feedback other than the goods arrived, you are missing another opportunity to improve your ordering process.

Five simple recommendations:
1. Develop order guides to fit your personal environment. Document the counts, par levels, and other notes. The notes should have details on weather conditions, seasonal peaks, etc.
2. Clearly mark your orders with any changes made during the phone call with the supplier. Use a different color ink to highlight these changes.
3. Organize the price quotes faxed each week on bid comparison sheets.
4. Document all specification issues and ask for credits when the delivery does not match your request.
5. Summarize this activity each week and use the information to improve the process.

Once you order food, the economic impact of the order is reflected in your food cost percentage. It is impossible for something you never ordered to spoil, be improperly portioned, stolen, or over produced. Spend less time in the long run by investing in organizing your ordering process today.

Restaurant Data Pros

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