With the recent rapid increase in meat prices, operators are discussing the merits of smaller portions. If they serve an 8 ounce steak, they may be considering a 7.5 ounce portion. For operations with large portions, the change may be from 16 ounces to 15 ounces.
A change from 8 to 7.5 ounces is a 6.25% reduction. Everyone is familiar with the coffee cans at the local market. It is rare to find a one pound can. Actual weights are often less than one pound. Sometimes, the size of the can stays the same but the net weight changes.
Would your customers notice their serving is only 93.75% as big as last time?
They may not notice a small change in the serving and they may not care. If you notice the plates coming from the dining room have uneaten meat or fish, your current portion size may be too large. Consider a slight drop in size. The profit potential is significant.
Take a look at the big picture. If you use 800 pounds per week at $6 per pound, a drop from 8 to 7.5 ounces will save $300 (around $15,000 per year).
This strategy should not be combined with an immediate and significant price increase. Raising the price and decreasing the portion size doubles the risk of your customers objecting to your strategy.
[For my loyal readers, the bakery I wrote about when flour prices went through the roof is now under new management. They made the changes too obvious.
The size of the loaves decreased by 20% for the same price which was perceptible. They eventually raised the cost per loaf by 15%. Traffic suffered and they never regained their gross margin.]
Thursday, June 02, 2011
The Profitable Butcher - Part 2
Tracking butcher yields is essential if you decide to trim your meat and fish rather than buying portion cuts. Too often, managers treat the process with a lackadaisical attitude.
"We use the trim in ravioli. They're free." "This week's meat was fatty." "Our butcher doesn't slice the steaks evenly." "We only pay $6 per pound and the portion control cuts would cost $7." "Nothing is wasted. We make all of our stocks from scratch."
The common theme is a lack of clarity. You can't afford to butcher meat in your operation if you do not closely track the process. Butcher yields can fluctuate widely. The differences in yields need to be monitored closely.
I know an operator who carefully tracks each batch. The starting weight and number of pieces of meat are recorded. The log contains the cost per pound paid to the meat supplier. After trimming the meat and slicing the steaks, the butcher records the number of steaks, usable trim and waste. All costs flow from the starting weight and cost per pound.
This person has a well documented 3-ring binder with each butcher batch sorted by date. I went through the history and found the overall yield was very close to the restaurant's standard. More importantly, the yield from batch to batch varied by plus or minus 5%. This is a 10% spread.
Most operators do not keep these records. The time to record the batch is minimal and the gain in information is tremendous. Understanding your standard yield is key to tracking usage and gross profit.
"We use the trim in ravioli. They're free." "This week's meat was fatty." "Our butcher doesn't slice the steaks evenly." "We only pay $6 per pound and the portion control cuts would cost $7." "Nothing is wasted. We make all of our stocks from scratch."
The common theme is a lack of clarity. You can't afford to butcher meat in your operation if you do not closely track the process. Butcher yields can fluctuate widely. The differences in yields need to be monitored closely.
I know an operator who carefully tracks each batch. The starting weight and number of pieces of meat are recorded. The log contains the cost per pound paid to the meat supplier. After trimming the meat and slicing the steaks, the butcher records the number of steaks, usable trim and waste. All costs flow from the starting weight and cost per pound.
This person has a well documented 3-ring binder with each butcher batch sorted by date. I went through the history and found the overall yield was very close to the restaurant's standard. More importantly, the yield from batch to batch varied by plus or minus 5%. This is a 10% spread.
Most operators do not keep these records. The time to record the batch is minimal and the gain in information is tremendous. Understanding your standard yield is key to tracking usage and gross profit.
Wednesday, June 01, 2011
The Profitable Butcher - Part 1
Our goal is to keep the cost per portion as low as possible while maintaining the current standard. The focus is on the center of the plate. Most people break down their current meat and fish using a cost per ounce model.
There are many limitations to this approach.
Your cost per ounce may be 50 cents. If you take a piece of meat which costs $6 per pound and you lose 25% in unusable trim, your cost per pound is $8 and your cost per ounce is 50 cents.
Our first issue is the 25% unusable trim. This implies a 75% yield when we focus on our center of the plate portion. What happens if a particular piece of meat yields 80%?
Instead of 50 cents per ounce, we would only pay 46.875 cents per ounce. Is this meaningful? Do people actually see the impact? I would argue they don't see the impact clearly.
If the piece of meat weighs 10 pounds, the 50 cent per ounce model assumes 120 ounces. We would expect to yield 15 - 8 ounce steaks. The 80% yield would increase the number of steaks from 15 to 16. The same numbers are in play with only a slight change in yield. The piece of meat weighs 10 pounds and the cost per pound is $6. Only the yield changes from 75% to 80%.
The extra steak is the true benefit. Monitoring a 3.125 cents per ounce change won't be easy to explain in meetings. "we should have a slightly better profit this weekend because our cost per usable ounce decreased by 3.125 cents..."
The extra steak would cost $4 using the 75% standard at $6 per pound. Our goal is to save this $4.
Perhaps we could find a supplier who usually delivers meat which yields 80%. If we expect to purchase 10,000 - 10 pound pieces per year, we would save $40,000. The savings would occur 1 steak at a time as we gain the extra steak from each batch. Using our POS system, we can make sure we get the sales for the extra steaks and the gross profit increase will appear in our bank account.
Rather than tracking 3.125 cents per ounce, we can track these extra steaks.
There are many limitations to this approach.
Your cost per ounce may be 50 cents. If you take a piece of meat which costs $6 per pound and you lose 25% in unusable trim, your cost per pound is $8 and your cost per ounce is 50 cents.
Our first issue is the 25% unusable trim. This implies a 75% yield when we focus on our center of the plate portion. What happens if a particular piece of meat yields 80%?
Instead of 50 cents per ounce, we would only pay 46.875 cents per ounce. Is this meaningful? Do people actually see the impact? I would argue they don't see the impact clearly.
If the piece of meat weighs 10 pounds, the 50 cent per ounce model assumes 120 ounces. We would expect to yield 15 - 8 ounce steaks. The 80% yield would increase the number of steaks from 15 to 16. The same numbers are in play with only a slight change in yield. The piece of meat weighs 10 pounds and the cost per pound is $6. Only the yield changes from 75% to 80%.
The extra steak is the true benefit. Monitoring a 3.125 cents per ounce change won't be easy to explain in meetings. "we should have a slightly better profit this weekend because our cost per usable ounce decreased by 3.125 cents..."
The extra steak would cost $4 using the 75% standard at $6 per pound. Our goal is to save this $4.
Perhaps we could find a supplier who usually delivers meat which yields 80%. If we expect to purchase 10,000 - 10 pound pieces per year, we would save $40,000. The savings would occur 1 steak at a time as we gain the extra steak from each batch. Using our POS system, we can make sure we get the sales for the extra steaks and the gross profit increase will appear in our bank account.
Rather than tracking 3.125 cents per ounce, we can track these extra steaks.
Subscribe to:
Posts (Atom)
Restaurant Data Pros
