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Thursday, August 28, 2014

Operators Are Watching Portion Sizes Carefully

I have been traveling through New England and Upstate New York this summer. While driving on major highways, the meal choices are limited to major chains for the most part. Menu prices tend to be 10% higher at the rest area food courts.

Most of the popular concepts have strict portion control built into their service. I did not notice many changes in portion size. The main observation in the chain concepts was the tight control over complimentary condiments. Gone are the handfuls of ketchup and mustard. Napkins are also being strictly controlled at the grab and go locations. You need to ask for cream for your coffee at every place I visited.

My favorite meals were in off the beaten path locations.   Most operators were watching the portion sizes.

We stopped for a chicken BBQ at a church near Keuka Lake in Hammondsport, NY. For $8, they served one half chicken, one roll, one butter patty, one serving spoon of salt potatoes and one container of cabbage salad (similar to cole slaw).

The utensils and napkin were carefully distributed - one per guest. The lemonade was technically unlimited but the cup size was designed to limit consumption. It was a very satisfying meal and I complimented the pit crew on my exit.

I want to emphasize the portions were carefully controlled. This does not mean they were small. On a trip from Amherst to Concord, MA, we stopped for fried clams. I decided to order one quart for three people. We were overwhelmed with clams but the portion was controlled. The way the operator handles portion size is as follows: a waxed one quart container with flaps for the cover is placed in a paper bag. The server fills the container all the way to the top of the flaps.

We would have been satisfied with a pint. However, I observed the same paper bags at the picnic tables nearby. The amounts seemed exactly the same.  The parking lot was completely full and the seasonal shack had an impact on the local traffic patterns.

The server handed me three containers of tartar sauce (one per person) and let me know more was available if needed. Guests helped themselves to napkins.

We enjoyed a terrific breakfast of Eggs Benedict in Concord. This dish was carefully put together with one english muffin, two poached eggs, two slices of back bacon, a serving spoon of hollandaise sauce and 3 ounces of home fries. We were all offered a second cup of coffee or extra water for the tea. The potatoes were excellent and we all had exactly the same size portion.

Massachusetts has world class ice cream stands and terrific donut shops. It's impossible to travel through the state without stopping at least once for each temptation.

While the medium cup of ice cream would have been called large in the Mid-Atlantic, every customer was served the same overloaded cup. Donuts are easy to portion. The napkins were self-serve at the ice cream stand. We each received a single napkin at the donut shop. Control of napkins, sugar and cream was the norm at several coffee shops we visited.

Amherst, MA is part of the five college consortium between the Berkshire Mountains and the Quabbin Reservoir. Although we were in town when school was out for the summer, the main street shops were open for business.

We enjoyed one of the best roast beef sandwiches in many years at a sub shop and bakery. The fresh baguettes were sliced in half and the freshly sliced beef was weighed (5 ounces). The lettuce and tomatoes and the condiments were all carefully portioned. We received two napkins per sandwich. I noticed the baked goods were all pre-sliced. Some cookies were wrapped in 3-packs.

Our favorite spiedie pit in the Southern Tier area (near Binghamton, NY) serves generous portions. The spiedies are portioned prior to cooking on skewers. The meat is served on a single pita with one spoonfull of sauce. All condiments and vegetables are measured carefully.

We split a large french fries order. They use a bag method similar to the fried clams stand but smaller. All of the patrons at the tables near ours had the exact same bag size filled to the brim. For beverages, they hand you a cup and you can refill the cup.

There is an outdoor market/bazaar operation outside Penn Yann at the top of Keuka Lake. We were told to see the Polish Princess for her pierogies. She was sold out of everything except the pierogies since we arrived near closing time.

We each received five pierogies and we were allowed to spoon on the sour cream and dill sauce. She chatted with us and encouraged us to enjoy the sauce. The orders sold for $5.75 per portion or $1.15 per pierogie.

She looked like she had a busy day.

With so many restaurants wrestling with tactics to lower their food cost this year, it is important to watch your portion sizes like a hawk. Make sure you are consistent. If you are known for generous portion sizes, it is important to meet your customer's expectations.

Thursday, August 07, 2014

High Food Cost Due To Inflation

The June Consumer Price Index (CPI) shows a 7.5% increase in the category meats, poultry, fish and eggs (see chart below).  This category is very important for most restaurant operators.  The protein component of most restaurant meals has the highest weight.

Over many months, protein costs have been on the rise.  The trend may correct later this year since the 2014 corn crop is excellent.  Corn futures have been in a free fall since early May 2014.

Source: US Bureau of Labor Statistics - June 2014 - CPI Summary

Should you increase your menu prices to cover the significant rise in your invoice costs?

The answer is yes for almost every operator.  Unless you face very stiff price competition in a market with a steep decline in restaurant visits, it is essential to raise menu prices.  Many operators have increased menu prices to help offset increases in labor costs due to health insurance premiums.  Your guests see the increase in food prices 

If you never prepared a budget for 2014,  you may have a tough time putting the food cost inflation in perspective.  A rise in the cost of goods sold of 10% (e.g. from 30% to 33%) can completely wipe out profit at many restaurants.

Should you raise menu prices across the board?

I would vote for an across the board menu price increase in 2014. 

It has become more difficult to hide profits in non-alcoholic beverages and extras.  Restaurant visitors are looking for a high quality meal for a price that meets their budget.  Many diners are opting for tap water.  Guests are taking a close look at their checks and they are modifying their behavior as they see pricey drinks and charges for extras.

If your current check average is $20, an across the board increase of 3% would raise the check average to $20.60.  An aggressive 10% increase would take the check average up to $22.  You need to study your local competition.  You need to know your guests.  Will your guests adjust their menu choices to keep the check average at $20?  If you think a 10% increase will drive your guests out the door or cause them to order fewer items, you should go with a modest increase.

One thing is for certain.  This is a very tough year to discount menu prices.  If you depend on deep discounts and coupons to fill your dining room, the current rise in protein costs will wipe out your profit.

Restaurant Data Pros

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