TACTICS TO COMBAT RISING FOOD & OPERATIONS COSTSWARREN DIETEL, CEO, PUFF ‟N STUFF CATERING, ORLANDO & TAMPA, FL GREG KARL, PRESIDENT, EPICUREAN CULINARY GROUP, DENVER, CO JIM ZILLI, CEO, ZILLI HOSPITALITY GROUP, WAUKESHA, WI
TACTICS TO COMBAT RISING FOOD ANDOPERATIONS COSTSIt is a fact of life that food and operations costs continue to rise. Thefinancial squeeze between the retail price and the cost of food andoperations often results in a reduction of bottom line profits. In today‟ssession we share a number of our best practices for combating theserising costs while protecting and increasing margin. Develop standardized systems to reduce costly waste Use menu engineering when designing cost-effective menus Determine true production and overhead costs Different factors to consider when strategically raising prices Effective purchasing practices Presentation available at: http://www.slideshare.net/WarrenDietel
DEVELOP STANDARDIZED SYSTEMS TO REDUCE COSTLY WASTE
BUILD A SYSTEMS-FOCUSED TEAM Quality Control Team • Involve all department managers • Meet weekly • Focus on top 3-5 goals per department • Take ownership & report minutes • Director of Purchasing • Identifies cost effective items • Looks forward to both short & long term needs • Educates sales – promotions, new recipes, A-B-C list
QUALITY CONTROL TEAM• Form an executive team focused on quality• Develop Food and Service Standards – every member looking out for quality, hospitality and service.• Involve the team in full strategic plan - Great for culture.• Helps waste with hours, safety, efficiency of decision making, four eyes on each event• Entire company knows who the QC Team is.• Review food before departure
REPORTING: WORK SMARTER, NOT HARDERVelocity Reports• MPM velocity report by menu item• Friday report by month, YTD, by concept• Pricing & purchasing strategy directionPEAR Report “Post Event Analysis Report”• Caption completes 8-9 pages• Average portion/person• What was returned? (Interview Dishwashers, look at garbage)• Cost out party after the fact to measure GOP
80/20 RULE• 80% of your business comes from 20% of your clients (75/25) – focus on those clients• Charging for tastings now to those clients who don‟t hit our 75/25• 80% of your sales come from 20% of your menu items – study what sells and what doesn‟t.• Be efficient and price items higher that sell.
EFFICIENT TEAMSBlend food & labor costs • Labor is a significant portion of menu cost • Example: Lobster is a high food cost, low labor costUtilize technology to: • Scale recipes & prep • Determine required itemsLeverage small efficiencies • How many chefs chop parsley each day? • Consider offering screw top wine
Epicurean used over11,000 pounds of beef tenderloin in 2012
Use Transglutaminase for a cost of $13 per poundFancy word for Meat Glue, but it is better than it sounds!
Cryovac Everything!It‟s not just for meat anymore
PRESERVING THE „SERVE LIFE‟ OF YOURPRODUCT• Returned event food, can be made into small plates, apps, stocks, sauces• Sautee & freeze Spinach/Greens in advance to save time• Fish can be turned into Tacos, Lobster Meatballs
Create hors d‟oeuvres based on your typical waste Leftover and end products of Cheese, Beef, Fish
Selling: Hors d‟oeuvresoffer a mouthful of profitFull Quantities of each @ 4 Bites & Adjusted Quantities of each @ 4 bites
Grow a GardenEpicurean purchased no herbs in the 2012 season. Grow what you use!Great marketing and sales tool to demonstrate fresh product.
WHAT IS MENU ENGINEERING?• Designing Menus for in-season foods• When food is in-season, what can you make, can or cryovac?• When designing a Seasonal Menu, Seated Dinner or Suite Experience – design for use of same product throughout the menu to reduce the amount of items to purchase and prep labor.• Considering labor intensive vs. labor efficient menu items
STREAMLINE YOUR MENUSThe Basics:• Avoid too much variety and menu waste• Train to prepare low volume purchases• Tenderloin – Sirloin – Rib eye• Cut to first Tenderloin, even if it‟s a smaller portion• Custom proposalsBonus:• Put more expensive Items at end of buffet on the left• Less people tend to eat these items
PRACTICE PORTIONCONTROL• Understand your clientele • Rural people • Women drink coffee, men indulge in protein• Portion vs. production waste
Quantities: Tricks of the Trade Chef/Management is allowed to reduce quantities based on knowledge of events or guest counts. Guests Go Right – for station events, put more expensive items to the left and reduce quantities.
VALUE ENGINEERING• Start with a common item/sauce/ concept for variations• High-end menu items can be tailored for the appropriate course and portion size • Lobster Mac „n Cheese = 7 service options • Hors d‟oeuvre (2), buffet, plated, family style & action stations (2)• Find a winning balance between budget and brilliance!
LOBSTER MAC „N CHEESE Lobster Mac „n Cheese is a richinterpretation of a classic comfort food. This dish debuted on our menu an a luxurious hors d‟oeuvre Chef Bar combining fresh Maine lobster meat,savory pasta, Prosciutto de Parma, petit pois, and rich cream in a decadent eighty pound Grana Padana cheese wheel. The finished dish is garnished with a basil leaf and presented to delighted guests on a crisp Cheddar and Edam cheese tuile.
Options 1 & 2: Hors d‟Oeuvre• Smallest portion sizes• Tray passed• Perfect for large groups
OPTION 3: BUFFET• Medium portion size• Cost effective service style• Presented in chaffing dish
OPTION 4: FIRST COURSE• Plated meal• Medium portion size• Elegant service style• Introduce refined ingredients to more simple meals
Options 5: Family Style• Presented on a shared platter• Most generous portion• Relaxed service style fosters conversation
Options 6 & 7: Action Stations• Prepared to order vs. pre-prepped• Most exciting and original presentation• Most expensive execution• Cost can be controlled by adjusting chef‟s servicestyle
VARIED OPTIONS FOR VARIED BUDGETS1. $ Hors d‟oeuvre – Butler-passed in an edible cup2. $ Hors d‟oeuvre – Butler-passed as a mini plate3. $$ Buffet – presented in chaffing dishes4. $$ Plated – as a first course5. $$$ Family Style – presented on a platter6. $$$ Action Station – served from a chaffing dish or cooked to order
2013: THE YEAR OF THE R&D CHEF• Develops all menus two seasons ahead.• Responsibilities: Recipe, Method, Pictures, Teach Cooks how to Cook it and Back Captains how to prepare on site• Great personality: help Sales People to sell what is in season and convince clients to use what is in season.
REMEMBER THE 80/20 RULE! 20% of Costs - impacted by smart purchasingRemaining 80% - managed by operational controls“What you do once products arrive at your backdoor”
HOW TO MAKE YOUR KITCHEN LABORWORK FOR YOU• When creating menus, we calculate labor, OT and fudge factor into the mix by historical numbers• Four kitchens around the city and a Food Truck. Chefs speak to each other weekly to see what food items we can reuse. Chefs do cost transfer between profit centers.• Certain kitchens are slower/busier at different times of the year. Use those down times to trade staff, save overtime, make and freeze bulk items that hold up.• Stagger Staff in and out of parties. Tell staff that they must sign out at X time and that they need to come to the Captain. Force efficiency.
LET YOUR SOFTWARE DO THE HEAVY LIFTINGPricing• Set a base sell price for each menu item• Use software to mark-up based on venue commission, other factors• Put a per person “Cleanup and Disposables” charge into every menuVenues• Develop different menus for different venuesLabor• Electronic & smart phone tech for time & attendance• Stagger labor arriving and departing• Capture accurate time for work produced
NOT IF, BUT WHEN YOU RAISE PRICES…• Know what prices went up and what didn‟t• Know your place - a position of strength vs. weakness• Raise prices all at once • Go up on only 1/3 of each menu – by 3 years, all up. • All prices across board rise 5%. • Administrative Service charge rise 2%• Create a cycle, review prices each November• Menu type and by guest size volume
DONATIONS• Give away less!• Use a charity/donation response form
PURCHASING: DON‟T BUY ALL YOUR EGGSFROM ONE BASKET• We have an exclusive agreement with one major purveyor, but we still constantly shop. Other purveyors still know we can buy from them and bring us great deals.• Go direct to manufacturers. Negotiate hard with purveyors. Remember BATNA for negotiating and Wayne Gretzky.• Alcohol – saved us a ton of money going with one distributor. Better price on all products. Great incentives when we need to close and event or save money. 30 cases of Breckinridge Vodka and Bourbon for Skin & Bones.• After negotiating to the bone with one purveyor we asked them to buy half of our box at Sports Authority Field and they did. It came from a different budget.
TIPS OF THE TRADE• Financial Consultant• Understand pricing seasonality • Meat prices go up in the fall• Sign one vendor contract, but still shop around• Produce it yourself! • Herbs, stocks, etc.• Liquor distributors donate products
THE CARDINAL RULE “Don’t chase the lowest price.”Buying from multiple distributors dilutes your purchasing power.
THE CARDINAL RULE• Leverage your volume with a select few• Create win-win relationships with distributors by clearly explaining your “definition of success”• Listen to distributors‟ challenges and needs• Remember – loyal and educated customers receive better pricing
GROUP PURCHASING ORGANIZATIONS• Goal is simple: Contribute to the bottom line of the members while increasing sales for participating suppliers• Analyze your organization and specific purchasing history, needs, and future requirements• Develop unique purchasing strategies• Leverage the combined purchasing power with Distributers and Manufacturers• Negotiate Master Distribution Agreement with Distributers and Manufacturer Agreements
GPO BENEFITS• Reduce your time “chasing the deal”• Track and manage your refunds• Identify manufacturer opportunities• Piggy back on others• Typical Fee Structure • 1% - 2% of Annual Purchases• Percentage of Rebates• Manufacturer
NEGOTIATNGDistribution Agreement Points• Financial • Annual sales/commitments • Growth incentives • Deviated pricing • % of overall broad line business, 70% + • Audit privileges • Terms – payment and length (typically 1, 3 and 5 years)• Logistics • Delivery $$$ or drop size, $1,500+ • Delivery frequency, delivery day & time• Product • Number of proprietary items stocked • Distributor branded items
YOUR ROLE• Receiving product• Invoice price• Product handling• Portioning/menu item costs• Waste• Theft (Industry average = 3%)• Appropriate pricing• Implementing systems and controls
FOOD FORTHOUGHT… lop your own network of caterer‟s of similar sizephilosophy to share best ctices and learn from each other
THANK YOU! PRESENTATION AVAILABLE AT:HTTP://WWW.SLIDESHARE.NET/WARRENDIETEL