How to Cut Costs without Reducing Quality
UNDERSTANDING FOOD COSTS IS NOT ALWAYS
“WHAT IT COSTS”
BUT RATHER ABOUT
“UNDERSTANDING YOUR BUSINESS”
Servicing quality FOOD offers can always
provide significant profitable outcomes to
More often than not, the servicing of food
can become the CASH bleed losses of the
entire business due to operational costs not
being controlled from the kitchen production
and the service of FOOD
The CUSTOMER’S RETURN – when they are
pleased with our offer and services they will
often come back time and time again.
GOOD AT WHAT WE DO?
90% of the time we are pretty good at what we do in our businesses BUT 10% of the time we are all pretty AVERAGE.
On occasion we may even be EXCELLENT at what we do, but this is NOT ENOUGH
Understand the STRENGTHS and WEAKNESSES of your business and especially understand the profile of your
membership across all food & beverage services areas of your business.
SWOT Analysis of your business models
Strengths – what we are GOOD at
Weaknesses – what we are NOT GOOD at and need improvement
Opportunities – what we CAN DO NEW
Threats – what will happen if we DON’T DO ANYTHING
THE STARTING POINT
Clearly understand the PERCEPTION of your business Vs. the
REALITY of your operations
COMPLAINTS are opportunities to get it right so always listen to
your customers and make informed decisions for the right reasons
at the right time.
NEVER drive RE-ACTIVE management outcomes instead of
developing PRO-ACTIVE management principles by engaging your
entire Team and your customers so as to focus on the best desired
outcomes for your business model.
MONITOR the performance of your business regularly and especially
the business effectiveness when food PROMOTIONS are on offer.
(Ensure correct accounting of special promotions reflected on the
Food can be a VALUE DRIVER or a LOSS LEADER but your business
must always provide a real financial return for your Team’s efforts
and your Team’s long term sustainability. i.e. JOB security and
FOOD COST PERFORMANCE REVIEW
FOOD COST BENCHMARKS
Each and every food service area will have different retail price offers together with differing food menu offers.
Minimize the number of retail prices which are closer to each other rather offering multiple prices with wider price ranges.
Therefore it should be also determined that each and every food service area has a separate and differing FC% benchmark
However the overall MIX of sales within all food service areas should always provide a combined FC% that sits within
industry BEST PRACTISE
Industry best practise benchmarks is achieving FC% of 32% - 36%
Wages benchmarks best practise is achieving WC% 42% - 45%
Performance Benchmark Policy of individual operations is directed by Executive Management and is always achievable
conditional upon good governance and effective controls and information reviews.
The PROCESS must run the business NOT the INDIVIDUAL
All Team members must be part of the SOLUTIONS not part of the PROBLEMS
Always consider all the ALTERNATIVES no matter how bizarre
Always be prepared to openly listen ,even to “the person washing dishes”
Always negotiate with suppliers to operate a Catering advantage by using commercially purchased FOOD PRODUCT drivers
FOOD COSTING ANALYSIS AND MENU DESIGN
Most all food operations remain the most critical performance financial RISK side of any operational hospitality business.
Specifically providing a competent USER FRIENDLY cost control software system supported by a specifically focused Team of
cost control analyst/s provide added advantage in immediately identifying cost blow outs and poor outlet performance to
direct PRO-ACTIVE and COMPETENT Food Service Management. (highly recommend RESORT KITCHEN RESTAURANT as a
Skills of Chef Managers are not suitably trained in basic business processes and report analysis review as they have focused
training as professional trade persons and often do not hold business degrees
Most purchased food commodity groups will have static price structures but some will have seasonal market influences
directly impacting menu returns e.g. Fruit & Vegetables and Fresh Fish & Seafood
All food production involves a degree of processing and control of trim wastage which is not found in beverage sales which
can control a live inventory unit transfer and respective charge. FOOD inventory is not suitable to live inventory systems
(apart from dry goods) but is better preferred as direct charged due to short shelf life term of fresh produce.
FOCUS on minimising as much in house SCRATCH production activity within all kitchens financially assists better control on
man-hour activity and finite cost of food products. Consider in-house COOK CHILL production methods.
Always ensure that the ACTUAL meals served from the Kitchen truly reflects the THEORETICAL costed recipe which will relate
specifically to the loaded POS charges posted to P&L’s
REMEMBER rubbish information IN is rubbish data information OUT
FOOD PREPARATION PRODUCTIVITY & “SELECTIVE VALUE ADD” PRODUCT
Developing menu design with theoretical correct margins and retail benchmarks is only part of the solutions in managing
operational food offers to our customers
The hard part is often the ACTUAL daily ongoing performance of the model to achieve the THEORY. In leading the service
deliverables and promised outcomes, mandatory attention must be directed towards all manual activity involved in preparing and
servicing the menu product, but also the amount of wastage trim loss of any one particular ingredient also investing man-hour
CRITICAL PATH PLANNING PROCESS - a determined focus needs to be start at the END i.e. PRESENTATION and CONTENT
Minimise the items on the plate to no more that 4-5 actions or items
Firmly consider what real bottom line return is afforded by continuing to invest man-hours in processing or production of any one
Strictly consider all low cost per kilo base produce being outsourced and invest in-house man hours on value adding HIGH cost
products which adds real value to maintaining these activities in house
All COST ITEMS whether in-house produced or outsourced supplied need to be assessed to always provide the business return
Regular updated industry advice on newly developed products will permit use of VALUE ADDED or PROCESS COMPLETE products
The final objective must be to maintain all productivity actions efficiently controlled focused strictly on the QUALITY,
APPEARANCE and FINISH of the products served. (“Art on The Plate”)
Negotiating special priced “ONE OFF OFFERS” from suppliers when invited will also assist business returns
FOOD SERVICE COST PERFORMANCE REVIEW
Service models can be either
A ‘LA MINUTE (a ‘la Carte) cooked to order from a displayed menu choice
BUFFET SELF SERVICE which can be bulk cooked and carved to order
BANQUET SERVICE (Table d’hote , Buffet or Cocktail Finger Food)
When evaluating theoretical costs for menus offering per plate e.g. a ’la carte or a pre-plated banquet meal, all items can be
definitively costed by weighing or identifying all raw ingredients that compose up the dish.
When evaluating theoretical costs for menus offering a Buffet all you can eat style service including Banquets, an average weighted
allowance per each item per person should be applied
Costing our BUFFET menus should be based on actual CONSUMPTION then supported by kitchen production cooking with what
the allowance per serve should be rather than permitting to cook what CHEFS think you will need. This production process must be
scientific in calculation rather than permitting individual guesswork.
CONSUMPTION based allowances is based on what our customers on average actually consumed every time a person dines in a
Buffet environment and reverses the focus in forecasting production.
By determining HOW MANY persons you expect to have in per service, will in turn permit a simple calculation to now advise CHEFS
what production VOLUME of food items they must only cook based on how many covers expected per any one service.
This model is simply about the theoretically volume to be consumed which is defined upon that average weight a consumer will
eats every time a service period is provided.
To confirm the variables of “OVERS & UNDERS” in forecasting production over any one month, the number of forecasted covers
per service is compared to the actual covers served (and revenue provided) and a total monthly report simply displays the accuracy
for your FORECAST Vs ACTUAL. If controlled correctly you will find better control of forecasted production with better accuracy of
the forecast of customers.
CONSUMPTION ALLOWANCE PER PERSON –
means weighing all raw items produced to served
Vs. all leftovers not consumed
Every Item will on average be identified as per
grams per serve consumed
Every production schedule now advises all CHEFS
what amount to cook based on FORECAST of
FORECAST Vs. ACTUAL tracking over any one
(4 Weeks / Monthly) will provide a definitive
OVERS or UNDERS for the period
FORECAST ACCURACY – will be identified upon
end of each period / month and can be altered
FORECASTS - must be provide by FOH managers
who will now focus on HOW many customers are
KITCHEN PRODUCTION – must now be
specifically guided by covers forecast which auto
calculates how much of any one raw product is to
REVIEW SALES MIX DATA WITHIN ALL
FOOD SERVICE AREAS
Statistical sales data is captured via POS
systems within most every modern business
HIGH CRITICAL RISK IMPORTANCE – “STARS
Identifying and controlling what best SELLS
and what DOESN’T SELL.
RULE OF SALES SUCCESS
If it doesn’t sell why keep it
If it doesn’t make a profitable margin why
invest in the liability of costs to keep it
• PRODUCT SPECIFICATIONS
• Often the best source for purchasing detail to your specific
product requirements will be the suppliers already acting
within a HACCP food safety program as part of their supply
• Reviewing the information contained within so as to enable
and assist your TEAM in developing written product
documentation best suited to your business.
• EVALUATING ROSTERED MANHOURS - LABOUR COST
• Critical path analysis of rosters is a very good process for
identifying unnecessary wasted hours always questioning
• Clearly identify actual tasks of each person rostered to
confirm best performance practise of TEAM objectives.
• Productivity is enhanced best when working within objective,
empowered, motivated TEAMS.
• Start as ONE group finish as ONE group.
REVIEW PERFORMANCE OF ALL OPERATIONS
AS THEY PRESENTLY EXIST
COMPARE VARIOUS OUTLETS OFFER TO
DIFFERING BENCHMARKS & MENUS
REVISIT IN-HOUSE PRODUCTION ACTIVITIES
AND EVALUATE OUTSOURCING
NEGOTIATE BEST PRACTISE SUPPLIER
PURCHASING BENEFITS AND PRODUCT
ENGAGE IN CUSTOMER FEEDBACK WITH
ENTIRE TEAM INVOLVEMENT FOR