Menu Engineering, Plough Horses
August 5, 2009
All menus have some Plough Horses (also known as Cash Cows). The profitability/contribution metric used in the Menu Engineering Model is based on an average. The nature of an average means there will always be some items below the average. Assuming all items meet the popularity benchmark, any items below the average are Plough Horses and all those items above the average are Stars.
The popularity benchmark is based on 70% of the average number of items sold. Any items that don’t meet the popularity benchmark are Dogs or Puzzles.
As a result, we expect to have some Plough Horses on the menu. These are the menu items that our customers keep coming back for. They are perceived as good value for money and are often the backbone of the business. They tend to sell themselves, leaving us to focus on our Stars.
Resource: Menu Engineering Model
Pareto Principle of Food Stock Control
July 29, 2009
Inventory management is time consuming and takes our focus away from building sales and providing a great customer experience.
The Pareto Principal states that 80% of the effects come from 20% of the causes. In other words: 20% of your stock items make up %80 of your stock value. By focusing on the high value 20% we can minimize the time spent on stock control, but ensure this time is spent on the things that really matter.
To implement the Parento Principle go through a full stock take and select the high value stock items that you want to focus on. You can then summarize the remaining items into a nominal cost. Next time you do a stock take you only need to count the high value items and use the previously calculated nominal value to represent the other items. You can still calculate all the key metrics like Cost of Goods and Gross Profit, but minimize the time spent on stock control.
In-house vs. Out-sourced
July 23, 2009
In an age of plentiful refrigeration and high tech packaging it is possible to purchase a wide range of pre-made, pre-cut, pre-processed ingredients and even complete meals, ready to serve. In this post we look at some of the pro’s and con’s of purchasing pre-prepare ingredients/meals.
Pro’s of Out-sourcing
- Reduce labor. Suitably experienced staff are difficult to find and expensive to keep. With pre-prepared ingredients/meals it is possible to produce more meals with less staff.
- Reduce production space requirements
- Reduce amount of equipment required
Con’s of outsourcing
- Higher food costs
- Less control over quality
- Increased reliance on external suppliers
Out-sourcing may stack-up, depending on your business model.
5 ways to Prevent Stock Theft
July 18, 2009
Here are some tips if you suspect you are loosing stock due to theft:
1. Control access to your store rooms. Install locks and keep them locked when not attended.
2. Control/monitor access to your kitchen/stores from the back door. Monitoring may include CCTV cameras, an alarm on the door or as simple as paying more attention to who/what comes in and out.
3. Check waste bins before they are emptied. Waste bins may be used to smuggle valuable stock out of your kitchen.
4. Do spot stock checks/audits. Count an item you suspect of being taken at the start of the day, monitor how many are legitimately used, then do another count at the end of the day. If the variance between the start and the end of the day does not equal the usage, you have a problem.
5. Let your team know theft is not ok. Make sure your staff understand that theft will not be tolerated and that you actively monitor your stock. This will reduce the temptation and stop honest thieves.
Recipe Template
July 15, 2009
I have used the Recipe Template above for some time. It is ideal for documenting, printing and laminating your recipes for use in the kitchen.
The template includes both Batch and Production recipe templates, along with an ingredient list.
I hope you find it useful.
1$ Cost Saving = $10 Sales
July 13, 2009
In a slow economy cutting back is an obvious way to maintain the profitability of your food operation. However, the impact of cost minimisation on the bottom line is often underestimated.
For example:
If you have a net profit of 10%, each dollar you save by reducing costs is equivalent to making a sale of $10.
Cost saving will never grow your business and can damage your business if it negatively impacts your customer experience. However when things are slow, cost saving is your friend.
Accounting Gets Closer To The Kitchen
July 12, 2009
This month, I noticed an urgency in 3 restaurant chains which would be out of the question in the past. Top level financial officers have made the dive into inventory control including batch recipe models for work in progress inventory. Calling late at night, I found the CFO of a 35 unit chain in the office working feverishly to get the new database deployed. She was working on recipe costing and linking her recipes to the POS system.
Years ago, restaurant companies needed to be shoved into software systems to get better a handle on their cost of sales. Now, these solutions are ubiquitous. POS vendors throw them in for free to sweeten an offer. Solutions exist in every price range.
I spoke with the Executive Chef of a 6 unit group here in the DC Metro area. He was working on a solution with his brother who works in the accounting department. Each of their concepts has a unique menu and they have finished the first test. Results have exceeded their expectations. The actual food cost has now come down to less than 1% above ideal.
Recessions often force corporate staff to wear different hats.
As these financial people work closely with the chefs, purchasing agents and other key operations people, the reports have to improve. Communications are more focused and everyone has a feel for their counterpart’s unique issues.
A Recipe for Success
July 8, 2009
Costed recipes are an essential tool for any food operation. Without accurately costed recipes there is no of knowing if your product offering is profitable or if your financial performance is on target.
Theoretical Vs. Actual
With costed recipes and sales mix information it is possible to calculate the theoretical food cost. This then enables the comparison between actual and theoretical food cost. Any substantial variance between theoretical and actual food cost represents an opportunity to reduce costs, directly improving the bottom line of the business.
Menu Planning
In addition to calculating the performance baseline, costed recipes are critical to the planning process. When creating a new menu it is important to know how much each item costs before settling on an appropriate selling price.
Costing a recipe does not need to be a complex task and does not necessitate the use of expensive software. A set of scales, a calculator and a scratch pad is really all you need. While costing recipes will not directly assist with the next service period, it has the potential to drive enormus benefits to a food operation strategically.
Taking Stock
July 7, 2009
No one likes doing stocktakes. However, an accurate stock count is essential to producing meaningful management information.
Here are some tips on doing an accurate stocktake:
Have a hard copy of your stock list - A list grouping stock items by Category, then listing Stock Items in alphabetical order makes it relatively easy to look-up Stock Items as you count.
Do one storeroom at a time - If you have stock items that are stored in multiple locations (dry store, cool room and service fridges), don’t run around the kitchen to find all instances. Count methodically through one store location at a time.
Count each storage location left to right, top to bottom - Start at the top left of each shelf, then work your way down to the bottom right. That way you wont miss anything.
Count with a friend – It is faster and easier if you count in pairs. One person can physically count the stock while the other records the counts. In addition to speeding up the process this also serves as a check, to make sure you don’t miss anything.
Although counting stock may seem simple, it is surprising how many people I have seen get it wrong.
Best of Breed, Thermometer
July 2, 2009
I was putting together a review on Kitchen Thermometers, when I found this review by “Cooking for Engineers”. It’s worth reading if you’re looking for a good kitchen thermometer:
