Tag Archives: restaurant consulting

“An ounce of prevention is worth a pound of cure” – Labor Law Risks

19 Mar

In one of my recent projects, the restaurant had devised a home-grown tip disbursement sheet. One of their executives had put together the mother-of-all-spreadsheets to track the tips, tip-outs, and net tip payments to each server, bartender, busser, barback, foodrunner, and expo. Staffers did not take their credit card tips home in cash every night. They had to wait two weeks till payday. This spreadsheet had a number of mistakes that are in violation of labor law. Oops!

There are many issues these days where restaurant owners don’t even know they are risking their business and their hard-earned money. For this reason, restaurant consultants scan the business practices not only for ways to make more money but to reduce risks like these. Read the excerpts below and check the full article. Afterward, consider if you should make an appointment with one of our experienced restaurant counselors at Destination Restaurant Consulting.

Here’s an article on Mario Batali’s restaurants in NYC from Kluger Healy LLC. I excerpted parts below so you can get an idea of the dangers many restaurant owners don’t even known they have. 

Last week, celebrity chef, Mario Batali, agreed to pay $5.25 million to settle a wage and hour litigation involving his restaurants in New York City. The settlement will end a class action lawsuit and establish a fund for over 1,000 captains, servers, waiters, bussers, back waiters, runners, barbacks and bartenders. The principal claim was that management deducted, from the tip pool, an amount equal to 4 to 5% of each shift’s wine and other beverage sales.
The Chef Batali settlement, which has received a great deal of media attention, demonstrates how vulnerable restaurants are to employment lawsuits and audits. In addition, while the publicity may empower employees to file claims against restaurants on their own, several plaintiff-side law firms – citing the Chef Batali settlement – have already begun trolling for new claimants.

And here’s a list of current common snafus with restaurateurs.

  • Sexual harassment and discrimination, combined with inadequate policies and complaint procedures
  • Impermissible wage deductions, especially relating to cash register shortages
  • Invalid tip credits and tip pooling arrangements
  • Improper charges or reimbursements relating to employee uniforms
  • Misclassification of the “exempt” status of managers, resulting in liability for overtime compensation
  • Insufficient meal breaks, particularly as to minors
  • Inappropriate use of employer-provided meals to offset wages
  • Discriminatory hiring practices as to servers and other front-of-the-house employees


Introducing Destination Restaurant Consulting

27 Feb

Rather than relying on local traffic wouldn’t you prefer to have a “Destination”
restaurant that people will drive for 20, 30 minutes or more to visit?

Destination Restaurant Consulting offers a variety of services for restaurants with the overall goal of enhancing the bottom line.
In addition to helping create signature dishes, facility design, staff training,
marketing, and branding we also are experts in backroom operations such as
cost control, vendor negotiations, 
policies, secret shoppers, and assisting the owner(s) with re-dedicatingthemselves to their vision or  even creating an exit strategy.  Rather than hourly rates, we provide value-based consulting services based on the goals you want us to achieve.  We offer our services nationwide.

The restaurant business is incredibly tough and constantly evolving.  Many independent restaurants that are able to survive for awhile offering unremarkable food and service make themselves vulnerable to eventually being killed by new competition opening nearby.

Contact Destination Restaurant Consulting for a FREE, NO OBLIGATION evaluation [info@destinationrestaurantconsulting.com].  Our value-based consulting services offer an excellent return on your investment. Perhaps our consultants can offer a few tweaks that are easily implemented but yield big profits over a year.  Or perhaps your restaurant requires a turnaround similar to those shown on “Kitchen Nightmares”.  Either way, we would like an opportunity to help you meet your goals and dreams!

Principles of Scheduling – Restaurants

26 Feb

It amazes me how little restaurant managers focus on how many people they need to staff for a shift. I hear things like “I’m good tonight. I have Jose and Ramon. They’re awesome line cooks!” Perhaps they are, but what does that mean mathematically? Every management decision should have a mathematical formula in order to accurately test it’s effectiveness. Otherwise, you’re scheduling by the seat of your pants.

Questions that need to be answered are:
1. How many dishes can each line cook produce in an hour, comfortably and running? [My experience is a veteran can produce 25 plates if he is properly set up, and 30 running. A newby will be 5-10 plates per hour behind that.]

2. How many plates are ordered in an hour? [This varies by shift and it’s vital to scheduling to know your range on a Saturday lunch or dinner or a Wednesday night. If you’re manager doesn’t know, he/she shouldn’t be doing the scheduling.] Use your POS, it’s there to help you access easily the business metrics you’ll need to be successful.

3. Now you can determine how many line cooks you need. Note I did not mention support personnel like the dishwasher or the prep cook. The line cooks are producing your sales. They are your front line just as your waiters are in the front of the house. For waiters, 15 customers per hour is the norm, 20 if you have a star waiter and 10 if you have a newby or underperformer.

So if I have Jose and Ramon – both veterans – pumping out 25-30 dinners per hour I can do 50-60 dinners per hour before I the km has to jump in. If my range is 80-100 dinners per hour, the km is going to be buried on the line along with Jose and Ramon, the great chefs. Pray nothing goes wrong. But, wait, the expediter is overwhelmed as is the foodrunner. Complaints come in that the fries are cold and you know it’s because they sat too long in the window. What do you do now? Learn how to schedule!

At your disposal, you have Betty, a trainee, who can do 15 plates an hour. Bring in another veteran, Jaime, for the rush hours and you have 90 plates an hour you can do comfortably. The km has enough staff to be able to…manage.

A few more notes:
Of course, 30 plates per hour doesn’t mean your cook gets one dish ordered every two minutes. Orders come in waves, not piecemeal. As much as 80% of an hour’s business can come in a 20 minute span. A 90-plate hour could see a wave of 72 plates in 20 minutes. More often you’ll see 50-60 in a third of an hour where you sold 90 plates. Ticket times will drag and things will go wrong if you’re not properly staffed and your km doesn’t know where he needs to be.

Productivity formula. Since your line is the largest contingent of labor – and usually make the higher pay rates – it is important to track productivity. Example: If you averaged 80 plates an hour all night long, and your average plate costs $15, your 4 line cooks produced 20 plates per hour, or $300. If they earn $14 an hour, they are producing at a labor cost of 4.67%, better than 20 times their pay rate. With support personnel added in as well as opening and closing duties (that time before anything is rung up and after the last sale; set-up and break-down), labor will be in the goal range of 10-14% of food labor to food sales. That’s a homerun in the industry.

Panic scheduling. Take time to do your math. It’s very easy to panic after a rocky shift and start telling your staff to come in extra here and here. Before you know it, productivity plummets and you’re into overtime. If you’ve done your scheduling accurately – mathematically – your worst case scenario is that you may need ONE more person in a specific spot if you’re expecting a higher volume.

Rule of thumb regarding where to add. If the km is stuck in a position for more than 1 hour, you’ll want to consider one more staffer for the rush in the position the km got stuck in. Keep in mind, we are talking about high volume restaurants that do 80-100 plates or more per hour.

Where does the km jump in? Answer, exactly where he must. In a multi-station line like Shooters [char-grill, flat grill, fryer, saute, pantry], the hot spot for the km is the WHEEL. That is, the spot between the grill cook and the fry cook. From this vantage point, he can see what is dragging on each ticket and make sure the dishes are being plated close together in time. The worst enemy of an expediter or food runner is an incomplete order. Those fries and that rice can get cold fast when they are waiting for a missing item that was not fired on time. By jumping into the wheel position, the km solves that problem by keeping the cooks focused on finishing orders.

Mexican food is different, being already pre-prepped and needing assembly more than anything. There the LEAD position is where the manager can quicken up the service. That is, the plates are getting started much quicker and, since melting cheese or heating up the plate is the main action, they are finished a lot sooner. In both cases, Mexican and standard American fare, the km has to also keep an eye on his food runners and expediters. They can be overwhelmed very quickly.

The manager has to surf the wave, so to speak. In my own restaurant, I was usually the only manager, so I would back up the bussers and waiters when the waves would come in, then bail the bartender out, then run into the kitchen in time to get them in mass production mode. Once that wave was on its way to finishing a good dining experience, there was normally a new wave right behind it as the waiting list was liquidated. Run to Bussers/Servers, then Bartenders, then Cook Line, then Foodrunners, then Repeat. So getting stuck in any one position is an epic failure of management.

So we solved our problem with Jose (25-30 plates per hour) and Ramon (25-30 plates) by adding Betty (15 plates) and Jaime (25-30 plates). We can now do 90-105 plates per hour with the kitchen manager filling in for a few minutes during the large waves. We’ve met our goal of 10-14% labor while keeping the customers happy.

If for some reason we can only find Jose and Ramon to work, then we know we are limited to what we can do per hour to 50-60 plates with the km helping stretch that a bit more. Our only salvation if we get a strong dinner pop is to go on a wait at the door. That is a last resort and it is a failure of scheduling.

Front of House scheduling. These principles hold true for waiters and waitresses as well. Their number is 15 per hour, but remember that Sally might only tend to 10 customers well per hour while Jane the speed demon can handle 20. Outside the printable areas of my schedule, I write the capacity of the server by tables they can handle. A weak server like Sally might have 4 tables, Jane might have 8. So the manager can draw the map accordingly. Each shift has a number limit of tables that can be open for seating.

Rule #1 of Liquor Controls – Know thy optimum pour cost (plus 10 more)

26 Feb

A post on LinkedIn.Com asks for advice on controlling liquor costs at a Country Club. There were a lot of good suggestions. The one thing that stands out is knowing what your overall, zero-waste pour cost is based on your purchase prices and sell prices. Call this the “Perfect World” PC (pour cost). Here’s the 1-2-3 on this angle:
1. Menu Costing for liquors. Keep an accurate PC on each item (Absolut, Jose Cuervo, etc.). Absolut costs you  $30 per bottle or $0.89 an ounce. You sell one ounce in an Absolut and Soda for $6 so your PC on Abs/Soda is 14.83%. An Absolut Martini requires 2 ounces of Absolut and is sold for $8 thus $1.78 divided by 8 is 22.2%. Your menu costing spreadsheet will give you a % for each item you sell. Now if you plug those percentages into a P-Mix spreadsheet (a spreadsheet listing item by item sales), you will get a Perfect World PC. This takes a lot of work to set up but is easy after the first few cycles.
Here are a few examples of why this is important. Bar Manager X comes from a local bar where the owners were happy with a 25% PC or lower. When he turns a 23%PC he gets excited. However the Perfect World PC for his bar is 16% and Bartender Y finds that out and shows the GM who promptly demotes Bar Manager X and promotes Bar Manager Y. PC drops from 23% to 20%. The GM is happy for a time, then after a few months starts grumbling about the extra 4% that is being wasted.

2. Proper Discounts and Comps Management. Let’s assume Bar Manager Y’s first problem is that he didn’t account correctly for discounts in his costing. Even A-list locations are doing discounts (Happy Hour) and comps (Groupons, coupons, etc.) in this economy. Often discrepancies are caused by this necessary nuisance. What affects liquor costs most are free drinks and % discounts. First of all, the comped drink, whether it’s for the owner or a good regular customer or ladies’ night, has to be rung up. Wasted drinks are recorded on a waste tab. Employees will often try to blur this line but they must be trained that every measure of bar products is recorded.

Two-for-one Happy Hour. In tracking this is easy (take 2 measures out of inventory instead of 1) but it’s a little trickier in menu costing. In my opinion, the following is the easiest way to convert Happy Hour to a Menu Costing.
Month of July, 2011
Absolut Cocktails (shot and mix). 278 units. 278 times 6 [$1,668.00] times14.83% [$247.36]
HH Absolut Cocktails. 79 units. 158 units times 3 [$474.00] times 29.66% [$140.59]
Set this up on an Excel spreadsheet and see what your real PC is for the month. You might find that some of your specials are untenable. Imagine having a 2-for-1 on Absolut Martinis; 44.4% PC anyone?
3. Portion Tracking. This is what BevInCo and other inventory control companies do; track weekly by units each of your liquors. This doesn’t supplant a dollar amount inventory per se but I do have a spreadsheet that also serves as inventory. Time-challenged bar managers can pick their top sellers and focus just on them or they can go all the way and track their inventories weekly unit by unit. The spreadsheet will tell you how many units you USED versus how many you SOLD. Discrepancies can be for over-pouring, not ringing up wasted or comped drinks, or straight theft. I can’t run an operation without portion tracking. It’s vitally important because it points you right to where your problem is. People don’t steal 2% or 4%, they steal bottles, shots, beers, etc. Back in the 80s everything was by percentage; that is, managers saw percentages as the final frontier of bar metrics at the time. Now with Excel spreadsheets and even more fancy software, we can track each unit of liquor we sell.
To conclude our Bar Manager Y fiction, Y realizes his Perfect World PC was 18% and, due to effective tracking, has cut down the PC to 19%. He devises a whole new round of purchasing techniques (a.k.a. case deals) to get that even lower.

Now that you’re set up to make money, don’t forget that these points are just as important:
4. Limited access to liquor. While a slow bar might fit all the merchandise up front, most bars need a locked liquor closet or room. A requisition sheet should be on a clipboard and must be enforced. Anything coming out of the closet must be noted and logged with the date. This is extremely important that your kitchen managers follow it, too. Bottles of wine, beer for the beer batter, and, if you’re like me and cook with Tequila, that all has to be accounted for on the req sheet.

5. Look at Daily P-Mixes. POS systems can spit out a lot of useful business metrics. The bar manager needs to look at the daily P-mixes on a, well, daily basis. When the bottle of Frida Kahlo Reposado Tequila takes a hit it should jump out at the astute bar manager, who consults his P-Mix for the recent days. Long story short; know what it is that you are selling.
6. Measure each pour. Everything should be measured. There was a little dispute between jiggers and control pourers (that measure 1 ounce). The most important thing is that the bartenders constantly see a frame of reference. When I was pouring 1,000+ drinks a night I used a jigger but did “abbreviate” my measuring when the waves of orders came in. Often I would toss the jigger down while I grabbed another bottle or a glass and finish the second half of the measure with a free pour. But since I used the jigger for each drink I had the frame of reference of seeing the correct pour over and over. On the other hand, I’ve seen bartenders using the control pourer and simply adding more liquor; a floater or drag pour. Optimum portion integrity is almost impossible without some good, old-fashioned supervision. I recommend using a jigger or a control pourer and giving warnings to bartenders who don’t use them or misuse them.

7. Cameras! Nowadays the cost of installing a camera system is less than it used to be. They are a pivotal tool in holding everyone accountable.

8. Recipe Standards. I almost forgot this one. Don’t assume everyone knows how to make a Rum Runner or Martini. The Bar Manager must see that there is a House Recipe for all major cocktails. These should be reviewed during bartender meetings and a notebook copy should be kept at each bar. These days you can compile one quickly by copying and pasting recipes off the Internet and tweaking them based on the products you have and your profit goals.

9. Pars/Inventory Management. A successor of mine has an average $4,000 more in liquor inventory in the store room than I did. While I took advantage of bulk buys to lower bottle prices, I still managed a lower inventory and that is a good thing. Too much in the store room is an added risk. Keep in mind your business’s owner will appreciate a little more money in the bank over stuff sitting on the shelves. Also, avoid buying turkeys like Espresso-Cherry-Peanut Butter Flavored Schnapps. You don’t owe it to anybody to buy their bad ideas.

10. Light Night Promotions, etc. Donna had mentioned this as a goal. I was tempted in my own restaurant to do late night promotions but a study of the area around me showed there really wasn’t a market for it. Live music on Friday and Saturday has kept the crowd a little longer but it’s still over by 11:30 pm. And always do a menu costing of the discounted promo items.
11. Labor. Don’t forget labor costs. Most bar managers have to do the schedule also. For some pointers on that, I have a blog post titled Principles of Scheduling. The idea is measuring how much each bartender can produce, looking at your hourly sales figures, and making a mathematically inspired decision to determine how many people you need on hand per hour.

That’s my bar manager guidebook I guess. Good luck.

Checklist for Planning a Menu

26 Feb

Here’s a list of considerations to review for each dish as they come up for evaluation at that critical point when it’s time to evolve the menu. So often managers forget to do one or more of these diligences when they are redesigning their menu. The menu is the key tool in driving sales and profits.

1) Menu Costing.
Any item that is being evaluated for either continuing, removing, replacing, or – in the case of new items – adding, a costing needs to be performed. This will help clarify the recipe and whether the item is economically viable.
2) Price Points.
Considering what the customer is willing to pay is integral to any successful food service business. Ask how each item will serve the public and how feasible it is to meet THEIR price point.
3) Ingredient Consolidation.
One of the most common errors in menu planning is the one-ingredient one-dish dilemma. Your sales are great but you’re constantly in danger of serving up some slimy ingredients because several of your slow movers have the one-dish problem. Your sales goals might be getting met but you have to deal with an irate customer three times a month because they bit into something rancid. Make sure your ingredients are used enough and in enough dishes.
4) POS Report on item sales.
Discontinuing or keeping a dish should never be determined emotionally. It is a question of numbers. Items that are lagging way behind in sales are best discontinued in favor of items that have a reasonable chance to sell. The objective is to drive sales higher by eliminating frogs and replacing them with potential princes.
5) Logistics.
Dishes that involve multiple steps to prepare better be driving sales higher. Difficult-to-produce items have to sell better than easier items to prepare. If it’s a pain in the butt and doesn’t pay a salary, kill it. The inverse is that if a plate is easy to produce and guaranteed popular, throw it onto the menu already.
6) Is this item a good idea?
What is our purpose with this item? What customer profile type is going to order this item? In short, this is the consideration of the public awareness of your brand. Included in this consideration is how one is going to sell the dish on the menu. Does it have a marketing hook?

Last, I’ve always found limiting the printed menu as a good idea while saving dishes with uncertain sales futures as frequent guests on the Specials Board. Specials are a good way of letting the clientele base know what kind of creative energy you have behind your brand.

Tips On Team Building

26 Feb

Team building is probably the most challenging part of taking over or starting a restaurant. Most of the key players in a restaurant management team come from different backgrounds. Each has a distinct personality and management style. Some will work out. Many will not work out. What is, then, the first step of team-building?

1. Vision Statement. In my experience, I’ve started with a vision statement which states the goals and the optimum behavior for each person. These points are solely about how members of the organization are to deal with their tasks and with one another; e.g. transparency, communication, respect, etc. It’s very important that the team take this seriously and set time aside each meeting to review it and update it if necessary. It’s shocking how little managers pay attention to stated goals. Enforcing the vision statement requires constant, daily action. Often you will have to correct a manager 5 minutes after the meeting on the vision statement has ended. Be vigilant. it takes time and perseverance before the team is truly “on the same page”.

2. Critical Path goals for all and for each manager. Remind the managers often that their goals and how well they achieve them are how they will be evaluated. It’s not about loyalty to one clique within the team. No, the managers must be acutely aware that where they stand with their goals is where they stand with the company. Just as with the vision statement, this is a source of constant review and evaluation. Critical Path goals might include hitting a certain labor %, or coming up with menu proposals, etc. These goals should not be open ended. They aren’t suggestions and they NEED a due date attached to them. Here is where you divide the work load and give team members a clear target to reach.

3. Positive Reinforcement. Your team members will be less likely to do what you want if you never complement them for doing what you want. A psychiatrist friend once told me that his youth would have been a lot better had his parents used the same training program on him that they used on the family dog. Positive actions should get positive responses, just like training a dog. We are natural beings and we expect and deserve a pat on the back when me meet our goals. I have worked in organizations where not one positive thing was said, ever, by top management. A glowing email from a big client praising my handling of their Christmas party was met with complete silence from upper echelon of corporate managers. I know how unconnected to the team that made me feel. Thus I know how a void of positive reinforcement can sabotage a team. Also included in this principle is that positives should precede the negatives when discussing the issues at a managers’ meeting. Furthermore, false positives are as useful as no positives. “You did good getting the food out. Now, if we could just get the pantry guy to wear gloves….” As Jesus might say, let your positives be positives and your negatives be negatives. Pointing out positives is the first thing that a lead manager does in a meeting. If you don’t complement the team on the positive things they are accomplishing, they will be less likely to continue doing them.

4. Meetings; frequent, formal and informal. A weekly managers’ meeting is essential to building a team. Managers must be trained to write down issues and ideas they have so as to bring them up at the managers’ meeting. Managers must also be trained to take notes. It never ceases to amaze me when I see managers without a pen and paper in hand during an important meeting. They should be told to take notes or else they will be dismissed from the meeting. The restaurant industry has a lot of managers who resist order in an organization. They must be retrained or removed. If meetings are to build the team, then serious team members will have something to bring to the table, and be prepared to take away the management goals by writing them down. Each shift should start with an informal managers’ meeting. With the fast pace of change (policy changes, new promotions, schedule changes, etc.) in a restaurant, managers need to be on top more than ever and communicate more clearly than ever before. Another point about meeting is the personal one-on-one. I would like to improve on this myself; taking that extra step to go for coffee, lunch, or even a drink with a team member to discuss pressing issues. Leaving the confines of the workplace is like meeting outside the walls of the fortress. The team member is less likely to feel the karma of the daily grind. [Obviously, going for a drink does not mean getting drunk with them. Limit one.] It’s important to meet the team member on a turf where they are comfortable.

5. Management Evaluations. Every manager needs to know what they are doing right and what they are doing wrong, and why. Lead managers tend to skirt this responsibility to a point where the manager is not aware that a  problem is developing that could hurt their chances of staying at the company. This is why so many managers complain of being “blindsided”; being fired without ever being written up. Coaching and Training Logs and Employee Warnings are for managers, too. I like the C & T Log because it establishes that a conversation occurred regarding critical training points. When those points are not followed, an employee warning is next. Then dismissal. Management Evaluations are a way to communicate positives and negatives of a manager’s performance. They are not easy for the supervisor who has to point out the bad qualities of the manager that need to change, but they are literally a lifeline to job security for the team member. As always with a management evaluation, cite the problem action, not the person. Be specific when bringing up a critique, and use examples. All evaluations must be carefully measured. Keep in mind, letting go of a member of the team who is underperforming or being insubordinate is necessary in building the right team.

6. Clear Communication Channels. A lot of misunderstandings can arise in a team through email. Certain guidelines are needed to keep email communications from developing into “email chatter”. What is email chatter? Well, it’s when everyone chimes in, often without fully reading the initial email at the top of the thread. Emails can degenerate quickly into consequential misunderstandings and hostile fights between team members. Points for email are no trivial or self-serving emails (the email has to convey a significant new point), no using of emails to change schedules or meeting times at the last minute, and no emails for some to see and not others. Another clear communication channel is the good old Log Book, the long red daily diary where managers can write down important points; employee X no show, reservation for 50 at 8 pm, our new House Tequila is Jimador Blanco, etc. What belongs in the Log Book is clearly stated. Even if an email was sent, the notes need to be written down in the Log. This is an opportunity to log whether there were liquor incidents; e.g. cut off customer X at 8 pm, called a taxi for him or “No liquor incident tonight”.

7. Careful Team Planning. Last, the movement forward comes through tapping your team’s resources and planning new strategies together. Guidelines for changes such as menu makeovers are to be carefully done with team spirit. For an example of planning menu changes, click here. In each planning stage, everyone is included in the process not to please their egos but to do the best job the team can do. It’s human nature to be ego-centered and not team-centered.

8. Not “I” or “We” but “The Company”. Your vision statement puts the company first before the “I”, or even the “we”. The key to being a good team-builder is to make tangible the concept that the team exists for the company above all. Then it will be easier to move forward as a single coherent team to be as successful as you possibly can be.

Food Cost Fallacies and their costs

26 Feb

My organization redid their menu 2 months ago without doing a menu costing. It is my understanding that it has been a year or more since a menu costing was done. I found one set of menu costing files on the computer that was either old or erroneous from the start. Two crabcakes with garnish for $2.56? When was that? 1986?

So I sat down surrounded by a month’s worth of invoices and calculated each ounce of protein, garnish, dressing, etc. What I found was a wide range; spinach dip was 9% while Seafood Platter was 40%. The award winner was the add Mahi to your salad cost, 62%! Luckily the salad cost is 10%, but that’s a blend of 36%, way too high. Our goal is a true overall blend of 25% food cost.
And that’s not gonna happen. You see, if everything were equal, being the same price, the menu came in at a blend of 23%. However, there is no way you’ll ever see 23% food cost. Reasons?
1. Spinach Dip is $8, Seafood Platter is $24. You would have to sell 3 times as many spinach dips as seafood platters to offset that 40% cost, bringing it down to 25%. But, no, the SP sells about the same as the SD. SO you’re true blend is:
Spinach Dip —$0.91 —-$8.00
Seafood Plttr–$9.71—–$24.00
Ok, so your combined cost is 33.2%.
2. It gets worse. We mis-stated the true price of the spinach dip. While appetizers are in the 10-20% food cost range, we have a Happy Hour from 3 to 7 Monday-Friday when they’re 30% off. Approximately one THIRD of all apps are sold during that time. Take $8 and $8 and add it to $5.60, then divide by three. Answer; 21.60 divided by 3 = $7.20 true price of a spinach dip. [Note that the POS system rings up the 30% off price rather than backing it out as a discount.]
Thus we now have:
$10.62 divided by $31.20, a new blend of 34.0%. OK, that didn’t kill us, but you can see how the sales mix affects our food cost.
3. Without going into too much detail, the register’s P-mix (sales mix) shows that a lot of these high food cost items are in the top sellers. That shouldn’t surprise menu planners as the highest cost items are the most expensive; it takes two burgers to equal a Seafood Platter sale.
Food cost tracking. It is imperative that you know the food cost of each item on your menu, update it regularly (every 3 months at least), and that you plug in those numbers to give you your planned food cost. The goal of the kitchen manager is to get as close to that figure as possible. Each month do a spreadsheet of what you sold, item by item, multiplying it by the food cost (cost of goods) to get your true food cost. Do this when you calculate your inventory at month’s end. For example, you find your food cost should be 28.6%, but due to waste and other factors your food cost runs 30.2%. The difference – 1.6% – is your waste percentage. A kitchen manager’s bonus or lack thereof should depend on it. [Note to owners and admin folks: Never let kitchen managers do inventory unsupervised! Have your accountant or your mother-in-law double check their counting.]

Summary of food cost fallacies:
Lazy assumptions or “ballparking”. Baseball managers don’t use that logic and neither should a kitchen manager.
My $8 10%COG appetizer is going to offset my $24 40%COG dinner. Nope. You’d have to sell 3-to-one to get to a 25% blend. Then you’d still see your bottom line shrink when, oops, the waitress meant to order a Seafood Salad.
Wishful thinking. I know you feel you’re going to find that breakthrough price reduction to “make everything work out” in your P+L but that’s wrong. Be realistic.
Consider every angle. Many good ideas, mine too, have been found wanting because I and other managers failed to take something into consideration, usually an overlooked cost. My article on saving money with ketchup was a good example. Before making a change that will affect your costs and your staff’s mental health, ask yourself, what might the unintended consequences be.

No problems. Only solutions.
It can be a hair-raising experience for a kitchen manager to realize after a menu costing has been entered into the P-mix to find his goal of 25% is an impossible dream. The first positive point is that he now knows what his true best target is. The first part of getting well is knowing how sick one is in the first place. You’d be surprised how many managers have lost their jobs because they couldn’t attain food costs that no one in the organization knew were impossible! Once the cat is out of the bag, you can get to work.

Clearly the goal is to be able to blend the higher cost items with the lower cost ones to attain a 25% food cost. In order to do that with our Spin Dip/Seafood Platter axis, we’ll have to bring down the cost of the platter/spin dip 9%. [Note: I’m using these two examples because together they show the cost dynamic of the whole menu.]

Spinach Dip —$0.91 —-$7.20–12.6%
Seafood Plttr–$9.71—–$24.00–40%
9% represents $3.06 that we need to cut from the cost of these two dishes. Since the dip costs 91 cents in all, I suggest cutting something on the Seafood Platter. The SP consists of a 7 ounce Mahi fillet ($4.33), a 3 ounce crab cake ($1.57), 4 shrimp ($1.94), 4 scallops ($0.88), rice and veggies ($0.75), sauce/lemon/parsley-paprika garnish ($0.24). Be careful about taking something off the plate. My first thought was to take off the Mahi or drastically reduce that while stealing a shrimp and a scallop away. Be careful. The customer may have a negative response, usually by taking 100% of their money elsewhere. I think the popularity of the dish is in its value and variety. Thus, I hesitate to take anything off of the plate. So here’s what I recommend and why…
The fresh Mahi is too expensive for our price range. Recently we went to fresh fish. The previous chef was buying frozen, pre-portioned Mahi, Tilapia, Salmon, and Grouper. The response to the Grouper and Tilapia were very negative while the Salmon and Mahi got almost no complaints. Grouper was the most returned item. But Mahi freezes well. The price for IQF frozen Mahi portions is currently $6.26 per lb. “Planks” or filleted Mahi frozen with the skin on is $4.99. With the yield on fresh Mahi, we are paying $9.90 per lb. I recommend we use the plank Mahi, cut them into 5 oz portions to reduce the Mahi cost to $1.56 on the Seafood Platter plate. That reduces our cost $2.76, which brings us only 30 cents away from our goal by only taking 2 ounces of fish off the plate. If the fillet is cut correctly, butterflying it to cook faster and cover more area, the change is nearly invisible to the customer. Reducing the shrimp and scallops by one each saves $0.70 or $0.48 for one shrimp and $0.22 for one scallop. You have 40 cents to work towards increasing the rice and vegetable portions to make the seafood stand out more on the plate [Note: By this I mean, using the fillers to raise the crabcake, Mahi, and shellfish higher on the plate. When the center plate items are closer to the customers eyes, even if it’s an inch or two, they look much bigger. We’ve been getting compliments for increasing portions while in many cases we’ve done the opposite. In the Fish and Chips, for example, we stack the fish on the fries, making it look like more. Think vertically…]

So I recommend going with a reduced price Mahi portion at 5 ounces, reducing by one shrimp and one scallop, and beefing up the accompaniments by 3 ounces to make up the weight differential. So our $9.71 albatross is now a manageable $6.25!

The new cost is a cool 26%. Can you do any better? Yes!
Mahi is a commodity fish harvested in November and December. You can sign a deal with your purveyor (for this I prefer Cheney Brothers if you’re in Florida) in November to purchase your yearly allotment from them. They will hold the winter commodity price all year long. That’s a range of $3 to $4 per lb. You can sell that all day long.
Update: One last point here. Using a “blend” of costs to reach your goal is really a last resort. Notice how we brought the cost of the Seafood Platter in line with our 25% goal for EACH item. That won’t be as easy with the Prime Ribs, the Babyback Ribs, and other high-cost dishes. In the event it’s just going to be a high-cost item, I recommend taking it off the menu if it isn’t helping drive sales. 
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