David Scott Peters made a bold statement when he began his session. The founder of TheRestaurantExpert.com and expert in restaurant systems addressed a room full of bar and restaurant owners and told them the following:
“I, as a front of house person who is food stupid, can run any one of your kitchens.”
He believes this because his systems are simple, measureable, applicable, repeatable and trainable. Or, if you prefer, SMART systems. TheRestaurantExpert.com provides a service that seeks to make the systems and tools used by successful chains available to independent operators.
Two of these tools are a budget and recipe costing cards. We’ll start as he did, with the budget. Take a look at your budget from last year and tell yourself the following: “If I did exactly what I did last year, this is how little I’m gonna make.” The best way to increase that number instead? Create a budget that either extends through the end of the year or is a 12-month plan, and do so today. Next, come up with reasonable, achievable goals for your managers. Next, realize that it’s possible your management will miss a goal. In that case, adjust the rest of your budget to give your managers new reachable goals.
You can’t have a solid budget without knowing one number: your prime cost. To calculate this number, add your total costs of goods and services (food and liquor in our industry) and total labor costs (raw labor, taxes, benefits and insurance). If you work a shift, include your salary. By the way, David Scott Peters would prefer it if you fired yourself to keep your costs down…and your managers would probably also love it. So how do you calculate your prime cost accurately? You do inventory. It all starts with doing inventory, something David highly doubts the majority of you are doing. Of course, finding your prime cost, creating a budget and coming up with goals doesn't mean much if you don’t know what the ideal prime cost is. If you’re doing $800,000 or more per year, the magic number is 55 percent.
Recipe costing cards are the second tool you need in order to succeed. The reasons these cards are so valuable are incredibly simple: they keep things consistent and help you with pricing because they allow you to measure your results. Menu engineering can reduce your food costs by a minimum of 3% to 7% if you have current accurate recipe costing cards. David has game-changing advice here: charge for your giveaways, those consumables your guests believe are free (and if you really aren't costing these out, they indeed are free). If you offer your guests bread, chips, salsa, ketchup, mustard, salt, pepper, etc. for free, calculate the cost. Take a beginning inventory of products that are giveaway, add purchases and subtract the ending inventory. Run an item-by-item sales mix report (PLU or velocity) and find out how many entrees were sold. Divide that number by use and add that onto all entrees. In short, charge for everything. Also, keep in mind that recipe costing cards are only useful if you add usable quantity (that percentage of an item that is actually usable) and perform routine yield tests.
David then moved onto menu engineering.
“The unfortunate reality is for many of us, when we opened our business, we spent all this time and money on architectural plans, uniforms... We spent time with Sysco, US Foods, we picked food… We did all these things, got two weeks before [our] open and said, ‘Oh crap – I need a menu. Oh, let’s just pull one out of the air.’”
The menu, as the restaurant systems expert pointed out several times, is the heart of your business. To keep your business’ heart healthy, avoid the following mistakes: using ellipses leading to a dollar sign and a bold price, not being able to put your ego aside and having your logo watermarked in the background, utilizing less than 50% white space, being “cute” and using more than three fonts and having more than 35 menu items. Now, in terms of that magic number of 35 items, don’t rush to hack your menu down immediately. Look at your menu, analyze it and create a plan to get down to 35 items over time. You should be changing your menu throughout the year so stay on top of current trends, don’t offer your target demographic items they don’t want and use odd-cent pricing as it makes it more difficult for your guests to detect price increases.
Menu engineering includes using descriptions of menu items rather than simple lists of ingredients. As they say, you sell the sizzle, not the steak. Eye movement is another key factor to menu engineering. For a single-panel menu, you want your guests’ eyes to start at the center and move upward, so place the items you really want to sell within that space. For a two-panel menu, you want the eyes to move from the upper left corner and drop on an angle to the center of the edge of the right side, with the items you want to sell the most placed above that imaginary line. For those using a three-panel menu, the center is wasted space so place the sides there and direct the eyes upward and across the three panels. Also, don’t place items in a list featuring sequential pricing and know that in a list of 10 items, the first, second and last will sell the best. Finally, a great way to control your food costs comes down to portion control. To keep portions consistent, use scales (make certain to have enough of them and keep them calibrated), pre-portioned bags, properly sized ladles, measuring containers and standard vessels. You should also monitor your garbage cans. Is the food inside them bad or is good food that your guests simply couldn’t finish? If it’s the latter, your portions are too large and that means so are your food costs.
There you have it! Maximize your menu, embrace doing inventory, learn to love the recipe costing card and create a budget with reachable goals. Oh, and aim for that 55% prime cost – don’t leave points on the table! You'll have the opportunity to hear fantastic speakers like David Scott Peters at the 2016 Nightclub & Bar Convention and Trade Show so grab your tickets and book your hotel today!