Back to Food, Beverage and Labor Basics!

Back to Food, Beverage & Labor Basics

            A conversation with a client the other day reminded me how many independent operators may not have adequate time to review their controllable costs on a regular basis.  The client mentioned how their margins were shrinking so I asked when was your last review of the three basics being food, beverage and labor costs.  Their response floored me, they said “Over eighteen months ago”, to which I replied “that’s your answer right there, it’s an ongoing thing and requires timely reviews.” 

            Many operators, especially independents, are time-crunched just as many consumers who commonly seek out food service operators who can provide the convenience to recapture some of that lost time.  While first the phone, then online and currently “app” style ordering helps the consumer how will the operator provide that speed without the appropriate infrastructure within their establishment?  We’ll take a quick overview of options for today’s operators to address that “need for speed” from consumers while they tend to their bottom line as well.

            Those of us currently in the industry, or providing services to it, understand how little time operators have to attend to the necessary functions of their business and I’m alarmed at how many don’t perform a “hard count” inventory on a monthly basis.  Go back to accounting 101 and your text book will outline why this is essential from incorrect ordering levels to a mistake in purchasing and yes, to shrinkage all may be detected from this monthly exercise. This of course applies to both food and especially adult beverages, as when these go miss-counted or “missing” it’s not only the cost of the item that’s lost but also the potential “contribution margin” each item represents as part of your sales mix.

            To the point of inventory control, versus the time it requires, there are many back office software packages that presently offer a mix of “real time” auditing as menu items are sold and a physical entry method of inventory once it’s been counted.  Operators should investigate the different options available as these all come in varying degrees of capabilities at a variety of price points.  We suggest finding a basic platform that offers the opportunity to upgrade over time as management becomes more confident and knowledgeable in its’ use and applications. While inventory control is usually a function of management it could be a great teaching moment should you decide to have your line-staff become involved so they better understand how controlling costs will benefit the operation overall.

            Okay it’s 2018, not 1918 and I still walk into restaurants that use hand-written checks, WHY?  There’s only two reasons that come to mind immediately for why a restaurant wouldn’t use a POS system, first they’re attempting to “beat the tax man” OR they honestly are afraid or intimidated by anything technological.  We can’t help you on the former but as for the latter there are many advantages to using a POS as these perform far more functions than just ringing up a guest check.  Modern POS systems usually have a time-keeping component to track labor with many providing a real time cost of labor to assist operators in managing labor throughout the day.  The information these units can provide such as items sold, by day-part, weekly, monthly and so on can be used for food preparation and ordering decisions and how to manage the menu-mix as well.

            Another method of controlling dining room labor costs is to trim those bodies as well by moving to either a counter-service style such as quick-service or fast-casual restaurants.  These models allow the operator to tailor the amount of service labor necessary for the dining day-part. Industry observers (Financial Times, 6/30/18) suggest even fine-dining can shift to a “Fine-Fast” service model when appropriate perhaps for lunch or slow meal periods.  Should you prefer to begin a conversation on managing your costs, and dropping more to your bottom line, please reach out to us for an initial gratis consultation at www.themenuspring.com.