You Must Forecast Accurately How Much You Are Going To Sell

Advanced planning is an important step in any business strategy. Being able to predict within 5 percent of what you are going to sell can improve the quality of your decisions significantly. When it comes to food-cost control, it’s necessary to estimate what and how much you are going to sell of each item listed on your menu. You don’t want to run out of something, and you don’t want to be left with excessive leftovers and waste.

Knowing what you are going to sell enables you to be better prepared. Armed with an estimate of the number of covers to be served, your sales-mix sales history is used to forecast how many of each menu item is likely to be sold. You then base the purchases and preparation forecast on those numbers so that you do not run out of an item in the middle of a meal period. At the same time the process will keep you from preparing too much and finishing the day with too many leftovers that cannot be sold a second day.

Remember: Being forced to work with leftovers will result in higher food costs and impose restrictions on your menu offerings. Early run-outs not only disappoint customers but can also disrupt the smooth production on the cooking line because demand may switch to a station that is not prepared for the additional volume.

Your chef or kitchen manager will determine the amount of food to prepare based on the projected number of customers that are expected at a particular time of day or day of the week. Employees must be scheduled according to the number of customers expected.

If your forecasts are off by more than 5 percent, note your actual sales and adjust upward or downward in the future. Managers and chefs come and go, so it is imperative that you keep good records of your sales history in order to forecast accurately.

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Establishing Standards In Your Restaurant

A STANDARD IS A GOAL or expected level of performance that becomes the benchmark you will compare with the actual performance. It’s an ideal condition one wishes to attain and a sense of where one seeks to be in relation to where one actually is at a point in time. The process of establishing realistic productivity standards begins with assembling data on productivity, which requires planning on the part of management.

       
Before attempting to develop any standard of employee performance or productivity, you must possess a clear and detailed perspective of the operation. That involves defining quality standards for food and beverages, the level of customer service, and the demographics of the customer base.
           
Once the products and services to be offered have been described, it will become apparent which jobs need to be filled and the skill levels required. The regular assignment of work can be ascertained and schedules developed. You must conduct that analysis for your own operation; industry standards or those of a competitor will not work for your operation. Review schedules and hours worked for each employee-job category. Break down the information by days of the week and meal periods. Observe employees on the job and grade their productive efforts throughout their shift.
           
Observation of workers in action will enable you to identify the employees with the best and poorest productivity. The most productive employees serve as the standard of productivity for that position. An efficient measurement must be made of both the amount of work that must be accomplished within a time frame and the number of employees who are required to accomplish that work at the minimum qualitative level of performance. Those activity levels become the standards of performance for manpower requirements for each job classification.
           
Ask such questions as, “What makes an efficient cook or dishwasher?” “What is it that makes Sue a more productive cook than Bill?” “How many covers can Tom handle before he needs help?” In essence, what you’re conducting is a form of work analysis utilized by human-resource engineers to determine the number of workers needed at the different levels of business activity. The number required will depend on the quantitative output and the qualitative standards expected.
           
That information serves both as a basis for writing job descriptions and establishing staffing guidelines. It also may reveal inefficiencies and opportunities for including labor saving equipment, present a better way to arrange the work center, identify time-saving equipment and utensils, and even target those tasks that could be accomplished by another employee or job category.
           
Standards must be established based on actual on-the-job conditions and not measurements in a controlled environment. Each standard must be general enough to account for the varying abilities of employees and actual circumstances of the task and work environment.

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The Successful Manager

The success of a restaurant manager depends greatly on the willingness to adopt a leadership philosophy that calls for a belief in people...their worth, their abilities, and their growth potential. This type of philosophy will build a strong foundation for building sound relationships with your people...relationships that will lead to personal growth and success for them, you, and your restaurant.

Four Faces Of Food Cost

Embrace food cost not as a single percentage, but from four different perspectives.

In order to appreciate the full value of food-cost control, you must examine it from “the four faces of food cost”. The four faces are maximum allowable, actual, potential, and standard.

Assume you’re opening a new restaurant and preparing a pro-forma income statement. What percentage should you run? The answer to that question is partially answered by the calculation of the Maximum allowable food-cost percentage, or MFC.

The MFC is the high-water mark for your food cost; if it exceeds the percentage that percentage of sales, your profit will be diminished by that percentage amount. Remember: Each operation will have its own unique MFC because it has unique expenses and sales.

The second food cost is the percentage that appears on your monthly income statement. It is a reflection of the food cost you actually ran during that accounting period, thus the name Actual Food cost percentage, or AFC.

The third perspective is referred to as potential food cost percentage. It is also called Theoretical food cost percentage because it is calculated by dividing the total or potential food cost by the total or potential food sales (PFC).

The fourth and final face of food cost answers the management question, “what should my food cost be at the end of the accounting period?” That percentage is referred to as the Standard Food Cost Percentage, or SFC. The SFC is compared to the AFC to assess the effectiveness of the food cost control during the accounting period. It is calculated by adding employee meals, and management allowances for unfavorable waste and quality control to the PFC percentage.

The four faces of food cost represent the highest food cost can rise and still return a minimum profit; what food cost percentage the operation actually incurred; the food cost percentage based on the menu-sales mix and zero waste; and what the food cost should be, given all known allowances for food consumed but not sold. Only then can you fully comprehend the true purpose and value of food-cost analysis.

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How To Sollve Problems In Your Restaurant

I began my consulting career focusing on helping restaurant owners solve day-to-day problems. Below are some techniques I found to be effective in rapidly solving problems.

• Focus on cause, not blame. The former provides an objective search, the latter provides emotionalism and recriminations. Don't seek vengeance.
• Problems usually DO NOT go away by themselves. Face the issue, and deal with it. Procrastination exacerbates problems and builds stress.
• Ask yourself immediately, "Is this important?" If the answer is "no," then live with it. Not all problems need to be fixed. (All of my cars have imperfections somewhere that don't merit my time to eliminate.)
• Look for comparisons. If a door isn't closing, look at other doors and determine if you can spot any distinctions. These will often lead you to the cause of the problem.
• Ask yourself "What's changed?" Virtually all new problems are caused by some change (else nothing would have gone wrong). Find out if the nature of a relationship has changed, something new has been installed, or someone made an alteration.
• Use only empirical evidence. Focus on what you can see and prove, not what you suspect or are told. Validate assumptions. ("Yes, she has been late each morning," or "No, we aren't having poor responses to the offer.")
• Be aware that to solve a problem you must remove its cause. Otherwise, you're adapting to it, which may be appropriate, as well. Putting additional air in a slow-leaking tire is adaptive, but plugging the leak (or replacing the tire) is corrective.
• Interim actions can buy you needed time. Covering a hole in the roof with a tarp is an interim adaptive action which saves the furniture until a permanent patch can be installed. (Asking someone to "sleep on it" and talk in the morning when you are both calmer is an interim action to create a better environment for reconciliation.)
• Make your process transparent. Let others know what you're doing and why. Unlike decision making, problem solving is basically an objective, logical pursuit and the more people sharing, the more positive suggestions and the less suspicion as to your motives. ("What do you mean by that?" is one of those emotionally pregnant accusations which often follow what was thought to be a rational suggestion but the intent of which was not shared.)
• Validate to ensure success. Test your thesis on paper (it's easy to turn buttons on a machine and reverse them, but far more difficult to take back what you've said to someone in error or confusion). After you take your corrective or adaptive action, check to ensure that the problem is either removed or accommodated successfully.

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Coaching

Whether your job training program uses on-the-job training or group training, or both, the most important component of your program is not the actual training, but what happens after the training is completed. Through coaching your employees and setting the right example, you can make their training stick.
        
So what is coaching? Coaching is a two-part process involving observation of employee performance and conversation between the manager and employee that focuses on job performance. The overall goals of the conversation are to evaluate work performance, and then encourage optimum work performance by either reinforcing good performance or confronting and redirecting poor performance. Coaching therefore provides employees with regular feedback and support about their job performance, and lets managers know exactly what their employees need to know.
 
If coaching employees is so beneficial, why do managers often avoid it? Following are some possible reasons:

• Lack of time
• Fear of confronting an employee with a performance concern
• Assumption that the employee already knows he or she is doing a good job
• Little experience either doing or observing coaching
• Assumption that the employee will ask questions when appropriate and does not need feedback

The first step of coaching is to observe employees doing their jobs. If the employee is doing the job well, don’t hesitate to tell the employee. Everyone likes to be told that they are doing a good job, so praise employees as often as you can. Work on catching your employees doing things right, and then use these steps:

1. Describe the specific action you are praising.
2. Explain the results or effects of the actions.
3. State your appreciation.
4. Ask the employees how they feel about doing a good job.
5. Say thank-you.
6. Write a letter of thanks and make sure a copy goes into the employee’s personnel file.

If there appears to be a problem with some aspect of the employee’s performance, answer the following questions before talking with the employee:

1. What is the difference between the employee’s performance level and the performance standard? Is it significant?
2. Is the performance standard realistic?
3. Does the employee know what is supposed to be done?
4. Does the employee understand why it is supposed to be done?
5. Does the employee know how it is supposed to be done?
6. Are there any hindrances to the employee’s performance that the employee can’t control, such as inadequate equipment?
7. Has the employee received feedback on this before or has this problem been ignored?

     
The next step is to confront, not criticize, the employee’s poor performance. Confronting is a positive process used to correct performance problems, gain the employee’s commitment to improvement, and maintain a constructive supervisor-employee relationship. Criticism, on the other hand, is a negative process that, instead of concentrating on performance, blames the employee personally for not doing a job properly. It tends to be general, rather than specific, in nature, and generates excuses, blaming of others, and guilt on the employee’s part. Managers who confront employees are more interested in helping them feel confident about improving future performance, rather than making them feel inadequate and guilty about past performance.
       
When confronting an employee with what is perceived to be a performance problem, follow these steps:

1. Speak in private with the employee without any interruptions or distractions. Make the atmosphere as relaxed and friendly as possible.
2. Explain the reason for the meeting and express in a calm manner your concern about the specific aspect of job performance you feel needs to be improved. Describe the job performance concern in behavioral terms and explain its effect. Also, explain that you have not made up your mind yet as to the cause of the performance problem.
3. Ask the employee for his or her thoughts and opinions, using the seven questions just listed as a starting point to get employee feedback.
4. If the employee is the cause of the performance problem, work on getting his or her agreement that the problem exists. Next, ask the employee for some solutions to the problem. Discuss together some possible solutions and mutually agree on a course of action and time frame. Ask the employee to restate what has been agreed upon to check on understanding. State your confidence in the employee’s ability to turn the situation around.
5. Lastly, schedule a follow-up meeting to check on progress.

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A Manager Must Be A Leader

An effective manager has the ability to build a diverse group of people into a highly functional team. Like a quarterback on a football team, a manager is the one who calls the plays. Each team member, in turn, fills a specific role. When all team members fulfill their assigned roles, everything comes together and the goal is reached. It's up to the quarterback/manager to see to it that all team members receive the proper assignment, know how to execute it, and are commited to the appropriate action. Another function of the manager is to hold each team member accountable, and to provide feedback.

Are you or your managers leading the team?

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A Cost Control Program Must Be Part Of Your Business Culture

THE PREVENTION AND DETECTION of fraud and theft are just ancillary benefits of a cost-control program, a premise that is not always clear to independent operators. Over the years I have implemented cost controls at several independent restaurants. Once completed, they would tell me that they now understood the true purpose and value of cost controls. A few independent owners felt that their physical presence and the hiring of family members eliminated the need for cost controls. Once they progressed beyond the singular idea that cost controls are to keep people from stealing and understood that the primary purpose was to provide feedback on day-to-day operations and decisions, they appreciated the real purpose and value.
           

Why don’t all restaurant operators have cost-control programs? The answer is that they are not aware of the waste that is taking place around them. It is not very complicated, as it is all basic management. You have to be able to identify value, and you have to know your costs and detect where they are excessive. Cost control encompasses all areas from the back door to the front door; from purchasing to paying your bills; from recording each transaction to depositing the sales receipts in the bank. Cost control is also more than just computing percentages and ratios; it involves making decisions after the information has been compiled and interpreted.

           

Cost control is used to monitor the efficiency of individuals and departments; to inform management of what expenses are being incurred and what incomes are being received; and whether they are within standards or budgets. In essence, cost controls are for knowing where the business is headed, not for discovering where it has been. That enforces the preventative and proactive purposes of cost controls.

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