Thursday, January 31, 2013

Seek Results.....Not Activities

I am often asked by my clients to provide training services. As if somehow the process of “training” will magically make all of their operational problems disappear. My response is always the same, “what is your objective?”  By focusing on the output (results) rather than the input (tasks) you can eliminate steps (work) that has no bearing on the success of your restaurant. Going through the motions of a training program does not guarantee results. It only guarantees you going through a “training process” that may not be needed. I have always believed that one should never do more work than is absolutely necessary to get the desired result.  Besides, isn’t it all about results?

The problem with providing an employee with a “job description” is that the job description focuses on tasks, not outcomes. It is conceivable that an employee can complete each task listed on the “job description” and still not provide you (the owner) with the desired result. Think about it….your restaurants profitability and reputation is predicated on the results your employees achieve. Activities (tasks) mean nothing if they do not deliver the desired result.

By defining results rather than tasks you allow your employees to interpret their jobs in the way it works for them. The result will be increased productivity, enhanced guest service, improved moral, and more sales and profits for you.     

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Monday, January 28, 2013

How Much Inventory Should You Keep On Hand?

The answer to the question is simple. As little as possible.
The point is, you don’t want to convert your liquid cash to perishable food inventory if you can help it. The more frequently you get deliveries from your suppliers, the less inventory you must keep on hand.

Inventory control is basic “cash management.” Minimizing your inventory increases the liquidity of your restaurant.
Purchases should be tied directly to sales and not storage capacity or some par-stock level based on the maximum usage plus a safety factor. 

Remember…….Inventory is Cash.

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Do You Have A Food Cost Problem?

If you are experiencing high food costs, some possible areas of concern may be:

1.       No balance of high and low cost items on your menu.

2.       No consideration of locally obtainable products.

3.       No competitive purchase plan.

4.       Theft in any form.

5.       Purchasing more than needed (spoilage).

6.       No daily check of invoices, quality, and prices.

7.       No rotation procedures.

8.       No perpetual inventory.

9.       No controls on issue items from the storage areas.

10.   Low yields on products.

11.   Over preparing.

12.   Not following or using recipes.

13.   Not following exact portion sizes.

14.   Improper handling (Wrapping, rotating, storing).

15.   No reconciliation of sold vs. used.

16.   Employee theft.

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Thursday, January 24, 2013

Restaurant Profitability - The Managers Role

Restaurant profitability requires the manager to have a general understanding of the control process and operating environment of a foodservice operation, functions that generally occur in a foodservice operation, and cost relationships between the menu, level of service, labor, and technology.

Without these skills, the manager is doomed to fail.

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Monday, January 14, 2013

Why Your Food Cost May Be Too High

When I work with clients who have food cost issues, nearly all of them have very poor receiving practices.

When a driver unloads the product and hands over the invoice, on a good day the person does a quick check of the invoice and the delivered product, signs the invoice and the driver is on their way. Rarely is there a purchase order check on quality, price, weights, and a complete inspection on what was just delivered.

I have found that clients with food cost problems, 50 percent or more of their excess food cost is a result of what’s happening, or not happening, at the delivery door.

Receiving is an area where the combination of no system, carelessness and greed can add up to very big losses for your restaurant.

Here is my list of what you can do today to improve your receiving practices:

1.       When making an order, record the product type, quantity, and price quoted. This is your purchase order.

2.       At the time of delivery, count all products, and then verify that count against your purchase order and the invoice.

3.       For products purchased by weight……weigh them and compare the actual weight to what is shown on the invoice. You should not be paying for packaging or ice.

4.       Inspect for quality, consistency, and condition with your standards and specifications. You should have minimum standards and specifications for all of your products.

5.       Verify that the prices charged agree with the prices quoted.

6.       Bring any irregularities to the attention of the driver on the spot. Resolve them, noting adjustments, returns, etc., clearly on the invoice, and have the driver sign and or initial the adjusted invoice.

Delivery drivers notice everything you do (or don’t do) at the backdoor. Don’t make it easy for them to take advantage.
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Tuesday, January 8, 2013

How Often Should You Take Inventory?

How often should you take inventory? The answer depends on your purpose for taking inventory. Technically, you need to take inventory as frequently as you order. So if you order produce five times a week, you should inventory produce five times a week. When it comes to a fiscal inventory…….that is, counting everything on hand and extending the value of the stock on hand… should do that at least once a month for accounting purposes. Some operators take weekly inventory to keep on top of food and beverage costs, especially if they’ve been having a problem.

Some operators take inventory after each meal period to pinpoint product theft, but once a month is enough to calculate the cost of goods consumed for the income statement. When you take inventory before calling in an order to a supplier, you do it to determine the amount required. The amount you need to order depends on how much you will use between successive deliveries.

Still some operators take a fiscal inventory only once a year, which is all that is necessary for income tax purposes. But the operators who take a fiscal inventory only annually have no idea what their food cost is running the other 11 months of the year.

I’ve learned over time that not taking a monthly fiscal inventory is fairly common among many independent operators. Many believe that they have a consistent level of inventory that never changes. There’s a fallacy in that logic, even if the operation has the same amount of sales volume every month and the menu-sales mix remains constant…..neither of which is a realistic expectation. Inventory levels will fluctuate for various reasons.

With a little organization of your inventory records and storage areas, the inventory process can be made an efficient and painless process. One should approach inventory taking with the same intensity and attention given to counting each day’s sales receipts. The process of counting everything on hand should not take more than two hours, depending on the size of the restaurant. The extension of the value of inventory may take another two hours if extended manually or just seconds if you do it with a computer. Just remember: There are no shortcuts for accuracy in inventory: You must count everything in order to give yourself an accurate picture of your restaurants financial health.
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Saturday, January 5, 2013

12 Points to Consider When Conducting Employee Evaluations

  1. Know the employee’s job description thoroughly. You are evaluating how well the employee meets the job requirements, not against other employee’s or what the employee’s potential is.
  2. Always conduct the evaluation in private, with no interruptions. Schedule each evaluation far enough apart so that there is plenty of time to discuss everything in one sitting.
  3. Don’t let one incident or trait, positive or negative, dominate the evaluation. Look at the whole picture over the entire time since the last evaluation.
  4. Evaluations should be balanced between positive and negative attributes, never one sided. A totally negative evaluation will almost never motivate a poor employee. Bring out some of his/her positive contributions and in detail describe what changes are needed. A totally negative evaluation will only scare the employee. Should a negative evaluation be warranted it is probable that the employee should have been terminated long ago.
  5. Review past evaluations but don’t dwell on them. Look at areas where improvement has taken place or a decline in performance.
  6. Always back up your thoughts and appraisals with specific examples. Allow plenty of time for the employee’s comments. Remember, you could be wrong. If examples or circumstances come out in the evaluation that was never mentioned before, you are guilty of allowing the communication process to deteriorate.
  7. Don’t cover too much material or expect the employee to make drastic changes overnight. An evaluation is only part in a series of continuous steps to help and direct the employee.
  8. Begin the evaluation with some positive points and then direct the discussion to areas that need improvement.
  9. Certain personality traits and deficiencies may not always be changeable. Don’t overemphasize them but relate them into how they might affect his/her job performance and the performance of others.
  10. Finish the evaluation on a positive note. The employee should leave with a good feeling about his/her positive contributions to the restaurant and how precisely what and how to improve his/her performance.
  11. After the evaluation, make certain that you follow up on the thoughts, ideas, and recommendations that were brought out during the evaluation. Without a follow up the evaluation is of little value.
  12. Evaluations are confidential. Keep them that way.

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Friday, January 4, 2013

Opening a Restaurant - The Mystic of Working Capital

This is often the great black hole of restaurant development. Of course, everyone knows that you need money set aside to operate your restaurant until the cash flow is sufficient to carry it. But in reality, it is too often a bogus figure that is never funded. Undercapitalization….not enough money….is an all-too-frequent reason for restaurant failure. Good concepts, well executed, and with excellent potential for success can fail if the financial obligations associated with them cannot be met in the early months of operation. The amount dedicated to working capital is often underestimated. Ideally, you want to have six months to a year of fixed expenses covered. Realistically, many operators budget one to three months. Because they have underestimated other preopening expenses, this fund is depleted in the early weeks or months.

Budget for success…..not failure…..

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