The Monthly Inventory

I am amazed whenever I hear that a restaurant does not take a fiscal inventory each and every month. By fiscal inventory I mean counting what is on hand at the end of the month and extending the value. In order for the monthly income statement to reflect accurately the cost of food consumed and sold, you must take a complete food inventory. There is no substitute or shortcut for taking a fiscal count of food, beverages, and supplies if you expect your cost ratios and percentage to show what is actually taking place in your restaurant.

You wont know if you don't count.

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Why Standardize Your Recipes?

A standardized recipe has several advantages. It will produce a known quality and quantity of food for a specific operation. It specifies the ingredients to be used---brands, grades, and varieties; the preparation and cooking procedures; the yield and potion size; and in some cases, the equipment, utensils, pots, pans, and evenn the flatware require for service.

But contrary to what you might believe, standardized recipes are not those previously used in other operations or found cookbooks. "Standardization" refers to recipes that are "customized" to your operation. They might begin with with ideas you took from another restaurant or cookbook but then adjusted for your operation's equipment, ingredients, and serving procedures.

If you don't have standardized recipes, or if their not being followed, you won't have consistency in in cost and quality. If the recipes have changed, let your standardized recipes reflect those changes. If you permit deviations from your recipe standards, you will lose both cost and quality consistency.

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What Should Your Food Cost Be?

A cost control problem is when there is an unacceptable difference between the ideal and actual cost for a given period. A 2 percent varience for a restaurant that does $30,000 a week in food sales amounts to $600 a week. That's more than $30,000 a year. However, if the targeted cost is inaccurate, then you'll be left scratching your head looking for a cost problem that doesn't exist. Below are some tips to determine your ideal cost.

• Accurately cost out each menu item
• Make sure each menu item has its own POS key so you can track the unit sales of each item.
• Create a spreadsheet that calculates the cost of each menu item times the number of items sold from the POS report to give an "ideal cost."
• Compare the ideal cost to the actual cost calculation from your P&L.
• For many operators who compare their ideal versus actual food cost, a varience of more than 1 percent of sales indicates a food cost problem.

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The Restaurant Menu

A well designed menu can make things a lot easier for the operator. It can help keep costs in line and even help distribute the workload in the kitchen. A menu can be designed to influence the amount a customer will spend and generate a check average needed to achieve daily sales projections based on seating, customer counts, and hours of operation. being able to "guide" a customer's selection will improve the accuracy of sales forecasts, purchases, preparation quantities, and even labor scheduling.

The product and worker flow will be driven largely by the menu-sales mix. A menu will dictate the skill levels of the employees in both the kitchen and the dining room. The information the menu provides will help management select specific equipment and the best way to arrange that equipment for efficiency of production.

Whether you are looking to improve the operation of an existing restaurant or planning a new restaurant, the menu design plays a critical role in your success.

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Protecting Your Profits

Employee theft is such a major problem that it is a leading cause of restaurant failure. There are several reasons as to why the restaurant industry is susceptible to loss from employee theft.

They are:

There are several ways employees can combine house receipts with tips.

High employee turnover.

Access to cash.

Food and liquor are highly desirable items.

In order to combat the problem of the theft, you must learn to recognize the symptoms.

Some of those symptoms may be:


1. Become familiar with the warning signs of substance abuse. In most instances an employee will need the extra money to finance a habit. 

2. Refuses to take a vacation. Employees who refuse to go on vacation may be afraid that their substitute will discover their dishonesty. 

3. Condoning dishonesty in others. Employees who steal tend to have a different belief system when it comes to theft. Rather than believing theft is wrong, they may condone the acts of dishonest employees as, "It’s no big deal. It was only a few bucks." 

4. A change in behavior. Employees who suddenly exhibit an unexpected change in their behavior should be a warning sign to management. Watch for sudden mood swings, nervousness, hostility, and other emotional changes. 

5. Over protection of work records or files. Employees who are reluctant to give up custody of records or files may be keeping incriminating facts and documents close to them. 

6. Violating the work rules. Employees who rebel against company policies and procedures should be watched. 

Additionally, employee embezzlement can put you out of business. Employee theft is far worse than all the theft committed by your customers. You need to take the right steps to protect your cash. 

Note: I cannot tell you how many times a client of mine has refused to believe an (I thought they were so honest) employee would steal from them. Whether it's an issue of complete denial or a distaste for confrontation. 

Don't let yourself become a victim of theft. Unfortunately, it's a very distasteful part of being a business owner that must be dealt with.


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High Food Costs?

There are hundreds of reasons why your food costs may not meet your cost standards.....reasons that encompass the entire range of business activities in both the front and back-of-the-house. One cannot automatically assume that the causes of high food costs are the fault of the kitchen and ignore what is taking place in the dining room. The problems driving high food costs could be in place even before the food is delivered to the restaurant. If any weakness exists within the entire cycle of ordering, receiving, storage, preparation, service, cash receipts, and accounts payable, your food costs might not be as low as it could be.

The first step in correcting a problem is to recognize that you have one. Once the problem is discovered, you can prevent it from happening again.

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Operational Systems Create Consistency

Restaurant systems create consistency. A system makes it possible for your employees to repeat a performance that creates a consistent experience for your guests.

Consistency is the key to creating a great reputation and hosting repeat customers

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