Food Costs: Actual vs. Ideal

One of the factors that play a substantial role in the success of a foodservice operation is food costs. Food cost is what a menu item costs to prepare. The cost of a chicken entrée with meat, sauce, vegetables and starch is your food cost. Most restaurants run between a 30-40% food cost, this does not include the cost of overhead that needs to get added in before you start making a profit. A major influence on a restaurant’s food costs are the portions that the kitchen staff are creating each recipe and dish with.

One of reasons that franchise chain restaurants are so successful is because they have menu portions under control and regulated. It doesn’t matter if you go to Applebee’s in West Virginia or California, you will probably be served the same food in the same portion sizes. Customers like this consistency. By having a restaurant maintaining predictability, regardless of the location, chain restaurants guarantee strong profit margins.

Poor portion control is one of the leading causes of food cost variances. Consider that your ideal food cost is based on the premise of exact portioning for each menu item, including the portioning of each ingredient within a menu item. If your prep and line cooks have gotten in the habit of “eyeballing” measurements rather than sticking to the exact recipes, chances are your food cost variance could be as much as 5% or more. Proven portion control strategies include the use of portioning scoops, scales and measuring spoons and cups. Pre-portioning can be effective in controlling costs by using portion baggies and a scale to pre-weigh product before stocking the cook line.

Ideal food cost is the standard by which you can compare your actual food cost. If your actual food cost varies to your ideal food cost, then you set about to determine why and where the problem(s) lie. After completing your inventory, you should do a food cost analysis. You should do this at least once a week. The actual food cost is the cost of the food consumed by your customers.  When your actual food cost is higher than your ideal food cost, then you have not optimized your bottom-line profits. You have thrown money out with the window- I guess you could say. However, you won’t know this unless you know what your ideal food cost is.

So, a few things that a restaurant can do to maintain this consistency and reliability, in regards to portion control and essentially saving in food costs are:

          Providing pictures of each plated item. This illustrates the correct portion sizes and proper plating.

          Provide pictures of what each raw material/ingredient should look like after they are prepped. So for example, have pictures of actual sizes of what diced chicken looks like compared to the restaurant’s sliced chicken. This will give employees a visual of how to prep and what to look out for when assembling menu items.

          Pre-portion condiments, sides, and sauces. Every restaurant that I have ever worked in has done this. This is why when you go out to eat a restaurant and you order a salad, the dressing usually comes in small ramekins that have plastic lids. This way you can serve the dressing in-house or for to-go.

          Always have an adequate amount of correct sized storage containers, ladles, and scoops for each menu item as well as a variety of measuring cups, spoons, and scales.

These four prevention measures not only assist in less waste, but they also speed up food preparation and service time – especially at peak times like the lunch-rush or dinner-rush. It also makes certain that your customer gets exactly what they order and what they want, every single time they come to dine at your foodservice establishment.

So, with all of this information being said… How does this apply to my ISPP rotations right now?  Well, at my Institutional Food Service, Production and Management rotation, the entire class was assigned a task. This was to choose a raw material (ingredient) and analyze the actual vs. ideal food costs of that item. And by doing this, see what the restaurant needs to do to improve the usage of this product- whether or not if it was being overused or underused. So, the raw material I chose was chicken breast. This is the most profitable, and popular, raw material that this particular restaurant location utilizes throughout the summer. So, by going through the company’s database with the assistance from management, each student/dietetic intern were able to see what problems existed. And by doing this, new techniques or methods can be adopted to improve the use of these raw materials within the foodservice operation. Fundamentally- creating an even happier customer base.

Manage My Restaurant

What is Ideal Food Cost?

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The Marketing Mix

As a part of my business class/Institutional Foodservice, Production, and Management dietetic internship rotation, we are required to develop a breakfast marketing campaign. The reason for this project is to incorporate the marketing mix and to essentially improve breakfast sales at the Taziki’s Mediterranean café in the WVU Mountainlair. We are required to speak with the management for advice on what’s working and what’s not working within their breakfast menu and customer foundation. As an ISPP dietetic intern and graduate student, I am also required to apply this information to my Management Quality and Process/Performance Improvement Project, as well.

So, to manage marketing activities, managers must deal with variables relating to the marketing mix and the marketing environment. The marketing mix is defined as the specific combination of marketing elements used to achieve an organization’s objectives and to satisfy the target market. The marketing mix decision variables are product, price, place, and promotion. The marketing environment variables are political, legal, regulatory, societal, economic, competitive, and technological forces.

Product

A product can be a good, service, or an idea. Even though the manufacturing of products is not a marketing activity, research on customer needs and product design is. Product decisions focus on which products to develop, which current products to promote, and which products to discontinue. The term new product means it is a genuine innovation because it has not been served commercially yet. The term new to the chain, like McDonald’s Chicken McNuggets, are really an imitation of a successful product offered by another chain restaurant, like KFC’s chicken nuggets.

Price

Price is the amount of money charged for a product. Price competition has become very common in foodservice operations. Marketing managers usually are involved in establishing pricing policies for different products because consumers are concerned about the value obtained in the exchange. Price is a critical component of the marketing mix and often is used as a competitive tool. Price also helps establish a product’s image. The goal is to set the price at a point that customers perceive value, yet the company achieves the volume and profit it desires.

Promotion

Promotion is used to facilitate exchanges by informing prospective customers about an organization and its products. Promotion is used to increase public awareness about a new product, or to renew an interest in a product that is declining in popularity. The level of advertising in fast-casual dining, like Taziki’s Mediterranean Café, has become quite large.

Place

In marketing, place refers to the location, the place where food or services are offered. Increasingly, food is prepared somewhere else. Food manufacturers are preparing, packaging, and distributing menu items to restaurants and contract companies. Customers are noticing an increase in mobile carts and food trucks. This is giving the public more options when they are away from home- and at an affordable price as well.

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Microsoft Word - The Marketing Mix

Food Production Forecasting

Forecasting is an art and science of estimating events in the future and provides the database for decision making and planning. The art of forecasting is the intuition of the forecaster, and the science is the use of past data in a tested model. Both are required to estimate future needs. Forecasting is described as a function of production and constitutes the basis for procurement. Computerized systems often are used to facilitate the forecasting process.

Production Demand

Forecasting not only is a function of production but also is needed for procurement. Food products must be available for producing menu items for customers. The primary result of forecasting should be customer satisfaction; customers expect to receive what they ordered. In addition, the foodservice manager is concerned with food cost; both overproduction and underproduction affect the bottom line.

Overproduction, the production of more food than is needed for service, generates extra costs because the salvage of excess food items is not always feasible. Leftover prepared food spoils easily and requires extreme care in handling and storage. Even though some leftover foods might be salvageable by refrigeration, certain foods may break down and lose quality. An example is re-using chopped tomatoes or chopped lettuce from an earlier production shift. Policies and procedures for the storage of overproduced food items should be well defined and rigorously enforced.

Attempts to reduce overproduction costs by using a leftover high-priced food as an ingredient in a low-cost menu item reduce profits. For example, using leftover rib roast in beef stew, soup stock, or beef hash, all of which could be prepared with less expensive fresh meat, is difficult t justify. In addition to the higher food cost, planning and carrying out these salvage efforts incurs higher labor costs that could have been avoided had overproduction not occurred. Customers often suspect that leftovers are being used, which can be damaging to the image of a foodservice operation.

Underproduction, the production of less food than is needed for service, can increase costs as much as overproduction. Customers will be disappointed if the menu item is unavailable, and they often have difficulty in making another selection. Furthermore, underproduction may involve both additional labor costs and often the substitution of a higher-priced item.

A wise manager will insist that a similar backup item be available when underproduction occurs. For example, in a university residence hall foodservice, if the grilled meat patties run out, an excellent replacement would be frozen minute steaks, quickly grilled. Such a substitution certainly would increase customer satisfaction even though it hurts the bottom line.

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Management versus Leadership?

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Managing in the restaurant industry can be a multi-tasking juggling act at times. Anyone who has ever worked in a restaurant knows that it can be, and most likely is fast-pace and requires organization and communication from everyone in each department.

Management is the ability to plan, organize, direct, staff, control, and evaluate the many functions in a foodservice organization for the purpose of serving organizational goals. A manager’s task is to perform all these functions with the finite supply of resources available. These resources include:

          Labor

          Money

          Products

          Equipment

          Time

          Processes and tools

          Energy

When managing a business like a restaurant, the person in this position could demonstrate different styles of management. There are four common management styles:

          Autocratic: Domineering individual who has ultimate authority over employees

          Bureaucratic: Regular procedures, division of responsibilities, hierarchy, and impersonal relationships

          Democratic: Considering and treating others as equals, more participative in the tasks performed

          Laissez-faire: noninterference, letting people do as they decide

But, being an effective manager does not always mean that makes you an effective leader. The roles are much different. Leadership is the ability to motivate and inspire employees to behave in accordance with the vision of an organization and to accomplish the organization’s goals. Good leaders demonstrate these behaviors:

          Provide direction

o   Leaders communicate clearly and ensure that employees know what is expected of them. One of the ways to accomplish this is to discuss roles and responsibilities with everyone in the operation. This way everyone understands the direction given.

          Lead consistently

o   Using the organization’s mission, vision, and values as checkpoints, leaders maintain standards by holding themselves and other accountable for their actions.

          Influence others

o   Gaining cooperation through caring acts, using persuasion to convince others of appropriate behavior, and offering constructive feedback are ways that leaders influence others. Leaders also examine how to build consensus through a “give” and “take” dialogue as well as encouraging superior performance by relating employees’ actions to the organization’s vision.

          Foster teamwork

o   Leaders create functional work teams that build members’ skills. They also establish cross-functional teams to monitor, standardize, and improve work processes across the company. Assigning problems to temporary groups of selected employees is one way to begin developing these teams.

          Motivate others

o   The importance of communication cannot be overstated. Leaders give pep talks, ask their employees for advice, and vocally praise people’s work. It is also really important to keep employees informed and provide them with a sense of belonging by allowing them to solve problems and contribute ideas.

          Coach and develop employees

o   Leaders instruct employees on better ways to perform a task, offer insights to high-potential workers, and ensure that every employee has a development plan. They also seek out learning opportunities for the staff and encourage them to enroll in these programs.

          Champion change

o   Anticipating the need for change, looking for better ways to do things, understanding the link between change and learning, and communicating the benefits of new processes and procedures are all actions of a leader.

So, overall here are the differences you will want to remember:

          Manager:

o   Plans and budgets

o   Oversees staffing

o   Solves problems

o   Maintains order

o   Write reports and other types of materials

          Leader:

o   Charts a course that provides direction

o   Offers guidance and counsel

o   Motivates and inspires a call to action

o   Creates an environment for change

o   Trains and teaches

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Teamwork

Since my summer in the WVU Individualized Supervised Practice Pathway (ISPP) dietetic internship is primarily focusing on the Institutional Food Service, Production, and Management rotation, I thought it would be fitting that I talk about the importance of teamwork. The importance of teamwork has been proven to be effective in today’s fast-pace foodservice organizations. The use of teams has become an unavoidable solution at tackling some of the pressing challenges that managers face in the food industry. Whether it be from finding ways to reduce costs or to increasing overall sales, all of these issues usually impact more than one department and can benefit from a multi-perspective approach.

The companies or organizations that use teamwork and team-based activities will be better prepared to make necessary decisions to adjust to supply and to meet customer’s demands. Yes, individual employees can make a difference to an organization, but no single person has enough knowledge, creativity, or experience to tackle some of today’s complex problems. Remember, two heads are always greater than one.

Several foodservice systems look to managers to influence teams whenever and wherever possible. Essentially, a team is a group of individuals who operate as a unit for an assigned goal. Teams differ from other work groups because they typically have performance goals to achieve. Team members usually feel some type of accountability for working together to achieve these goals. So, teamwork is the actual state of acting in a collaborative and cooperative effort to create positive results for the achievement of one common goal. For example, my group at Taziki’s Mediterranean Café had one of our group members drop the Business class. So, instead of panicking or blaming each other for common mistakes that we might have made that next day, we worked as a group and everyone helped each other at their designated stations. And it even brought us closer together as a team because we know that all 3 of us rely on each other, as well as the management of course too. And to be honest, I think that we’re performing even better as a team now because we were somewhat forced with a fight or flight situation.

Part of a manager’s responsibilities is selecting team members who skills complement each other. Now, this particular situation the management did not have the choice to choose their teams. But the College of Business and Economics did have the choice to choose the students taking this class. Here is a list of complementary skills needed for teams:

          Technical expertise

          Problem-solving skills

          Interpersonal skills

Technical expertise is a core competency that every team needs. The type of problem that will be assigned to a team dictates to a certain extent what expertise you will need to bring together. Skill in several areas may be needed, depending on the problem at-hand. For example, if Taziki’s Mediterranean Café was researching a new menu item to offer to customers, a team of dietitians, food prep specialists, servers, operations personnel, and marketing specialists would supply the necessary blend of experience to ensure a thorough analysis of what customers want, rather than just a team made of one of these groups listed. Using the knowledge and skills of a cross section of an organization will strengthen the likelihood of a team reaching its goal.

Problem-solving skills are needed by teams to identify the root or underlying cause of a situation or challenge. These skills are also needed to identify potential solutions and trade-offs. Initially, a team needs to have at least one member with this capability. As the team progresses, more team members should develop these important skills.

Interpersonal skills is the third and final category of team skills. Members who communicate effectively and facilitate a group process are critical to the success of a team. Team members who possess these skills help produce an environment of directness and confidence that allows the team to flourish and make progress towards their goal.

Balancing all 3 of these skills is essential f or a manager to consider when working with a team.

Teamwork

TeamWorkMakesTheDreamWork