Owner: Food Cost Control Blog URL:http://foodcostcontrol.blogspot.com Join Date: Thu, 14 Sep 2006 08:59:06 -0500 Rating:1 Site Description: A unique view of food cost control techniques. Blog is read by over 7,000 food service professionals. Posts may be found in reprints in 10 industry publications. Site statistics:Click here
Two Articles On High End Menu Price Increases 2006-10-22 17:21:00 Unlike the restaurants experiencing declines due to the "trade down" phenomenon mentioned in recent press, diners at the top spots are paying more. An article, New York City Diners Are Swallowing Higher Prices By NICK TIMIRAOS, in the October 11, 2006 Wall Street Journal (Page D9) shows the higher costs of an average meal in New York City. Mr. Timiraos uses the recently released Zagat's New York City Restaurants Guide as his source.
This weekend, an article Entrees Reach $40, and, Sorry, the Sides Are Extra By Jodi Kantor in the October 21, 2006 New York Times focuses on entree costs soaring over the $40 threshold. Bryan Miller first mentioned the appearance of the $40 entree in a New York Times-Diners Journal (The $40 Entree Ouch!) article back in the May 20, 1988 issue.
With the restaurateur paying from $10 to $15 per portion for a nicely trimmed filet mignon steak, this trend may spread nationwide.Please send comments to jdunbar401@aol.com Read more:Articles
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Selective Menu Revision 2006-10-17 20:36:00 If the higher fuel prices and dropping home values are cutting your covers, you may still see full dining rooms on the traditional busy nights. Keeping the menu intact will allow a baseline business volume to be established each week. Try to use the revenue from these nights to cover all fixed expenses.
Cut fixed costs to the bone.
On the slower nights, use cost-volume-profit models to determine special prices. If your fixed costs are already covered, you could afford to offer free appetizers, two-for-one entree deals, a free glass of wine, prix-fixe menus, etc. (early in the week). You absolutely need to understand and cover any variable costs.
If you know your key cost components through standard recipes and tight flex schedules, it's easier to target your lost leaders. For example, don't choose labor intensive entrees for the two-for-one specials. Any specials should use ingredients with stable pricing which fit your menu. Avoid menu specials which require long prep ti Read more:Selective
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Restaurant Companies Report on Third Quarter 2006-10-17 04:11:00 I read an article on CattleNetwork.com regarding recent third quarter results. The article "Restaurant Firms Show Sluggish Sales", written by Richard Gibson, appeared in the October 11th Wall Street Journal. Mr. Gibson highlighted sluggish sales and the "trade-down" phenomenon (substituting a fast food meal for a meal out).My chief interest in the article was the coverage of major transactions in the steak house segment. CBRL Group, Rare Hospitality International, and Lone Star Steakhouse & Saloon all reported major activity. Lone Star is going private and both CRBL and Rare are shedding steak house concepts. Read more:Companies
Avoid Slashing Your Menu Prices 2006-10-05 20:12:00 Economic conditions are rapidly changing with worldwide demand for energy at an all time high and rising interest rates in the USA. Higher costs are functioning as a tax on discretionary income. Borrowers and drivers are paying a lot more for money and gas. Restaurant expenditures often depend on patron's discretionary income. With the home equity line of credit option disappearing rapidly, credit card expenditures will be tightly monitored by more consumers.
Recently, I went for a walk on a Wednesday evening at 8 PM in my neighborhood. I passed by 4 restaurants and dining rooms had lots of available tables. The best of the four was a popular chain steak house concept. Let's try to put ourselves in the shoes of management.
Last year, our example steak house had annual covers of 50,000 and sales of $2,000,000. Covers in the current month are off 30% vs. the same month last year. The current average sales per cover is $40 and management is studying options.
One manager favors a 5% acr Read more:Avoid
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High Degree of Operating Leverage 2006-09-25 23:05:00 Some of my earliest clients were high volume restaurants on the New Jersey Shore. I noticed some key similarities among the successful operators. The very best started with a small operation on a relatively large area of land. Over time, they grew the restaurant's capacity with incremental additions. At their peak, these restaurants had many dining rooms and multiple kitchens. Some were found in the annual top 100 lists in industry publications.
As I gained clients further north in the state, I advised them to try growing incrementally and talked some out of major unit expansion. Rather than enlarging the fixed cost base, I advised them to maximize their profit at existing locations.
Since food service operations exist in a highly competitive environment, operating margins tend to be low. A restaurant operating at or near their break-even point will have a high degree of operating leverage. Any increase in sales volume beyond break-even will produce a significant increase in t Read more:Operating
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Entree Pricing-Dollars vs. Percentages 2006-09-20 16:53:00 The adage says "We put dollars in the bank NOT percentages." So, should you run some higher priced entrees with a corresponding higher food cost percentage to boost profits? Maybe. You should be prepared for some unplanned possibilities.
I'm going to use an example steak house with current annual covers of 50,000 and sales of $2,000,000. The average sales per cover is $40. Management has decided to introduce two new entrees priced $10 above the current average entree price. These entrees are costlier and will raise the food cost percentage.
Let's say 20% of patrons choose the new entrees and covers remain stable. Sales increase $100,000 and food costs go up $50,000. We should have another $50,000 going in the bank account. It's a good thing...right? Maybe.
All too often, managers forget to follow through with the dollars vs. percentages concept in the other cost components. If they track labor cost and other operating expenses on a percentage basis, a big chunk of the $ Read more:Entree
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Ideal Usage Tricks and Techniques 2006-09-14 18:51:00 The people who produce variance reports for the weekly and monthly management meetings need to forecast the likely meeting discussion for each red flag item. Common excuses occur over and over and it's necessary to anticipate and eliminate these distractions. The only way for a food and beverage professional to have a positive impact on the results is through proper focus.
Find the real problems ahead of time and structure your handouts (or overhead presentation)to highlight the major issues. Everything else is simply an exercise in excusing poor results. When the acceptance of these anecdotal responses is chronic, the operation will lose control and wide fluctuations in monthly numbers will ensue. Hopefully, a review of the common excuses will help you prepare for the next meeting and the tide will turn.
At the very top of my list is the inaccurate inventory extension. Since you should have complete control over this number, avoid making bad numbers "the reason" and take the Read more:Usage
We Don't Know Our Costs 2006-10-27 04:17:00 My boss at Sodexho always said "We don't know our costs." whenever the food cost percentage was too high. Generally, the remote site feeding business should be very predictable. Patrons live onsite and have zero options outside the dining room at the camp. If a room is occupied for a night, we'd expect the resident to show for breakfast, lunch and dinner. Straight forward revenue calculation involves the number of people in camp multiplied by the rate per person per day.
Problems in this business segment occur at mature projects after contract renewal. Since the competition is fierce, operators look for every possible advantage. When responding to the RFP, the bidders try to gain a cost advantage over their competitors.
If the camp is close to a urban area (close would typically mean a short flight), many of the residents leave on the weekend. Playing the game involves predicting the probability the Friday evening meal will NOT be attended. In addition, Sunday dinner attend Read more:Costs
Article in Philly Inquirer About Pizzerias 2008-03-09 19:44:00 Some pizzerias are raising prices to offset the huge increases in the cost of their key items according to a Philadelphia Inquirer article which highlights a delivery operation.Please send comments to jdunbar401@aol.com Read more:Article
, Philly
Do You Know Your Break Even Point? 2008-03-09 12:08:00 In my MBA program at Rutgers University, they made sure every graduate could calculate break even points. We were given a myriad of scenarios with a variety of variables. Our tests included irrelevant information to make sure we could focus on the essential formula. Break
even point analysis was taught in microeconomics, cost accounting, advanced cost accounting, finance and analytical techniques courses.The basic formula for determining your break even point follows:BE=FC/(1-VC%)BE Break Even PointFC Fixed CostsVC Variable CostsIf your business had fixed costs of $500,000 and a 75% variable cost rate, your break even point is $2,000,000. If your fixed costs are $800,000 and your variable costs are only 60%, you'd have the same $2,000,000 break even point.Which operation would you prefer t
Playing The Market 2008-02-28 18:27:00 Do you try to time the market for your top center of the plate items? Tolerance for using frozen protein items may be the key to your response. I have seen operators with huge outdoor freezers receive a truckload of meat shipped directly from Chicago. Prior to placing the order, they studied the Urner Barry Yellow Sheets and pulled the trigger at a favorable time.This article is written for the other type of market play. Operators may receive calls from their meat and seafood suppliers in up markets asking if they want to lock in a high price before it goes higher. Some take the bait and lock a bad price for their busiest season. No freezer needed in this scenario. You simply agree to pay a high price for your key ingredients during your busiest period of the year. Commodity markets clim Read more:Market
Time For Burgers and Fries 2008-02-25 10:15:00 Current market data for February 22, 2008 shows a better environment for restaurants with menus dominated by burgers and fries. Using a pub sized portion for the burger (8 ounces) and the french fries (8 ounces), these operators have picked up 3 cents since last year. The price of soybean shortening has doubled. This unfavorable trend is offset by stable prices for frozen potatoes and ketchup and a decline in the ground beef price.Market Data from Foodservice.com (www.foodservice.com) - An Online Community for Foodservice Operators was used in creating the chart.Operators looking for greener grass in the other vegetable oil markets won't find much relief. Canola oil and corn oil are both way up since February 2007. I'm using Wenzel Menu Maker's oil-to-fries ratio of 8 pounds oil per 100 po Read more:Burgers
Challenging Time For Pizzerias 2008-02-22 15:14:00 With more people utilizing take-out dining options, pizza delivery is growing strongly in my neighborhood. Today is Friday and I expect plenty of delivery cars on the streets near my home tonight. The pizza segment has a long tradition of take-out and delivery service. I worked in a pizzeria during my college years and we served lots of pizzas to go each night. The delivery option was not available for our customers. With a growing number of pizza lovers requesting delivery, the current economy offers pizza chains plenty of challenges:Gas prices are up due to a weak dollar and soaring demand for foreign oil;Mozzarella cheese prices have seen dramatic increases;Domestic vegetable oil prices have risen and imported olive oil is up;Canned tomato products have experienced modest increases and
Food Prices Are Way Up! 2008-02-18 12:25:00 In today's SmartBrief, there's an article about wholesale price increases for food quoting the National Restaurant Association data. The prices for food at the wholesale level have risen 7.3% since this time last year. Although the article focuses on a sole proprietor who has found it difficult to raise menu prices, they mention the efforts of publically traded Panera Bread. It's too bad they didn't interview a pizzeria owner or a Mexican concept. The current market statistics available to subscribers at Foodservice.COM show Mozzarella Cheese has increased 49% in market price since last year.Click Here For More InformationTags:food cost control, food cost, Joe DunbarPlease send comments to jdunbar401@aol.com Read more:Prices
Record Beef Recall Article 2008-02-17 20:51:00 Just in a couple of hours ago, the USDA Orders Largest Beef Recall involving over 140 million pounds of frozen beef.Click Here For More InformationTags:food cost control, food cost, Joe DunbarPlease send comments to jdunbar401@aol.com Read more:Article
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Prime Market Follow Up 2008-02-13 09:49:00 In my recent post Prime Market
Deal , the moves in the market prices for prime beef tenderloin were highlighted. We now have a new update.The recent market update available at Foodservice.COM shows the market anomaly of the week ended 2/1/2008 reversed course in the following week. A 10.8% gain in the price for prime beef tenderloin wiped out most of the short term opportunity. It is possible to now place the 2/1/2008 market opportunity in better perspective.Prime beef tenderloin market priced below $11 per pound is a bargain when put in the context of recent market activity. As I compose this post, oil prices are falling close to the $90 level. Since the grains market is linked to oil now due to the increased ethanol production, further volatility is likely.It appears these short
Prime Market Deal 2008-02-09 16:59:00 Market prices for prime beef tenderloin has plummeted from last year's $14 plus levels to below $11 a pound. These are market prices so you won't see anything close to $10 on your invoices. It's possible for savvy high end operators to find a sweet spot. Normally, a Beef Tenderloin yields 6 nice steaks from a 6 pound piece. This is a huge drop in the cost per portion (almost 25%).If a typical operation serves 1,000 steaks a week from the tenderloin, the savings is $3,500. Major dollars. Two factors seem to be in play. Oil has declined from the $100 per barrel level and the supply/demand mix has changed. Fewer people are buying prime filet in relation to the supply. I see this as logical. During the period of rising prices, many operators shifted from prime to choice. The market Read more:Market
90 Signed Up In First Month 2008-02-05 19:33:00 I'd like to thank the people who have signed up to join our Dynamic Chains purchasing cooperative. We have 90 companies at this time (many multi-unit operations). The key to success at this time is information about our members. My associates and I are making calls to suppliers (with our member's permission). If you have requested a tracking report from your main supplier(s) and have not received the report, please contact us by phone (800) 949-3295 or email. We need the group purchasing history to rank our opportunities. After one month, we have a diverse and rapidly growing membership. As soon as we can review the group purchasing history, we will finalize our rebate agreements. We want to receive tracking reports from our first month sign up list by mid-February.Please send comm Read more:Signed
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Dynamic Chains - Authorization Form 2008-01-31 21:06:00 I want to thank everyone who has signed up for our new DynamicChains
purchasing cooperative. We are currently receiving tracking reports from our members. Many have requested our assistance in obtaining these required reports from their suppliers. Please complete the form below to authorize Dynamic Chains to contact your supplier and request the required tracking report.On many browsers, you may need to scroll the form to click the Submit button. Please send comments to jdunbar401@aol.com
Coffee and Dessert Contest 2008-01-30 14:26:00 Is your dining room traffic slower due to seasonal changes, economic conditions or local competition? Savvy operators should look for higher check averages. If there's no big push for seats, guests should be allowed to linger. A strong dessert menu with premium coffee is the hook. With a special thanks to Starbucks, Americans have become comfortable paying more for upscale coffee brews. Whether you feature the Starbucks brand or another recognized option, diners are more likely to pay a higher price for a well known coffee brand.During the 90s, there was a trend toward larger dessert portions. A couple would order one of these over-sized plates to share (two spoons). In many operations, the dessert portion sizes became massive and priced too high for people like me - travelling businessm Read more:Coffee
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YouTube Video - Dynamic Chains 2008-01-28 14:45:00 Click Here For More InformationTags:food cost control, food cost, Joe DunbarPlease send comments to jdunbar401@aol.com Read more:Dynamic
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Cornell CHR Article 2008-01-25 10:40:00 There's a new article on Cornell
University's Center for Hospitality Research site regarding the disruptive effects of downsizing and informal networks on the survivors.Click Here For More InformationTags:food cost control, food cost, Joe DunbarPlease send comments to jdunbar401@aol.com Read more:Article
Spread Too Thin? 2008-01-22 18:11:00 In a recent post, I explained the profile photo for this blog. The hat I'm wearing in the blog profile photo is from Pick Up Stix. Carlson (owners of TGIF) acquired Pick Up Stix from their founder, Charles Zhang, in 2002. The commissary manager gave me the hat on a visit I paid to Charlie's commissary in San Clemente, CA. There's a recent story in the Sacramento Business Journal about a huge number of closings in the Pick Up Stix units in California, Nevada and Arizona. Having observed the well run commissary in San Clemente, I think the concept benefits from the central production facility. I wonder if the new owners utilize the San Clemente commissary for units in Northern California, Nevada and Arizona. Perhaps, the high cost of transportation is an issue. I'm speculating since I have Read more:Spread
Offer Dessert Early in the Meal 2008-01-18 10:36:00 Years ago, my brother Paul invited my wife Jackie and I to dinner at the American Bounty Restaurant. The restaurant is run by the students at The Culinary Institute of America. They have a great program where you take a student to dinner and Paul was our student guest. Although the entire dinner was exceptional, I still remember the dessert over a decade later. It was a delicious Berry Cobbler served fresh from the oven.After our server greeted us he promoted this special dessert option. He said he needed to take the order NOW because the fresh baked cobbler required over 20 minutes in the oven. We ordered the cobbler and the locally produced wine he recommended. He rushed to the kitchen to put in our dessert order while we read the menu.The entire meal was marvelous. After our entree dish Read more:Dessert
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An Article on Winter Beverage Ideas 2008-01-17 09:31:00 Drinks That Draw Customers In From The ColdClick Here For More InformationTags:food cost control, food cost, Joe DunbarPlease send comments to jdunbar401@aol.com Read more:Article
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What Would You Like To Drink? 2008-01-09 23:42:00 As margins keep shrinking due to higher energy and corn prices, operators are carefully analyzing their menus. My clients often are taken aback when they first calculate the recipe cost% of popular entrees and appetizers. It's very common for a popular entree's cost to creep up to 40%. With competitors dropping prices, you may want to look for dollars elsewhere. A fountain soft drink or a cup of coffee is a great place to start. Both of these selections are very profitable. Use these key beverage sales to improve your total food cost results.Typically, these beverages require very little preparation time. Make sure you deliver top quality beverages to the customer. Put the right amount of ice in soda, iced tea and other cold drinks. Brew a fresh pot of coffee frequently. Give the tea lov Read more:Drink
New Consulting Option 2007-12-31 19:28:00 For operators who would like to discuss a specific issue in detail, I'm now offering a 1 hour consultation via GotoMeeting.com. The session may be attended by up to 15 people. It is possible to record the session. You choose the topic. Click below to order your meeting now. Please send comments to jdunbar401@aol.com Read more:Consulting
Explosive Recipe Models 2007-12-29 20:55:00 Once you have decided on a menu theme, suppliers, a production team and specific menu items, it's time to develop standard recipes. Your recipes should be clear and well illustrated. It helps to take the view of a line cook when crafting plate recipes. Batch recipes are a different breed. If you want to completely understand your operation, I recommend you spend most of your time on batch production recipes.Basic prep activities should be carefully observed. Actual yields need to be compared to industry standards. Stocks are great for using the trim from your prep items. It's OK to assign the stock a zero cost for the usable trim. Some chefs like to give a credit for trim used in stocks when calculating the prep yields for the primary purpose. If you use this approach, you'll need Read more:Explosive
Profile Photo Story 2007-12-24 12:27:00 I have been asked by several readers about the logo on my hat in my profile photo. The photo was taken 4 years ago at Disneyland in Anaheim, CA. The cropped shot leaves out my then 6 year old daughter sitting on my lap. The logo on the hat is for a fast casual concept called Pick Up Stix.I took a day away from my vacation to visit their commissary in San Clemente, CA. The hat was a gift from the commissary manager. If anyone is contemplating a commissary, the Pick Up Stix operation is a great model. Carlson (TGIF, etc.) purchased the concept from the original owner and they are expanding beyond Southern California.Please send comments to jdunbar401@aol.com Read more:Photo
Welcome Random Searchers 2007-12-22 18:11:00 During the last half year, over 7,000 people have reached the blog by entering some words in a Google search engine string. Lots of people entered either "food cost control", "food cost", or "cost control". About 4,500 others have used MSN, Yahoo and other search engines to reach us here at the blog. Many people have entered a unique search string. Of the unique searches entered, some new readers stayed on the site for a good long time. Here's a small sample of the strings entered by unique searchers who decided to take a longer look around Food Cost Control Blog:buffet productionbanquet kitchen labor costbenefits of limited menu for food service operatorcalculate food priceanalysis of variance, sales,expense, menu itemsbuffet food cost report comarticle about food industrybreakfast f Read more:Welcome
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