Category Archives: Cost control

Where does your restaurant profit end up?

According to the external stock taker I was talking to yesterday, anyone in hospitality who thinks they haven’t got steeling going on is dreaming! Harsh words, but he was speaking from his years’ of experience.

How would you know if you had even minor problems with your stock – the odd free drink to friends, or a couple of fillets steaks for the weekend?

Unless you are on top of your figures it’s so difficult to spot when you have a problem. Sometimes it can go on for years undetected.

For example:

  • Do you know how much money you made last week?
  • Do you know how much your most popular dish is costing to produce and what profit (or loss!) it generates?
  • Do you know what impact a 1% increase or decrease in spend per head would have on your bottom line?
  • Do you know the return on your marketing investment from your last promotion?

No matter how compelling your marketing, how amazing your food, how extraordinary your service, and how happy your customers, at the end of the day if you aren’t making money on what you sell you have a problem. And unless you have a way of detecting this quickly the longer it can go on without you realising.

Stock control is key and here are some suggestions for keeping control on your stock. But it’s more than that.

Here are the top 4 things that you must keep on top of:

Regular recipe costing

  • Cost your recipe before you put them on the menu to decide if you can afford to put them on the menu at prices your guests are willing to pay
  • Post cost to check that what the chef produced is in line with what you initially planned. Ingredients coming in at higher prices, shrinkage, difficulties with portion control, wastage can all have an imp[act on the actual dish cost
  • Re cost the dish whenever any of the key ingredients fluctuate in price

Menu engineering

  • Knowing your stars – the high profit items, so you and your team know what to promote. Identifying the actual profit in monetary terms, not just percentages.
  • Showing your team the margins so they understand why some dishes need more of a push than others helps them understand the significance of why you might want them to sell more of one dessert than another

Your profit sensitivity

  • What impact small changes on spend per head, customer numbers or number of visits can have on your bottom line.
  • This is key to understand before you even consider giving any discounts.

Your bottom line profit and loss.

  • Too many restaurants leave far too long a gap between calculating their profit. Yes, it’s a chore taking stock, but unless you do you can never get anything like an accurate figure on your profit. And worse still unless you physically take stock you’ll never know when you have a problem with wastage or pilferage.

So to help you get on top of your figures I’ve bundled together my top 4 favourite tools, and am offering these at a special price for the whole of this week in honour of my birthday, plus I’m adding in a special bonus gift. Click here to learn more


Are your profits going down the drain?

Every day of our cruise I was horrified at just how much food and drink, and therefore profit, was literally being poured the drain.

The main culprit was a drink all you like coffee deal. At the start of the cruise you could purchase your own ‘souvenir’ mug, and refill it as often as you liked. At 250 NOK (approximately £27) this at first glance seemed a lot of money, but when you saw that it was 20 NOK for a single cup, 6 days at a probably 4 – 5 cups of team of coffee per day this didn’t seem such a bad deal.  Presumably some people would drink less and therefore this deal was a potential win-win.

However, here’s the rub: the mug provided were approximately 40% bigger than the standard cups, and the coffee machines were set to fill a standard cup. This meant that each time you went to fill your mug with coffee, instead of pressing for one measure, you pressed again for a second measure to fill the mug. Of course you don’t need to be a mathematician to realise that as the mugs were only 40% bigger 2 measures would be too much. What happens to the excess coffee? You guessed it, it goes down the drain.

So what on the surface seemed like a good deal for both parties, must have meant in reality that almost 1/3 of the coffee dispensed was ending up down the drain.

And this wasn’t the only area of waste. Where ever passengers helped themselves you saw waste that was avoidable:

Lack of labels or descriptions: On the buffets at breakfast and some evening meals there were several items not labelled. This meant that people would help themselves, then when they realised it was not what they thought it was, inevitably it got left on the plate. This included everyday items that I’m sure you may serve such as fruit juices – is it pineapple or it is grapefruit? They both look the same, but if you were expecting grapefruit you’re unlikely to be happy when you taste pineapple. Indistinguishable sandwich fillings, speciality breads and sauces, all can confuse our guests when they are not labelled.

Poor portion control: Little pots were provided for your jam, but the size of the pot encouraged you to take twice as much as needed, and most was wasted. And over-sized serving utensils meant that people took too much of meat dishes.

Lack of batch cooking meant that dishes got dried up and unappetizing towards the end of service, so people avoided them until they got replenished.

So if you have any self-service items such as at breakfast or drinks, take a look at what is being wasted and where you can make savings. Not only can this save money, but it’s better for the guest too. A win-win for both of you.


Start planning next Christmas now

Your restaurant or hotel marketing for next Christmas is probably the last thing on your mind. But now is a great time to be building up material to use for next year.  What better way to promote your Christmas parties than to show people having fun, and your hotel or restaurant in all its Christmas splendour?

Take photos of the bar, restaurant and reception while the decorations and Christmas tree are looking their best – don’t leave it until half the needles have dropped off, or the light bulbs have gone out! Take shots from different angles of the restaurant laid up for dinner. ‘Snap shots’ may be OK as small images for your website, but if want to use these as bigger images, or for printed material, use a professional photographer to take some quality pictures. And include some pictures of the food. Although this is easier to ‘stage’ at a later date, if you can get some shots now, so much the better.

Get some video footage of parties – best when guests have just arrived, and had time to relax with their first drink, but don’t leave it until the tables are strewn with empty glasses. Always check with guests that they are happy for you to record, and secondly for the footage to appear on your site. Ask people for testimonials that they would be happy for you to use in next year’s marketing.

Keep an eye out for a clear, frosty morning and get outside with your camera to take some shots of a wintery scene.

Keep tabs on your costs throughout to ensure you have an accurate picture of your profit margins.  This includes post costing for each event, to take account of wastage.

Take stock at the end of the season, and learn from your successes and failures to build on this for next year. Get feedback from your team, and involve them in the review process by asking for their ideas. Then make sure you record all this where you can find it easily when it comes to planning next year!

Here’s to a very successful and profitable Christmas season.


Keep your restaurant menu simple

Do you find a menu with 25 items tempting or just off putting? It’s one thing to offer choice, but too many itmes on the menu just confuses your guests. And for you it leads to more stress and wastage.

Keep your menu simple, and well within the capabilities of your chef(s), equipment and front of house staff.

A smaller range of dishes prepared and served well will always fare better than an extensive menu that stretches skills and resources to the limit. Fewer items means a more streamlined kitchen, and gives your team the opportunity to spend time on each dish, instead of stessing about too many different dishes.  It also means lower stock, so better stock turnover and less wastage, helping you keep your kitchen costs down.

It allows you more flexibility to change your menu daily or offer specials to take account of seasonal availability – giving you the best quality ingredients, with the best flavour and at the best possible price.


Show me the light

When I turned up at my training venue the other day it was in darkness. I assumed that the room had no windows, but when I looked behind the curtain there was one huge window. Why on earth then would I want the curtains drawn and have to rely on artificial light all day?

The room was set up with a freestanding screen stood in front of the window, so I asked for the room to be rearranged so that the projector faced an internal wall so that we could open the curtains and allow in the natural light. So I was even more confused when I discovered that there was already a built-in screen on the internal wall.

This isn’t the first time I’ve encountered such a setup. When will conference facilities realise that natural light is far preferable to artificial light, and when you add in the potential energy and cost savings on lighting this seems an absolute no-brainer!

So please, conference venues and hotels please show us the light, and keep those curtains open.

Perhaps hotels could divert some of these savings to bedrooms and give guests some decent lighting here for a change.

Hear it from the experts. Join me on my regular FREE interviews when I talk to hospitality experts and specialists and ask them to share their insights, strategies and secrets that can help to give your hotel a competitive edge. I’ll be interviewing Simon Thompson from Conferences UK in May on how to tap into the conference and meeting opportunities out there  Find out more and register here.


Hotel breakfast: Greatest Asset or Biggest Downfall?

Breakfast is frequently one of the last things your hotel guests experience before they check out, so is likely to leave a lasting impression. Even if we’ve got the quality of food and the menu balance right, how much effort goes into getting the service spot on?

The chances are if you run a bed and breakfast, what you serve and the way you serve your breakfast probably gets a lot of your attention as it’s often the only meal you’ll be providing. But do hotels give breakfast the same focus?

For many hotels breakfast provides a great opportunity for additional profit. But we’ll be doing nothing to capitalise on this if we don’t look after our existing breakfast customers.

You probably serve more breakfast than any other meal; but does it receive the same degree of care and attention as lunch or dinner?

All too often breakfast is used as a training ground for new or inexperienced front of house staff. I frequently experience waiting staff at breakfast who have little more than a basic understanding of what’s available, the basics of hygiene when clearing and setting up tables, and dare I say it, of the English language.

How welcoming are your guests made to feel at breakfast? Do they get a surly request for their room number, with absolutely no eye contact as the waiter or host checks their list? Or do they get a nice genuine smile and a welcoming “Good morning”?

Breakfast service can be confusing for those not familiar with your hotel. Simply telling a guess it’s self-service (which is what I heard yesterday at breakfast) doesn’t really tell us very much, especially when the guest is still stood in the doorway and can’t even see into the restaurant or where the buffet is located. Should they wait to be allocated a table, or can they just sit anywhere they like? Will you be serving fruit juice, tea and toast, or do they go and help themselves? If you have just one type of egg on the buffet, are others being cooked to order?

A smooth and speedy operation is paramount on busy weekdays when everyone appears to descend on the restaurant at once. The necessity for speed of service may differ at weekends from midweek. Few business users during the week will be prepared to be kept hanging around waiting for their pot of tea and toast, whilst those on a leisure break are more likely to be wanting to take their time and not feel rushed. Recognising guests’ expectations and being able to adapt their approach and style of service will be an important factor in how your guests perceive the level of service.

One of the most frustrating things with breakfast buffets or self-help items is the complete lack of logic in the layout. Just a little thought applied to the order in which a guest would want to collect their items can avoid bottle necks and prevent frustrated guests who may not be at their best first thing in the morning.

Ten tips for avoiding bottlenecks (and mess and wastage)

  1. Encourage your team to take the customer journey*, serving their own breakfast and seeing everything the guest sees. Some things to check:
  2. Fruit Juice – are the glasses next the fruit juice? Are all the various juices labelled so guests can work out what they are without having to taste them? It’s not only frustrating for the guest to discover that what looked like grapefruit juice is in fact pineapple, but does nothing for your wastage levels and food costs either.
  3. Cereal – Are your bowls, cereals and milk arranged logically for guests to pick up the bowl, help themselves cereal, then pour on their milk. It sounds obvious but I so often see guests having to backtrack to get their milk.
  4. Milk -Recognise that pouring milk needs two hands – one to hold a cereal bowl another to pour the milk so is there anywhere to place their fruit juice, tea, or anything else they’ve already picked up?
  5. Pastries – The logical flow goes for toast, breads and pastries, butter / spreads and conserves. The guests sequence is plate first, bread then spread then jam. It just frustrates them to find they’ve sat down and forgotten their butter….
  6. Tea – If guests make their own tea, is it easy to make? Where I stayed this week all the pots were already laid up with teabags; fine if you wanted normal tea, but there were no other pots for brewing specialist teas. So guests had to empty teabags out of the pots to make their tea. Crazy! And nowhere to leave the wrappers.
  7. Hot drinks – Depending on what you use for hot water or coffee, check how well this dispenses. Is it pre measured? If so, is does this over fill the pot, causing spillages. Or does it short measure encouraging guests to take a second measure.
  8. Utensils – Check your utensils match the item. If you serve fruit, is this cut into spoon sized chunks, or elegant slices? Either of course is fine, but just make sure that the serving utensils and plates or bowls you provide are suitable – i.e. slices can’t be eaten (or easily served) with a spoon; they need a knife and fork, so only providing bowls to be served in is illogical. I frequently see ladles used fruit salad, stewed fruit or bowls of yogurt. Have you ever tried serving from these ladles? A shallow spoon would make life a lot easier for the guest; why complicate things?
  9. Toast – Cold rubbery toast is a big criticism of many a hotel breakfast. But do rotary toasters perform any better? You’ve just plated up your bacon and eggs and head for the toast, only to find either there’s a queue, or the settings on the toaster make it possible to get the toast anything between completely underdone and burnt to a crisp. And of course why you’re trying to perfect the colour of your toast your bacon and eggs have got stone cold. I’m not saying rotary toasters are a complete no-no, but firstly check the settings so that toast only needs to go through once to make it look and feel like toast, and position it so that guests can cook their toast before plating up their hot food.
  10. Hot dishes – If you use lids on your hot dishes, are the dishes labelled, so guest don’t need to open each one to find the bacon? Is there somewhere to safely put the lids without having to do a balancing act. Or move them without dripping condensation on the floor and counter? Check your utensils’ handles don’t get too hot and guests burn themselves. And while on the subject of hot food, hot food put onto cold plates does stay hot for long. Whatever your style of service ensure you warm your plates as much as possible within the realms of safety.

Look and learn how well your layout works for your guests. Watch for your bottlenecks, and re arrange accordingly. What are the things that guests constantly ask for when it’s there already? How much toing and froing is there from table to buffet?

Make your breakfasts memorable, for the right reasons, and leave your guests relaxed with a positive last impression and an incentive to come back.

*Take the full Customer Journey – And become your Own hotel Inspector –  limited offer until March 21st only


When the cheque isn’t in the post ~

Ten Top Tips To Beat Late Payment

If you have business customers you will often be expected to invoice rather than taking payment at the time of their visit. Late payment is a problem for any business and in the current economic downturn there is a worsening climate of late payments and bad debts, and the associated impact on cash flow. How many times have we been told “The cheque’s in the post”?  It is reported that 59% of small and medium sized enterprises encounter difficulties with outstanding debts, with 33% claiming that customers’ failure to pay on time risks the survival of their business.  Despite the fact that you have a right to charge interest for late payment at 8% above the Bank of England’s reference rate, do we really want it to get to this stage?  Here are a few things you can do to avoid getting to this:

Credit check your customers

Check out their ability to pay before you confirm big bookings, or agree to credit. Speak to your accountant about th best ways to do this, which might include via their bank, credit reference agencies, or some of their existing suppliers.  Further financial information may be obtained from Companies House or the Institute of Credit Management.  Consider bi-annual checks for existing customers.

Diversify your customer base

Having all your eggs in one basket can be risky.  If this one customer runs into difficulties or fails to pay, this will have a far bigger impact on you than if your business is spread over a number of customers.

Agree payment terms in advance

Ensure you discuss payment terms at the outset, and record the agreed payment schedules.  If invoicing for any of the services or expenditure up front, ensure you set a precedent and ask for this before you start work or deliver.  Then ensure that payment dates are clear on each and every invoice.

Split invoices

When you have supplying over and above what was included in your original quote (e.g. extra covers, or additional bar bills), invoice the two amounts separately.  This means that if any amounts are then in dispute, the main invoice (which should match your quote) will not be held up, only the variations.

Invoice on time

Your customers won’t pay until they receive the invoice.  If payment terms are for example 14 days from invoice, it stands to reason, the longer you leave it to send the invoice the longer you will need to wait to be paid.  But there are other reasons to invoice promptly.  The longer the time gap between providing the service and receiving the invoice, the more likely the customer will forget the value they have received and the more likely they are to question or challenge items.  It also reflects the professionalism of your business – if you don’t take the effort to invoice on time what message does this send the customer about the importance of being paid promptly?  Make sure you have a system in place to ensure invoices are sent within days of completion, or for on going business on the specified day each month.

Put controls in place

Set up a system, which ensures you know at any one time what is due in this week, and what is outstanding.   I come from a sector of the industry where everyone’s performance was measured by ‘debtor days’ – the number of days’ debt outstanding at any one time.  This was published to all client managers on a daily basis, and it was their job to ensure that anyone who had not paid in 30 days (our specified payment terms) was followed up immediately.  It doesn’t need to be anything complicated, just a spreadsheet, which someone has a responsibility to monitor daily.

Make payment simple

Ensure that payment methods are simple.  If you encourage payment on line how easy is it for customers to set up a payment.  I have had a number of different suppliers recently who have either failed to give bank details, or who use a third party to monitor payments, where it is not clear what details to put into the payee section.  If paying by cheque, is it clear who to make the cheque out to, and where to send the cheque?  And how easy is it for you to monitor your bank account to check who has paid, and which invoice this relates to?

Communicate with customers

If payment is due, speak to the customer!  We complain to everyone that so and so has not paid, but have we actually asked for the money?  Sometimes it is a genuine over sight, and other times they are just putting it off to help their own cash flow, but rest assured if we don’t chase your invoice will be bottom of the pile.   This does not need to be done in an aggressive way, simply pick up the phone and ask the question “I noticed that you have not yet paid your invoice, which was due yesterday.  Can you tell me when we will receive payment?”  Be prepared for any ‘excuses’ and have your response ready; remain polite, but firm.   Identify who holds the purse strings and initiates payments, and build rapport with them.  Note I have said to phone – it’s far harder to ignore than a letter or e-mail, and you know for certain that they have received the message.  Better still, call in if they are local.  If you are worried about damaging your relationship, get someone else to call, who can be detached and objective.

Spot potential problems early

Don’t rest on your laurels.  Just because you have called once, keep checking for payment and keep calling.

If the theme of late payment continues try phoning them before the date it is due – “Hello, Jo, I just wanted to remind you that your invoice is due this week.  To help me monitor my cash flow, it would be useful to know which day I will receive your cheque”, or something along these lines. – This just acts as a reminder and lets them know you are monitoring it.  It is also implied that payment is only a day or two away, not weeks.

Keep any eye on customers’ behaviour – are they acting differently?  Are they suddenly difficult to get hold of?  Are they sending post-dated cheques?  Remember, prevention is better than cure.

How it impacts them

Let them know the implications of late payment.  We may not want to resort to threats, but make customers aware that failure to pay you may mean that you can’t hold their rooms or confirm their next booking until they are up to date with their payments.  If you say this you need to be prepared to carry out.  Their late payment could also potentially mean that you are unable to pay suppliers or your staff, which in turn could have a knock on effect on the quality of service they receive.  Letting them know how it will affect them is sometimes enough to prompt some action.

Look at options

If a customer is struggling themselves and simply cannot pay you in full consider the options.  If this a long term agreement you may not want to take the risk, but it is better to have some money than none, so discuss what they can give you now and when they will be able to pay the balance.


Are your breakfast profits going in the bin?

10 tips to cut down on waste at breakfast service

  1. For self service dishes use appropriate sized serving utensils – the bigger the spoon, the bigger the portion your guest will take
  2. If serving fresh fruit have this sliced or portioned in some way – grapes are a classic example – unless you cut the bunches into portion sized ‘mini bunches’ your guest will waste half by trying to break off a portion, or even take the whole bunch
  3. Label your fruit juices clearly – how many times have you seen a juice left barely touched because the guest thought it was grapefruit and it turned out to be something different such as pineapple?
  4. Avoid over filling teapots (especially those with poor fitting lids that have a tendency to dribble).  This avoids guests wasting napkins and table linen in mopping up avoidable spillages
  5. If you use table clothes, reduce your laundry costs by seating people on an appropriate sized table.  If most of your guests will be breakfasting alone or in twos and your most popular tables are those by the window – position your smaller tables here and place large tables for bigger parties where they are less likely to be requested by solo guests
  6. Ask before automatically serving toast – you’ll be shocked to see how much of it ends up in the bin (often because it is served cold and rubbery!)
  7. Listen to the guest’s order, and only cook and serve what is asked for – if they ask for one egg, only serve one egg, not two
  8. Cook to order when you can, to reduce wastage. This might not be possible for ingredients such as sausages, but there should be no excuse not to cook eggs to order, or at least batch cook for busier hotels
  9. Ask for feedback, so you can learn what your guest like and don’t like.  Watch and monitor what comes back on guests’ plates – and follow this up to check the cause of this – are your portions too big, was it not cooked enough, was there a problem with the ingredients or flavour?
  10. Monitor wastage and costs in the exactly the same way as you would for any other meal service.  Do you know your exact cost per item and average cost per head for a full English breakfast including cereal, fruit, toast, juice, condiments, and table linen?

Cash might be King, but so is your Stock

Stock is no different than cash – so treat it as such.

You wouldn’t leave your safe unlocked or your till drawers open, so why would you leave your store rooms open to anyone and everyone?

Here are my top 30 tips on controlling your stock

  1. Check suppliers’ prices before ordering, and adapt your order if price changes will reduce your margin
  2. Keep stock as low as possible by only ordering what you need ~ you’ll benefit from easier control, staff wont be tempted to use more than they need, reduced wastage from perished or damaged stock, and most importantly it helps your cash flow
  3. Only ever buy products on offer if you know they are needed, or can be utilised cost effectively e.g. incorporated into the menu without it affecting your sales or margins
  4. Control who is allowed to place orders for high priced items
  5. Don’t allow purchases for staff to go on your invoices ~ ensure they are invoiced directly to avoid any discrepancies or disputes
  6. Keep an order book so you have a permanent record of what’s been ordered
  7. Check all deliveries are complete, adequate shelf life and in good condition ~ never accept anything that is not to standard.  Keep a dedicated set of scales and a thermometer in the food delivery area
  8. Check invoice prices against suppliers’ list or quoted prices, and don’t accept expensive substitutes for out of stock items
  9. Conduct your own spot checks on deliveries ~ check what your suppliers send and what your staff are willing to accept
  10. Keep stores tidy, with everything having its own place – it’s far easier to control. Print out a layout of the stores and label shelves to ensure everything goes back to its proper place
  11. Separate items to avoid risk of cross contamination and subsequent wastage ~ high risk foods away from low risk, cleaning chemicals away from food or laundry, etc. Not just in the stores, but on housekeeping trolleys or baskets too
  12. Ensure correct storage for the product ~ i.e. stored at the correct temperature, correct atmosphere
  13. Keep stores locked, with access only from those who need it, and only allow staff to take what’s needed for the day to avoid excess items going to waste
  14. Keep particularly high value items somewhere it is easy to monitor e.g. gifts, saffron, truffles ~ anything that is easy to steel, or easy to over use – even if unintentionally
  15. Date stamp perishable products clearly and ensure stock rotation to avoid spoilage
  16. Write the prices of items on their box so staff see what they cost
  17. Fit dispenser pumps on cleaning materials to avoid over use
  18. Take stock regularly, and at the same time each period, weekly if possible, but as a minimum monthly – to get accurate stock consumption figures (this also encourages low stocks and good rotation)
  19. Ensure all items are physically counted on each stock take ~ don’t just assume the contents of a box is the same as last time
  20. Use an independent stock taker for high value stock such as liquor, or even for all your stock takes if you don’t have the staffing to do this accurately
  21. Check stock and consumption in all areas ~ don’t forget disposable items such as napkins, foil, printer paper, ink cartridges, toilet rolls, etc
  22. Follow a regular cleaning and maintenance schedule on all your store areas ~ freezers, fridges, chilled areas checking for temperatures, air circulation, cleanliness, rotation of stock, door seals on fridges and freezers, evidence of pests, security
  23. Know your expected usage and check your actual consumption figures against this.  If you know on average only 60% of guests use the body lotion and you’ve had 100 room nights this week does your body lotion bottle consumption equate to this
  24. Openly investigate any discrepancies as soon as they are identified.  If you have a problem with pilfering this will make people less inclined to take the risk
  25. Check your detergent dispenser concentrations on dish washers yourself – don’t leave this to the sales rep
  26. Keep your choices limited to avoid low stock turnover.  Don’t be tempted to buy in items just because one of your regulars requests it; you’ll never be able to please everyone all of the time (and when it comes to the menu, too big a choice gives the customer the perception of low turnover too)
  27. Ensure all staff are trained in stock control – this means chefs/service staff are trained in portion control, housekeeping staff are trained in the correct storage and use of toiletries and cleaning materials to avoid wastage
  28. Educate staff in the budgets and margins involved in the businesses – if they think you make a fortune on every sale they wont control costs
  29. Make it crystal clear to staff what the rules are on use of materials – including what’s allowed and not allowed for personal use. Post a sign by the staff entrance reminding them of the rules
  30. Accidents do happen ~ but ask staff to let you know when there has been anything out of the ordinary to affect wastage or stock levels

Increase your profits without the need for a single extra customer in your restaurant

https://www.naturallyloyal.com/products-resources/money-matters/


The 12 days of Christmas – What? Already?

Whether we like it or not, Christmas can be our busiest time of year. 

So it can be make or break for some hotels or restaurants in what has been for some a difficult year. 

But what happens when we get our sums wrong?

Your Christmas menu is key to your profitability over Christmas.  

How would you like an independent review of your menu?  

For the next 12 days only we are offering a Christmas Menu Review, to check you are doing everything to make your menu irresistible, offering excellent value for money, but at the same time making you maximum GP.  Sounds good?

 

Click here for more details