The New Year is a good time to get your restaurant’s financial affairs in order. As you look to gain greater control over your food costs, the formula you use needs to flex to suit your restaurant category and priorities. Does yours? You could start by calculating the cost of every dish on your menu, but you’ll likely get a more accurate cost of a dish against the overall cost of running your business if you use a target based on your cost of goods sold (COGS). Depending on the type of restaurant you run, that COGS will vary. While food costs tend to fall between 28 and 30 percent of total food sales, they skew higher for full-service restaurants, which sell higher-margin alcohol and include a premium for table service, according to the accountancy and business advisory network Baker Tilly. Orderly suggests several ideal COGS targets based on different restaurant profiles. Full-service restaurants should aim for a COGS in the low-to-mid 30s and may find room to trim costs if they manage their bar costs closely and also monitor market prices of fresh, local produce. Bakeries, on the other end of the spectrum, should have a COGS in the low 20s or below — the same goes for pizza restaurants. The challenge in these restaurants is managing food waste and playing close attention to inventory so you’re not over-ordering or buying ingredients at premium prices. Pizza restaurants have the added challenge of watching market prices of fresh ingredients but can manage that with lower labor costs and the addition of higher-margin items to the menu. Ethnic restaurants should target a COGS in the high 20s. While they benefit from less-expensive ingredients like noodles, pasta and rice, they may need to rely on more specialized suppliers of sauces and spices — that’s where they’re more likely to see costs spike. In general, the more specialty offerings you have, such as premium cuts of meat or hard-to-find toppings or other ingredients, the higher your COGS will rise. That’s okay — it’s just important to look for ways to balance those costs with careful inventory and supplier management, menu innovation (especially at the bar) and labor cost management. (Need help? Team Four can advise you in these areas.)
Go with your gut
As medical research continues to point to digestive health as the foundation for a person’s overall health, both nutrition consultancies and food distributors have identified “gut-healthy foods” as a top food trend for 2019. Food Business News reports that probiotics are finding their way into products such as granola, oatmeal, nut butters and soups. The good news is that it’s easy for restaurants to accommodate the trend. To give your menu a probiotic boost, incorporate cultured or fermented foods like buttermilk, kefir, tempeh, sauerkraut and yogurt. For prebiotic fiber, try bananas as well as asparagus, garlic, leeks and onions.
Bring your costs and the market into “Alignment”
Before any product arrives at your door and on the plate of your guest, it passes through many hands and layers of pricing and profit formulas. The system is complicated — and ripe for pricing errors due largely to the manual processes still used to conduct business. One weak link in the supply chain can result in billing errors between manufacturers, distributors and you. Team Four launched a new program — Alignment4 — to help you identify those errors and correct them quickly so you can proactively manage your food costs. The program starts by analyzing receipts from your distributors, then examining product-level detail by invoice for a set amount of time. We can then plug in items that have been specially priced and compare them to what you were actually charged. The program can not only determine if a billing mistake was made, but it can also help you identify purchasing trends so you have a better sense of market values. If you are having a food-cost problem, Alignment4 can analyze your data and determine (soon at a daily speed) if a pricing mistake was made, if there was a temporary change in the market following a hurricane, or if a simple shift in your product mix might solve the problem. It converts data into actionable steps to lower food costs while helping you maintain standards for food quality and guest satisfaction. Gaining this insight into your data (all while keeping it anonymous) through Alignment4 provides other benefits too: You will get a customized inflation and market report that considers your past purchases and product mix, providing you with meaningful information to help you set menu selections, prices and portion sizes. Team Four can also approach suppliers on your behalf and solicit opportunities for you to consolidate purchases with other operators, whether you have 1000 locations or just one. For more information about how Alignment4 can help your restaurant, contact us at firstname.lastname@example.org.
Restaurant investment designed to maximize shared resources
As investors look to bring the next foodservice concepts to fruition, a new trend is becoming clear: Much like the transportation, retail, media and logistics industries before it, foodservice businesses are now attracting technology investment designed to streamline and bring efficiencies to multiple operations at once. For example, Tech Crunch reports that millions of dollars are now flowing into networks of shared kitchens, storage facilities and pickup counters that are likely to become the next big restaurant brands. These networks can help cut back on overhead and make operators more nimble when it comes to hiring labor and conceiving of new menu concepts. The trend is something existing operators can put into practice too: How might you and your neighboring businesses collaborate or share resources to become more efficient and flexible?
Remind employees to lather up
As the season of colds and flu approaches, remind your staff of the importance of washing hands with soap and warm water for 20 seconds at regular intervals. It’s the best way to remove the kinds of pathogens foodservice workers carry on their hands. Make it regular soap, since antibacterial soap needs additional scrub time to kill bacteria and doesn’t affect viruses and other pathogens, according to Statefoodsafety.com. Antibacterial hand sanitizers are helpful once employees have washed their hands with soap and water, but they are less effective when they come into contact with water, proteins, feces and blood and they will not kill norovirus, which is the top cause of foodborne illness outbreaks.
Shift to a four-week accounting cycle
How often do you conduct accounting reviews of your business? If you work on a monthly basis, you may want to reconsider: Orderly suggests accounting reviews on a four-week cycle, giving you 13 four-week periods to review over the course of a year. Since each cycle is exactly 28 days, you will be able to make more accurate comparisons to other periods in order to calculate your profits and losses.
Get to know Alexa
Could voice-activated ordering have a place in your business? The technology is poised to change the mobile ordering landscape in the near future. The consulting firm Capgemini expects consumers to use voice technology for 18 percent of their total spending within three years — up from 3 percent now. Forbes reports that Dunkin’ Donuts, Starbucks, Denny’s, Wingstop and Fazoli’s are among the brands that now offer voice ordering, with many using Amazon’s Alexa Voice Service, a chatbot or some combination to allow customers to place an order. The tech startup Orderscape, which currently works with brands including Fazoli’s, reports being in discussions with more than 20 other brands looking to build business via voice search. Orderscape’s CEO predicts the technology will soon evolve into a more interactive, frictionless conversation in which the customer can order the full menu — not simply place a reorder or choose from a slimmed-down variety of options.
Mind your budget busters
How well do you adhere to your restaurant budget? Restaurantowner.com says the vast majority of restaurant failures are, at least in part, the result of a budget that is not at the foundation of key business decisions and lacks accountability. Setting — and sticking to — your operation’s budget will help you identify where you need to save and where you can afford to invest. Upserve recently shared several factors that can negatively impact your numbers. For one, poor management of your inventory can lead to between 4 and 10 percent of your inventory being wasted, so move away from paper-and-pencil inventory management and toward technology that allows you to take a holistic view of your business and spot problems before they become costly. Without such a system, it’s easy for you to lose control of portion sizes and present an inconsistent experience to guests, or to miss signs of employee theft —problems that can also hurt your budget. (Remember to update your software regularly to stay in step with changes to your system.) Next, understand how to retain your best people, since the average cost of replacing a front-line employee is nearly $6,000, according to Cornell University’s Center for Hospitality Research. It can help to reward your top performers and engage employees so they feel invested in the business, as can interviewing employees who are leaving.
For some restaurants looking to minimize food waste by using the entire fruit or vegetable, the compost bin is sparking innovation — and chefs are making no attempt to hide it. Restaurant Business reports that Spice Kitchen & Bar in Cleveland offers “compesto,” a changing concoction of carrot tops, parsley stems and other vegetable trimmings that would have landed in the compost bin, and blends it with couscous as the base for a halibut dish. At Graffiti Earth in New York, a soup was promoted online with the hashtag #eatmycompost.
What’s your challenge? Whether you need help developing recipes and concepts, analyzing food costs, fine-tuning purchasing, planning a marketing campaign or managing another aspect of your business, we can provide guidance tailored to your needs. Contact Team Four at email@example.com or 888-891-3103 for more information.
About Food For Thought and Profit
Food For Thought And Profit is brought to you by Team Four Foodservice/Value 4. We offer the latest foodservice trends, news, safety, and technological advances in the industry. We are an outsourced purchasing and logistics company that provides comprehensive supply chain solutions to our customers. Our executive team has many years of foodservice experience and we bring that experience to work for you. We have expertise in all areas of the foodservice sector.