Ten Steps to a More Profitable Food Service Operation

While creativity and innovation are hallmarks of a truly outstanding culinary experience, it is a daily focus on the basics that makes a food service operation profitable.  The following ten basic guidelines are taught in every restaurant or hospitality program.  It is, however, the daily application of these principles that will make a difference on your bottom line.

1.   STANDARDIZED AND COSTED RECIPES

Every recipe for every menu item, both à la carte and catered, must be standardized and costed.  This basic discipline ensures consistency of product and ongoing profitability.  While the initial set up requires some effort on the part of the chef, it allows each item to be priced based upon its raw ingredient cost.  Given the volatility of some ingredients, it is important to revisit recipe costing on a periodic basis.  One way to simplify this process is to set up each recipe on a separate worksheet in an MS Excel® file.  By linking each recipe ingredient to a master ingredient list, the chef can easily update the master list, hence all recipe costing, on a monthly basis.  This discipline, once established, can easily be delegated.

2.   PRICING BASED ON KNOWN COST STRUCTURE

The standard method of pricing is to take the cost of each menu item and multiply it by an appropriate multiplier to cover the cost of labor, other expenses, and overhead.  For instance a 2½ times multiplier should yield a 40% food cost; a 3 times multiplier yields a 33% food cost.  This simple formula is all well and good, but if your revenues are below projections and/or your payroll cost or overhead are higher than expected, you may still lose money.  Given the interplay of revenues, pricing, volume of business, and cost structure, these numbers must be tracked closely and reviewed frequently.

3.   PORTION CONTROL

Standardized recipes are costed based upon specific portion sizes.  If untrained or poorly supervised employees routinely serve larger than costed portions, your profitability will literally be eaten up.  Costly meat and fish products should be weighed to ensure correct portion size.  Ladles of specific sizes should be used to plate specific menu items.  Pies, cakes, and other baked desserts should be cut and served using templates to ensure the correct number of portions are realized.  Cooks and pantry workers must be trained to prepare and serve appropriate sized portions.

4.   LABOR CONTROL

Labor, both front-of-house and in the kitchen, is the single largest expense in a food service operation; it is also a continuing challenge to control.  Electronic timekeeping systems make it easier for supervisors to verify daily hours, but regardless of system used, supervisors must monitor payroll hours daily.  Close monitoring of employee hours will reduce overtime and milking the clock, while allowing daily comparison of payroll cost to revenues.  Front- and back-of-house supervisors should also keep a daily log that notes revenues, meals served, payroll hours, and a subjective evaluation of the smoothness of service.  Such an evaluation of each meal period will enable supervisors to better schedule staff.

5.   BENCHMARKING REVENUES AND EXPENSES

Benchmarking is the act of measuring and analyzing operating performance.  In a food service operation there are many things to benchmark, such as meals served and average check per meal period by day of week; payroll hours by position by meal period or day; and beer, wine, liquor sold per meal period and day of week.  When tracked over time, these statistics become the baseline to project and monitor future performance.  Benchmarks also allow measurement of member reaction to food service initiatives such as new menus or pricing.  Most importantly, benchmarking makes supervisors more knowledgeable about their operations.  Such knowledge translates to improved operations and bottom lines.

6.   ROUTINE AND CONSISTENT INVENTORIES

Inventories are critical to monitor stock levels, avoid shortages, control pilferage, and determine cost of goods sold.  Inventories can also be time consuming and inconvenient for hard working chefs.  Inventories sometimes get delegated to poorly trained subordinates who miss or miscount key items.  Sloppy inventories contribute to erratic cost of goods sold.  Poorly organized storerooms contribute to sloppy inventories.  Keys to accurate inventories include well-organized storage areas, knowledgeable individuals conducting inventories, routine and timely inventories, and organized receiving documents, invoices, and credits slips.  Delegating counts is acceptable if employees are trained.  However, having the same employee conduct all inventories without spot-checking and oversight will invite problems.

7.   SUGGESTIVE SELLING TRAINING FOR EMPLOYEES

Service employees who are trained in the techniques of suggestive selling can improve your average check and bottom line.  Whenever a new menu is put in place, all servers should be provided a “selling sheet” that gives key information about each entree.  Such information should include cooking method, ingredients, time of preparation, and enticing descriptors to help sell each item.  Just as standardized recipes are important in the kitchen for consistency of product, selling sheets provide the service staff with the knowledge and information they need to sell the product.  In addition to entrees, special training should be given for the suggestive selling of appetizers, desserts, wines, and specialty alcoholic beverages.  The time spent providing servers with the information and confidence to sell your food and beverages will yield consistently higher average checks.

8.   CONTINUAL FEEDBACK TO EMPLOYEES

Every month’s budgeted food sales is made up of how many meals are sold and how much each member spends on average for a meal.  By breaking your projections down into meals and average check and posting your daily targets prominently in the pantry, you provide your servers with goals that connect their daily efforts to your profitability.  By comparing month-to-date actual meal counts and average check to projected, you give your employees a day by day record of their progress.  Most people are competitive by nature and this simple technique will become a powerful incentive to servers.  The same technique can be applied to appetizers, desserts, and bottles of wine sold.

9.   FORECASTING AND SCHEDULING

By tracking key revenue and patronage benchmarks and keeping a daily log of staffing, food service supervisors can develop a routine system of forecasting business levels.  While some level of volatility can always be expected in member patronage, the act of forecasting, when formally done and evaluated after the fact, will assist in maintaining member service while controlling labor cost.

10. MEMBER FEEDBACK

While some members are vocal with their opinions, many are not.  Food service supervisors should make it easy for members to provide feedback.  Member comment cards must be readily available, periodic surveys should be conducted, revenue benchmarks should be analyzed to measure member reaction to offerings and initiatives, and employees should be trained to routinely report comments made or overheard to supervisors.

Every professional food and beverage manager is aware of these necessary elements to success.  Unfortunately, in the ongoing rush of business they are often overlooked.  At its root the problem is one of organization and discipline.  By taking the time to establish systems to address each guideline, by training and delegating tasks, by making each guideline part of the daily routine, each of these steps can be easily integrated into your operation.  While the initial effort may be great, so also is the ongoing payback.

Thanks and have a great day!

Ed Rehkopf

This weekly blog comments on and discusses the club industry and its challenges. From time to time, we will feature guest bloggers — those managers and industry experts who have something of interest to say to all of us. We also welcome feedback and comment upon the blog, hoping that it will become a useful sounding board for what’s on the minds of hardworking club managers throughout the country and around the world.

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