A Restaurant Turnaround: From Crash to Cash

Transcription

1 A Restaurant Turnaround: From Crash to Cash August 14, 2012 Presented by Don J. Avalier, FCSI, FMP, Principal Manask Hospitality Group

2 Don Avalier, FCSI, FMP 40+ years experience as a Restaurant Operator, Hotel Divisional Food & Beverage Director, Court recognized Foodservice Expert and Industry Restaurant Consultant Opened more than 70 restaurants, 9 hotels and 6 country clubs throughout career Seminar Presenter, Industry Judge and Author Memberships / Accreditations: California Restaurant Association Foodservice Consultants Society International (FCSI) Accredited Food Management Professional (FMP) through the Educational Foundation of the National Restaurant Association ServeSafe certified

3 The Restaurant A Case Study Independent steak and seafood restaurant, 30+ years old, with annual sales volume of 1.4 million Recessionary economy had contributed to decreased cover counts and increased cost of food, beverage, labor and operating expenses Restaurant owner was subsidizing the restaurant 12-15K monthly for more than 3 years Many long-term management and hourly employees with 15+ years at restaurant Bottom Line: Client could no longer continue to subsidize losses and was contemplating closing the restaurant

4 Our Process 1. Request of restaurant background information 2. On-site meeting with owner 3. Tour of restaurant facilities 4. Key department heads introduction: Chef, Sous Chef, Day Manager, Night Manager, Banquet Manager, Head Bartender 5. Food sampling 6. Wrap-up meeting with owner regarding priorities and next steps 7. On-site evaluation

5 Step 1: Restaurant Background Information Collect information before on-site evaluation Prepare proposal detailing objectives/goals/priorities of engagement as discussed with client during initial meeting Prepare a D&I (document and information) request of financial, operational and marketing materials from restaurant Three-year review of operating statistics and financial key indicators including: Covers and revenue by day and by day-part Prime costs Food, beverage, labor and operating costs Sales per labor hour Sales per square foot Set up the on-site evaluation timing

6 Step 2: On-site Evaluation Shutter or Save? That is the Question! Client meeting to update engagement and prioritize on-site activities for maximum exposure to operations for all day-parts (weekday and weekend) Conduct interviews with management department heads and hourly staff Observation of kitchen operations including: purchasing, receiving, storage, preparation, production controls, scullery operations and inventory management practices and controls Observation of front-of-the-house guest services including: guest reception, seating, table set-up, order taking, table-side service and sales technique, check presentation and closing salutation Oral and written recap of the on-site evaluation with client and determine next steps to be taken

7 Findings: Food Costs No standardized recipes in place No cost cards No photoplating of items to ensure consistent presentation of items No purchasing or receiving controls; i.e. specifications, order sheets with amounts and pricing, no weighing of incoming products, no inspection of goods, no competitive bidding, no par stock or build-to inventory standards and no established potential or ideal food cost No preparation/production controls to anticipated levels of business No plating/portion controls Chef was doing both the purchasing and the receiving! No updating of inventory sheets in previous six months

8 Findings: Beverage Costs Free pouring of beverages Over-pours for regular customers No par stock or perpetual inventory system in place No updating of beverage inventory sheets No full for empty policy for re-stocking daily beverage usage (Breakage Report) No established cost potential established for bar Employees drinking at bar at close of their shifts No tracking of Void, or No Sale rings on POS system Drinks being prepared on-call before orders entered into POS system

9 Findings: Labor Costs No established criteria for labor scheduling No scheduling synergies between beverage and dining room service No established job descriptions, or Table of Organization, for employees leaving duties and responsibilities open for interpretation by employees Overstaffing in front and back-of-the-house for volume of business No service training meetings in past two+ years Management not on the floor during peak periods of business at lunch and dinner Service staff hanging around in the kitchen/bar rather than at their assigned dining stations

10 Findings: Operating Costs No oversight of Chef s purchasing of food and supplies No security to monitor the many exits from the restaurant No linen controls (no credits for clean, but unserviceable linen, use of napkins for clean up, accepting vendor counts at delivery without random checking) Flatware costs excessive (no monitoring of garbage cans for flatware) No quarterly, or semi-annual, inventory of china, glassware and flatware All equipment and utilities being turned on at 7:00 am although the restaurant did not open until 11:30 am

11 Stopping the Crash Realizing a problem exists Getting help as soon as possible Setting up priorities to correct the problem(s) Instituting change communications (internal and external) Staff involvement and empowerment Measuring the results Sharing the success

12 Actions Taken: Food Cost Preparation of new standardized recipes and cost cards* Improve menu flavor profiles and plating presentations Photoplating of all luncheon and dinner items to ensure consistent production and presentation of all food items Re-train staff to prepare menu items in accordance with new recipes and portion controls Inventory updated to reflect current pricing Purchased digital scale to weigh items purchased by weight and instituted new policies and procedures checklist for purchasing and receiving of goods Competitive bidding practices Comparison of quoted pricing to invoice pricing Reduction in inventory on hand Inspection and weighing of all incoming proteins (meat, poultry, fish) Establishment of a daily prep sheet Cost/benefit analysis of complimentary appetizer bar and happy hour promotions * Sample hand-outs available

13 Recipe Card YOUR RESTAURANT NAME RECIPE CARD DATE: MEAL PERIOD: RECIPE NAME: YIELD: COOKING METHOD: PORTION SIZE: TEMPERATURE: INGREDIENTS AMOUNT MEASURE METHOD PLATING/PACKAGING INSTRUCTIONS/GARNISH:

14 Recipe Cost Worksheet YOUR RESTAURANT NAME RECIPE COST WORKSHEET DATE: MEAL PERIOD: RECIPE NAME: LAST UPDATE: YIELD: PORTION SIZE: COST PER PORTION: PROFIT PER PORTION: CURRENT SELLING PRICE: FOOD COST PERCENTAGE AT CURRENT SELLING PRICE: RECIPE COST PER EXTENDED PURCHASE UNIT OF UNIT OF INGREDIENT INGREDIENT DESCRIPTION PRICE PER UNIT MEASURE MEASURE COST TOTAL RECIPE COST: $0.00 SUGGESTED SELLING PRICE TO ACHIEVE A 28% C.O.S. SUGGESTED SELLING PRICE TO ACHIEVE A 30% C.O.S. SUGGESTED SELLING PRICE TO ACHIEVE A 32% C.O.S. N/A N/A N/A

15 Actions Taken: Beverage Cost Measured speed pourers on all bottles and staff re-training Bottle identification program Establishment of a par stock system for front bar Updated pricing on beverage inventory sheets Instituted a full for empty policy for re-stocking daily breakage 33% reduction in wines by the glass inventory Instituted new policies related to management and hourly employees use of bar at close of their shift Random exchange of cash drawers during shifts, tracking of voids and no sale rings, use of spotters, cash drawers closed at all times Drinks being prepared before orders are input into POS system

16 Actions Taken: Labor Cost Developed 13-week (quarterly) covers history, by week, by day and by day-part as basis for staffing* Established benchmarking standards for dining room and lounge staffing Cross training of service staff with hostess staff Quarterly training meeting for all front-of-the-house staff Established job descriptions, for ALL front, and back-of-the-house, employees and provided each with a Table of Organization Pre-forecasting of labor and projected costs prior to scheduling to allow for adjustments based on projected revenues* New policies related to entry/exit to restaurant, use of sign-in sheets, parking and packages/purses/food being brought in, or taken from, restaurant

17 Covers Tracking Forecast - Dinner YOUR RESTAURANT NAME Quarterly Dinner Covers - Tracking Analysis Week Ending 7/31/11 8/7/11 8/14/11 8/21/11 8/28/11 9/4/11 9/11/11 9/18/11 9/25/11 10/2/11 10/9/11 10/16/11 10/23/11 Total Maximum Minimum Average Dinner Forecast Monday #DIV/0! Tuesday #DIV/0! Wednesday #DIV/0! Thursday #DIV/0! Friday #DIV/0! Saturday #DIV/0! Sunday #DIV/0! Weekly Total Dinner Actual Monday #DIV/0! Tuesday #DIV/0! Wednesday #DIV/0! Thursday #DIV/0! Friday #DIV/0! Saturday #DIV/0! Sunday #DIV/0! Weekly Total Variance +/- Monday Tuesday Wednesday Thursday Friday Saturday Sunday Weekly Total

18 YOUR RESTAURANT NAME Blind Staffing Worksheet Pre-Forecast of Labor Prepared by: Date: Day of Week FRIDAY Owner Manager Hostess Hostess Chef Kitchen Kitchen Kitchen Kitchen Dish Dish Server Server Server Server Busser Busser Busser Bar Server Server Server Tot. Hrs. 6-7 AM PM AM 0 TOTAL Category RATE # HRS TOTAL $ TOTAL HOURS SCHEDULED 0.0 HRS. $ % Owner $ BOH LABOR 0.00 $0.00 #DIV/0! Manager $ TOTAL DAY'S WAGES $0.00 FOH LABOR 0.00 $0.00 #DIV/0! Hostess $ Chef $ EST PAYROLL TAX & BENEFITS $0.00 Kitchen $ Dish $ GROSS WAGES $0.00 Server $ Busser $ PROJECTED SALES for DAY $0.00 Bar $ Server $ LABOR PERCENTAGE 0.0% $ $0.00

19 Actions Taken: Operating Costs Implementation of weekly operations meeting with Chef, Head Bartender, Banquet Manager and General Manager New security system to cover front desk, and all entry points in and out of the restaurant Competitive bidding of new linen contract Use of magnets on garbage cans in dishwashing area and random dumping of garbage to review contents Implementation of 13, 4-week, accounting system to improve comparative analysis of food, beverage and labor costs* Restructuring of the financial reporting system to conform with Uniform System of Accounts for Restaurants

20 13 Period 2012 Calendar Period Year (28 days each) Period 1 Period 7 MON TUE WED THU FRI SAT SUN MON TUE WED THU FRI SAT SUN 30-Dec 31-Dec 1-Jan 2-Jan 3-Jan 4-Jan 5-Jan 16-Jun 17-Jun 18-Jun 19-Jun 20-Jun 21-Jun 22-Jun 6-Jan 7-Jan 8-Jan 9-Jan 10-Jan 11-Jan 12-Jan 23-Jun 24-Jun 25-Jun 26-Jun 27-Jun 28-Jun 29-Jun 13-Jan 14-Jan 15-Jan 16-Jan 17-Jan 18-Jan 19-Jan 30-Jun 1-Jul 2-Jul 3-Jul 4-Jul 5-Jul 6-Jul 20-Jan 21-Jan 22-Jan 23-Jan 24-Jan 25-Jan 26-Jan 7-Jul 8-Jul 9-Jul 10-Jul 11-Jul 12-Jul 13-Jul Period 2 Period 8 MON TUE WED THU FRI SAT SUN MON TUE WED THU FRI SAT SUN 27-Jan 28-Jan 29-Jan 30-Jan 31-Jan 1-Feb 2-Feb 14-Jul 15-Jul 16-Jul 17-Jul 18-Jul 19-Jul 20-Jul 3-Feb 4-Feb 5-Feb 6-Feb 7-Feb 8-Feb 9-Feb 21-Jul 22-Jul 23-Jul 24-Jul 25-Jul 26-Jul 27-Jul 10-Feb 11-Feb 12-Feb 13-Feb 14-Feb 15-Feb 16-Feb 28-Jul 29-Jul 30-Jul 31-Jul 1-Aug 2-Aug 3-Aug 17-Feb 18-Feb 19-Feb 20-Feb 21-Feb 22-Feb 23-Feb 4-Aug 5-Aug 6-Aug 7-Aug 8-Aug 9-Aug 10-Aug Period 3 Period 9 MON TUE WED THU FRI SAT SUN MON TUE WED THU FRI SAT SUN 24-Feb 25-Feb 26-Feb 27-Feb 28-Feb 1-Mar 2-Mar 11-Aug 12-Aug 13-Aug 14-Aug 15-Aug 16-Aug 17-Aug 3-Mar 4-Mar 5-Mar 6-Mar 7-Mar 8-Mar 9-Mar 18-Aug 19-Aug 20-Aug 21-Aug 22-Aug 23-Aug 24-Aug 10-Mar 11-Mar 12-Mar 13-Mar 14-Mar 15-Mar 16-Mar 25-Aug 26-Aug 27-Aug 28-Aug 29-Aug 30-Aug 31-Aug 17-Mar 18-Mar 19-Mar 20-Mar 21-Mar 22-Mar 23-Mar 1-Sep 2-Sep 3-Sep 4-Sep 5-Sep 6-Sep 7-Sep Period 4 Period 10 MON TUE WED THU FRI SAT SUN MON TUE WED THU FRI SAT SUN 24-Mar 25-Mar 26-Mar 27-Mar 28-Mar 29-Mar 30-Mar 8-Sep 9-Sep 10-Sep 11-Sep 12-Sep 13-Sep 14-Sep 31-Mar 1-Apr 2-Apr 3-Apr 4-Apr 5-Apr 6-Apr 15-Sep 16-Sep 17-Sep 18-Sep 19-Sep 20-Sep 21-Sep 7-Apr 8-Apr 9-Apr 10-Apr 11-Apr 12-Apr 13-Apr 22-Sep 23-Sep 24-Sep 25-Sep 26-Sep 27-Sep 28-Sep 14-Apr 15-Apr 16-Apr 17-Apr 18-Apr 19-Apr 20-Apr 29-Sep 30-Sep 1-Oct 2-Oct 3-Oct 4-Oct 5-Oct Period 5 Period 11 MON TUE WED THU FRI SAT SUN MON TUE WED THU FRI SAT SUN 21-Apr 22-Apr 23-Apr 24-Apr 25-Apr 26-Apr 27-Apr 6-Oct 7-Oct 8-Oct 9-Oct 10-Oct 11-Oct 12-Oct 28-Apr 29-Apr 30-Apr 1-May 2-May 3-May 4-May 13-Oct 14-Oct 15-Oct 16-Oct 17-Oct 18-Oct 19-Oct 5-May 6-May 7-May 8-May 9-May 10-May 11-May 20-Oct 21-Oct 22-Oct 23-Oct 24-Oct 25-Oct 26-Oct 12-May 13-May 14-May 15-May 16-May 17-May 18-May 27-Oct 28-Oct 29-Oct 30-Oct 31-Oct 1-Nov 2-Nov Period 6 Period 12 MON TUE WED THU FRI SAT SUN MON TUE WED THU FRI SAT SUN 19-May 20-May 21-May 22-May 23-May 24-May 25-May 3-Nov 4-Nov 5-Nov 6-Nov 7-Nov 8-Nov 9-Nov 26-May 27-May 28-May 29-May 30-May 31-May 1-Jun 10-Nov 11-Nov 12-Nov 13-Nov 14-Nov 15-Nov 16-Nov 2-Jun 3-Jun 4-Jun 5-Jun 6-Jun 7-Jun 8-Jun 17-Nov 18-Nov 19-Nov 20-Nov 21-Nov 22-Nov 23-Nov 9-Jun 10-Jun 11-Jun 12-Jun 13-Jun 14-Jun 15-Jun 24-Nov 25-Nov 26-Nov 27-Nov 28-Nov 29-Nov 30-Nov Period 13 MON TUE WED THU FRI SAT SUN 1-Dec 2-Dec 3-Dec 4-Dec 5-Dec 6-Dec 7-Dec 8-Dec 9-Dec 10-Dec 11-Dec 12-Dec 13-Dec 14-Dec 15-Dec 16-Dec 17-Dec 18-Dec 19-Dec 20-Dec 21-Dec 22-Dec 23-Dec 24-Dec 25-Dec 26-Dec 27-Dec 28-Dec 29-Dec 30-Dec 31-Dec 1-Jan 2-Jan 3-Jan 4-Jan (extra week every 5 to 6 years to keep make up for difference in calendar year (365 or 366 days) and 13 period year (364 days)

21 Benchmarking the Results Comparison of key operating costs to industry best practices for similar operations as shown in the Annual Restaurant Industry Operations Report Food cost Beverage cost Labor cost Prime cost Sales per square foot Sales per labor hour

22 Cash Not Crash, or the 180 Turnaround 6 mos. Prior 6 mos. After +/- Revenues $113,462 $125,807 +$12,345 Food Cost 42.0% 34.7% - 7.3% Beverage Cost 27.3% 25.0% - 2.3% Labor Cost 46.0% 37.0% - 9.0% Total Cost Improvement (%) %

23 Cash Not Crash, or the 180 Turnaround Monthly revenues ($) +$12,345 Food cost reduction ($) -$63,897 Beverage cost reduction ($) -$2,567 Labor cost reduction ($) -$127,953 Total Turnaround Savings ($) -$204,417

24 Any Questions?... Presented by Don J. Avalier, FCSI, FMP, Principal Manask Hospitality Group (818) or (800) Thank you!