Stop throwing money away: Cost your Menu

In all likelihood, your most immediate opportunity to improve your restaurant’s financial performance is to better control your Cost of Goods Sold (“COGS” – the cost of all your menu’s ingredients).  Time after time, we see well run restaurants literally leave money on the table when it comes to COGS.

It’s time to stop throwing your money in the garbage

The implications are huge.  We estimate that restaurants operating without costed menus are losing 5-8% of Revenue.  All of it could hit your bottom line!  That’s a staggering number for an industry that averages about 6% overall profitability.

And yes, we know, to have a real costing system is challenging.  We usually hear one or more of these responses when someone resists the idea:

  • We change our menu too frequently to be bean counters
  • I have a good gut feel for what everything costs
  • I’m never going to be a spreadsheet person
  • We have such massive amounts of ingredients, recipes and sub-recipes, there’s all these different units

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Mei Mei Shakes It Up

Mei Mei is more than a great restaurant, they are great story-tellers.  As long-time food system activists, they’ve integrated their values into their sourcing.  Their mission is inspiring:

We’re on a mission to provide not only great food and wonderful service, but also a thoughtfully crafted dining experience that seeks to address the complicated ethics that surround restaurant food and restaurant work. Restaurants can reflect the problems of the world we live in, but they can also be engines for change. We source our ingredients carefully. We invest in and empower our team members. We want to be a good restaurant – in all senses of the word. 

This heart-centered approach is why we were so excited to partner with them to impact lives of their employees and team members through our Rethink Restaurants program.  As we move into Year 2 of the program with their team, they are documenting their progress and impacts through a blog series on their website.  You can read part one here.



Rethink Restaurants

The $2,800 Strawberries

As anyone who has worked with, managed or owned a restaurant can tell you, the business is =&0=&.  Over the course of a year, a popular dish is prepared and served hundreds or even thousands of times.  And one step, poorly planned or executed, can cost the business serious money.

There are numerous ways to plan and control =&1=& in a foodservice operation.  In our Rethink Restaurants™ Open-Book Training, we engage the entire team to consider multiple ways to manage this prime cost.  We teach our “Nine Paths to COGS Improvement” and challenge the team to travel them all.

Is that waste or is it food? How can we make consistent portioning easy?  Are we charging the right amount for our top sellers?  Do we promote our most profitable offerings? Are we productively partnered with our suppliers?  Are we consulting our most insightful customers? These questions and several others are considered each in turn, and thus far the efforts always (pardon the pun) bear fruit.

At one of our clients, a popular dessert café, there were many constraints on the prep kitchen.  A small café overall, the prep area would be described kindly as close quarters.  Prep work is interrupted frequently, just to let a co-worker pass through the area. Before our Open-Book implementation, the team understandably was motivated to complete the extensive prep list as quickly as possible, following the training received up to that point.  But things were about to change dramatically, to the benefit of all.

As the team attended our Open-Book classes, they started to understand ownership thinking; that is, thinking like an owner of the business no matter what task you may be performing.  It didn’t hurt that they also now had skin in the game: All our Open-Book clients implement a profit sharing model to pay to the team some of the new profits they help create.  Going through the ingredients list, we identified some high cost, high volume items.  Mistakes here can be especially costly.

Rethink Restaurants

Over the course of one session, the team played out the reality of Strawberry prep.  “It’s slow and awkward to cut off the tops one at a time, so we line them up and cut a bunch with one stroke,” they explained.  We had them identify where the cut was made and then asked the question: How much of the usable fruit is being discarded?  The answer was about =&2=&  Then we ran the numbers.  What if we could increase the yield of strawberries through the whole year, how much would that be worth?

a millennial management strategy by rethink restaurants

Empowering WE: A Millennial Management Strategy

If you’re involved in business or management, it’s likely that you’ve had a discussion recently about Millennials in the workplace.  To be sure, it’s a trendy topic and one that carries increasing importance as the demographics of the workforce shift.  I’ve seen managers strategize, lament and poke fun at Millennials (If you haven’t watched this video, you should).  This topic is especially important in the foodservice industry, where Millennials comprise a disproportionate percentage of the workforce.

As I get older, I’m wary of falling into the trap of being too critical of younger generations.  After all, who among us didn’t hear similar complaints as young people ourselves? But I also try to remember that generational differences do exist.  And, as leaders, identifying the ways to best connect with, motivate and support those who may look at things differently is not only important, it’s our job.

To date, my experience with Millennials as a manager and a leader has been mixed.  With some team members, I’ve been blown away by their entrepreneurial attitude and their effectiveness and speed in problem solving.  With others, I’ve seen a sense of entitlement and selfishness that has, frankly, been a real turn-off.

And therein lies the challenge: how to unlock the power of problem solving and creativity of this generation while also orienting them to the Team First attitude necessary for a business to succeed?

Which brings us to our Open-Book Strategy program at Delta Foodservice. Open-Book Management has been around for years with a variety of implementations (Zingerman’s is one of my favorites) but it has yet to take hold widely in the foodservice industry.  As we’ve rolled out our pilot program at the Paris Creperie, we’ve learned many valuable lessons and accomplished some phenomenal results so far.  And as we debriefed with the Paris team after 5 months of instruction to see how they felt the program was going, a light-bulb went off:  these 20-something staffers felt included and empowered, and their contributions were fully aligned with business goals.

The Paris team is focused on one critical number this year, Net Operating Profit (“NOP”), and their performance thus far has been staggering.  After posting a record 13% NOP one time in their 11 year history, the business just completed its third consecutive period above 20% (without an alcohol program no less!).  Through our program, the team has learned how the business operates and have been continuously supported to grow NOP.  With classroom instruction and management support, ideas from the team have been encouraged and adopted with speed.  This has reinforced three key things:

  1. They are worthy of knowing the details of the business and are respected and trusted with this information. I believe this feeds into a strong desire for acknowledgement and the feeling they are valued by their managers.
  2. Their

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