As anyone who has worked with, managed or owned a restaurant can tell you, the business is very much a game of pennies. 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 Cost of Goods Sold (“COGS”) 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.
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 20%! Then we ran the numbers. What if we could increase the yield of strawberries through the whole year, how much would that be worth?
When they saw over $2,000, their collective jaw dropped.
Immediately, changes to the prep process were made with strawberries and soon, with ingredients all across the menu. The percentage of sales devoted to COGS began to drop. By the end of the year, our client saved over $2,800 on Strawberries ALONE. Their Cost of Goods Sold dropped to 25%, an excellent number for their concept. Waste was controlled while the bottom line and the profit sharing program benefited.
And that is the beauty of the Open-Book approach in a high-touch environment like a restaurant. When the team is given the knowledge of how their job affects the bottom line, engaged to improve the way things are done, and cut in on the ‘fruits’ of their labor (sorry, did it again), magic happens.