Click here to see the original article from the National Restaurant Association.
About one-third of sales in a typical restaurant goes to food and beverage purchases, making cost management in the kitchen critically important to maintaining profitability.
During the last five years, average wholesale food prices rose roughly 25 percent. Operators can expect to get pricing relief on several of the major commodities in 2015, including dairy and pork.
Meanwhile, menu prices have not risen at the same pace, putting additional pressure on restaurants’ bottom lines. In fact, food costs are cited as the top challenge by about one-quarter of restaurant operators this year.
When operators were asked which actions they took to manage rising food costs in 2014, common answers included increasing tracking of food waste, cutting costs in other operational areas, raising menu prices and shopping around for other suppliers, according to the NRA’s 2015 Restaurant Industry Forecast.
While restaurateurs can’t control the commodity market, they can control which ingredients to use and how to use them in their own kitchens. Some ways to alleviate food cost pressure are:
- Closely monitor what food is left on consumers’ plates. If your guests are consistently leaving the same items – like salad garnish, french fries or salsa – you can serve less of it or eliminate it altogether. Not only will this save on costs, but it also helps the environment by cutting back on waste.
- If you don’t want to change a core menu item completely, consider adjusting parts of it. For example, if one type of lettuce is becoming more expensive, substitute a different type. Or, if the price of milled rice is spiking, use other grains.
- Serve free items only upon request rather than having them on counters or automatically served by staff – for example, condiments, bread, crackers, chips and salsa.
- Wholesale beef prices climbed in 2014 and are projected to continue to rise in 2015. When planning new menu items, explore underused cuts like shoulder, cheeks and skirt steak, as these are often more inexpensive, but yet full of flavor.
- Use fresh produce that is in season, as supplies are more plentiful and prices typically lower. Consumers are also attracted to freshness of ingredients, so this can be a marketing opportunity as well.
Click here to see the original article from the National Restaurant Association.
Take notice of the next generation, and learn to “LIKE” them.
“Millennials present the greatest competitive advantage in our business,” says Kathleen Wood, founder of Suzy’s Swirl frozen desserts and Kathleen Wood Partners. Millennials, those born after 1980, represent a significant portion of the restaurant workforce. In an era of high-tech transactions and strong demand for customer service and convenience, millennials can help older peers navigate the new business landscape.
Wood, who recently spoke at the NRA’s Human Resources Executive Study Group, suggests leaders use her LIKE model – Listen, Include, get to Know, and Engage – to harness millennials’ best traits and leap ahead of competitors. They’re incredibly loyal to the companies they love, so you use these tips to tap their potential.
Listen. Learn their language, Wood says. “Millennials are the most socially connected people we’ve ever met.” They’re interested in social media and technology, and they love to share. “As we move forward, the language of business will be social connectivity. This is what they speak. We’ve got to take this opportunity as leaders of this amazing workforce and really leverage them as our competitive advantage to keep ourselves, our businesses, and our future way ahead of the game.”
Include millennials in business discussions. That allows them to see the big picture through the eyes of executives and leaders. Senior leaders need to be more involved, too. Employees of all ages should learn how to better connect with one another.
Get to know employees by learning more about millennials. They think globally and crave authenticity and transparency. If you understand what they want and expect, the whole team can benefit. “Schedule time to connect on a non-crisis manner,” she suggests. “Reach out, recognize, and acknowledge.”
Engage millennials in everything from problem solving, to product development, to customer service. “When you start to look at your new age resources, you really can start to look at your business in a profound way.”
Consider looking at business through the mobile lens millennials use. “How we train, how we connect, how we engage through the mobile lens — it really does make you think.”
Get comfortable being uncomfortable. “There are going to be times we have to be uncomfortable with not always knowing the answer … It opens you to possibilities.”
Embrace the power millennials bring to the workplace with social connectivity. Stop listening to the possible disasters of Facebook and Twitter, take social media for what it is, and unleash it for its possibilities.
“As leaders, we have so much to give, but we also have so much to get when we learn how to use all our powers together. We also have an inherent responsibility to teach, coach and lead the next generation of leaders, just as the generation before us did. Potentially, our greatest legacy is to pave that path.”
As Seattle began to phase in its $15-per-hour minimum wage this month, pay for hourly workers has been a top issue in other parts of the country, including California, New York and Massachusetts, according to a new article from NRN written by Lisa Jennings.
In Los Angeles, both city officials and the Los Angeles Board of Supervisors are studying a proposed plan by Mayor Eric Garcetti to boost wages to $13.25 per hour by 2017, and to $15.25 per hour by 2019.
Meanwhile, in Oakland, Calif., the minimum wage climbed from $9 per hour to $12.25 per hour on March 2.
New York to raise wages for tipped workers
Seattle’s $15 minimum wage phase-in begins April 1
More restaurant government news
San Francisco will join Oakland in May with a wage increase to $12.25 per hour, in the first phase of a gradual increase to $15 per hour by 2018.
Emeryville, Calif., is also considering a minimum wage increase to $14 per hour.
Some states are also weighing the inequities between tipped and non-tipped workers.
In California, which does not have a tip credit, a bill sponsored by the California Restaurant Association would invalidate local minimum wage laws for servers earning tips amounting to at least $15 per hour.
The state has already approved a minimum wage increase of $10 per hour by January 2016. Under proposed Assembly Bill 669, the wage for tipped employees would remain $9 per hour, as long as they earn at least $15 per hour including tips.
On the opposite end of the spectrum, Massachusetts lawmakers are considering legislation that would eliminate the subminimum wage for tipped workers by 2022.
This year, the state’s wage began climbing from $8 to $11 per hour by 2017. Tipped workers will see the wage floor also gradually increase, from $2.63 to $3.75 per hour.
Under new legislation proposed as an addendum to the bill, the wage for tipped workers would continue to climb until the two-tiered system is abolished by 2022.
In New York, however, a proposal by Governor Andrew Cuomo to raise the state’s minimum wage to $10.50 per hour, and $11.50 in New York City, is apparently a casualty of a budget agreement unveiled last week, which has disappointed wage-hike supporters there.
As of Feb. 24, 29 states and the District of Columbia have a minimum wage higher than the federal rate of $7.25.
Most independent restaurants calculate their food cost only once a month, but virtually all of the major chains calculate theirs each week.
According to industry averages, chain restaurants ‑ before corporate expenses ‑ are two to three times as profitable as independent restaurants. While weekly food costing isn’t the entire reason for that profitability, it’s part of it.
To accurately calculate your cost weekly, you’ll need to take inventory weekly as well. The only method for computing accurate cost of sales is to take physical inventories and then calculate the value of inventory on hand. Many operators erroneously believe that what they spend on food and beverage purchases is their cost of sales. While this may be true in the long run, for specific-period analysis it is inaccurate.
The correct formula for calculating cost of sales for each category is this: Beginning Inventory plus Purchases minus Ending Inventory equals Cost of Sales.
Taking weekly inventories doesn’t mean you have to spend half the night to do it. Here are a few tips to help you take inventory quickly. Properly applied, these principals will help you to be more accurate and should reduce the time spent counting your food inventory to under two hours.
Get organized. It is virtually impossible to take an accurate inventory when the stock room or walk-in is in disarray. Be sure all store rooms, shelves and refrigeration units are organized and clean. Product should be easy to see and count. Labels should be used for hard to identify product. Don’t put items in incorrectly marked boxes or containers.
Count it on Sunday. Most restaurants are open seven days a week. A natural tracking period is from Monday to Sunday. Also, inventory levels will be at their lowest on Sunday evening. If you are closed Sunday, then count it on Saturday evening or early Monday morning.
Separate your inventory into groups. Group your inventory into cost categories, such as meat, seafood, produce, dairy, grocery, etc. This will make it easy for cost calculations and help to organize your inventory. Grouping your inventory also makes it easier to zero in on cost control problems.
Arrange items in shelf order. Some managers advocate arranging items on the inventory sheets in the order they count the inventory. If you are using an order guide, arrange your spreadsheet to match that of the order guide. You can then record your counts on the order guide and transfer them to the spreadsheet for calculating the total value.
Use two people for taking inventory. One counts and the other records; the one recording is also an extra pair of eyes so nothing is overlooked. Also, be sure to use a pencil to encourage correcting mistakes.
‘Paint’ your restaurant. Always conduct inventories by starting at one end of the building and counting everything in a contiguous order. This practice will help ensure nothing gets skipped. Jumping from one area of the restaurant to another and back again will almost certainly cause you to miss something. It is much easier to flip to the proper page several times for a particular item rather than try to visit all of the places that item may be stored.
Keep counted areas off limits. Some kitchen managers like to get a head start on the inventory counting process. This approach is fine as long as counted product isn’t subsequently sold that same day. Once you have counted an area, make sure nobody removes or adds product to that area. For instance, maybe you have already counted the freezer, but later find out that the cooks need another case of frozen hamburger patties you have already counted. Be sure you adjust your count before putting them into production. That case will end up in an area you have not yet counted and thus will end up being double counted.particular item rather than try to visit all of the places that item may be stored.
This article is presented courtesy of RestaurantOwner.com, a source of operational and business resources for independent restaurant operators. For more information, visit www.RestaurantOwner.com.
Many restaurant owners want to recycle but don’t know how or where to begin. Follow these 7 steps from the National Restaurant Association to get started.
Starting with a big, complex recycling program can be difficult for a several reasons:
- Different cities and counties take different materials.
- Training staff can be time consuming.
- Establishing a front-of-house recycling bin system can take up considerable space.
Even if you can’t tackle everything at once, you can start by recycling the material that takes up about 25 percent of your dumpster. If you haven’t already guessed, it’s cardboard!
“Focusing on recycling your cardboard will help you get big bang for your buck by reducing the size of your waste stream and the need for a big dumpster to hold your ‘trash’,” says Jeff Clark, program director for the NRA’s Conserve program.
Waste material, such as cardboard shipping boxes, often has significant market value as useful new products. Boxes can be recycled and turned into paper cups or other items if the material isn’t contaminated.
Discover seven tips on how to begin:
Find out if you can recycle on premise. If you rent your space, check your lease to make sure you can place additional bins out back. If you can, make sure there’s enough room throughout the space and/or parking lot.
Train staff to safely cut up boxes and lay them flat in the cardboard bin. That will reduce empty space between loosely packed boxes so you can fit more in for each pick up. The result: You’lll save money and look more organized and clean to your customers and employees.
Put only cardboard in the cardboard recycling bin. Don’t contaminate the pile with other bags, bottles or cans, and keep it as dry as possible.
Ask your recycler whether he or she accepts waxed cardboard from foodstuff deliveries. Waxed cardboard must be separated from normal cardboard because the wax contaminates pulp during reprocessing.
Find out who will pick it up. Call local recycling centers and government agencies for information on finding the right hauler. Get references from neighboring business owners. And check out GridWaste.com, where haulers bid for your business.
Get baled out. If you have space constraints at your restaurant, ask the recycler about a cardboard baler to crush and bind the cardboard. Make sure you ask whether he or she can use the baled material as is. If not, ask what companies would accept it instead. Also, ask city or state environmental agencies about financial assistance to buy baling equipment.
Log your savings; revisit your efforts. You can’t manage what you don’t measure, so track your cardboard recycling by weight, if possible, as well as monetary savings. Once you have a successful program in place, consider expanding to single-stream recycling.
Visit the NRA’s Conserve program for more information about sustainability tips and tools, and check out the NRA’s partnership with LeanPath to provide operators with food-waste tracking technology.
Buying used commercial foodservice equipment can save you a bundle in the short term. But is it a good investment? Tackle these 10 questions from the National Restaurant Association before deciding whether to buy new or used.
1. What are your equipment requirements?
Start by determining your operation’s needs, recommends Joseph Carbonara, editor-in-chief of Foodservice Equipment & Supplies magazine. Ask: Can the equipment help you execute your menu? Can it handle the volume? Is it simple enough for your labor pool to operate? Consider any growth plans, like increased volume or menu expansion. He recommends investing in new equipment for cornerstone items, such as a brick oven for a pizzeria.
Tip: Familiarize yourself with the available equipment options by visiting local dealers or the NRA Show. Then decide what features you need.
2. What does it cost to purchase the item new?
“If a used item costs more than 50 percent of the price of a new one, I would strongly suggest looking at new,” says Carbonara. Expect better bargains at auctions, but buyer beware.
3. What is the total cost of ownership?
To determine whether you’re getting a good deal, consider the total cost of ownership. Factor in the expected lifespan, the cost of service/repairs and operational costs. “The initial purchase price is just the tip of the iceberg when it comes to the total cost to own and operate an appliance,” says Richard Young, senior engineer and director of education for the PG&E Food Service Technology Center.
The cost of energy and other commodities, such as water or fryer oil, often exceeds the initial purchase price by many thousands of dollars. You might think you’re getting a great deal on a low-cost piece of equipment, but you potentially are throwing away big dollars on the operating side, Young says. FSTC offers an online calculator to help you estimate life-cycle costs.
Tip: To slash your energy and water bills, look for equipment that qualifies for eitherEnergy Star and/or California Energy Wise incentives. See the lifetime cost savings of buying new Energy Star equipment vs. new conventional equipment. Unfortunately, it’s often difficult to find used Energy Star equipment, notes Jeff Clark, director of theNational Restaurant Association’s Conserve program, which focuses on environmental sustainability in the restaurant industry. “Be sure to ask your equipment dealer though; you might get lucky,” says Clark.
4. Has the equipment been reconditioned?
Some dealers recondition used equipment before re-selling it, replacing parts and making repairs as needed. Ask specifically what work was done. Reconditioned equipment comes with a higher price tag but lower risk than equipment bought “as is.” You also could consider buying remanufactured equipment that has been stripped down and rebuilt.
5. What type of warranty is provided?
Used equipment generally sells “as is” from auctions and individual sellers, so don’t expect a warranty. In contrast, dealers often provide a 30-day warranty on parts; some might give 60 or 90 days on parts and labor. If you want the security of a lengthier warranty, consider a remanufactured or new item.
6. Can I get someone to service and replace parts?
Make sure parts are available and that a local technician can service and repair the equipment. Your chances are best with an American brand-name product, says Tim Schrack, vice president of purchasing for Omaha-headquartered Hockenbergs Foodservice Equipment & Supply, which has 10 locations throughout the country.
7. Who was the previous owner?
If you luck into finding equipment owned by a church or a school, it will have less “mileage” than the same piece operated by a high-volume quickservice restaurant. “It’s like buying the car that grandma drove once a week,” Carbonara says.
8. How well does the equipment operate?
“Ask to see the equipment operate,” says Hockenbergs’ Schrack. “We’ll hook up any piece of equipment on request … It’s tricky to buy anything used online.”
Tip: Ask an authorized service agent to inspect the unit to ensure that it is in good operating condition, Carbonara suggests.
9. Is the seller reliable?
Work with sellers who want to establish a long-term relationship with you, Carbonara advises. “You want someone who is concerned that they’re putting their name and reputation on the line and wants to be good with you for a whole bunch of deals, not just this one.”
10. Does the equipment stand the test of time?
Look for equipment built to last, with brand names know for endurance, says Jameel Burkett, president of Burkett Restaurant Equipment & Supplies in Toledo, Ohio. For example, Hobart mixers and slicers can last for decades, he says, as can items like stainless steel tables and shelving, which have no mechanical parts that break.
Convection ovens and ranges tend to stand the test of time, Schrack says. But be wary of steamers, dishwashers, ice machines and other equipment that use water because they can develop lime buildup. If not maintained properly, aging refrigeration equipment can become energy-guzzlers and lose some performance FSTC’s Young says. “If the refrigerant has leaked, the unit has been overcharged or the coils are damaged, then that unit will probably not perform to spec.”
Just as this generation of coffee shops has made “venti” and “Frappuccino” part of the American vernacular, the newest foodservice coffee concepts are putting terms like “tasting notes” and “cold-brewed” on the radar.
Consumers’ growing interest in artisan craftsmanship has taken hold in the coffee category, as high-end independents lead a migration toward quality and as coffee drinkers express more interest in the sourcing and production behind their daily cup of Joe.
Observers expect mainstream coffee operators to continue to cater to those trends in the year ahead, but operators also will focus on staying relevant to the average everyday coffee drinker who is more interested in convenience.
Coffee continues to be an area of strength in the foodservice industry. Both bakery cafes and coffee cafes experienced 9.3 percent growth in sales from 2012 to 2013, according to Chicago-based Technomic’s Top 500 Chain Restaurant Report.
“Coffee cafes are a bright spot of the quick-service segment,” says Deanna Jordan, senior research analyst at Technomic.
Tastes and preferences within the coffee category are shifting, however, as many coffee drinkers — particularly Millennials — are looking at the brewed beverage in a new way. They are gravitating toward authenticity and quality, and placing a high value on attributes such as ethical sourcing and sustainability.
“It really speaks to the whole coffee culture that has developed in kind of the same way that wine has,” Jordan says. “I see that propelling the upscaling of coffee beverages.
“Independent coffee shops that cater to the ‘coffee culture’ are popping up everywhere.”
This so-called “third wave” of gourmet coffee shops includes small chains such as Intelligentsia, Blue Bottle Coffee, Stumptown Coffee Roasters, La Colombe and Philz Coffee. These operators, which often brew single cups to order and include tasting notes on their menus, are elevating coffee culture to a higher level, in much the same way that the second wave did in the late 1990s.
“I think the biggest story in coffee shops going into 2015 in the United States is the continued popularity of the third-wave movement,” says Elizabeth Friend, senior foodservice analyst at research firm Euromonitor. “These are places that focus wholeheartedly on the coffee itself: How it’s prepared, where it’s grown, everything about it. They are treating coffee like wine — something that’s brewed with care and precision.”
Their influence could result in a shift away from more indulgent coffee concoctions at more mainstream operators, Friend notes.
“Consumers are instead focused on different types of coffee and different roasts, so that’s where the energy is going in terms of new products,” she says.
The increasing consumer focus on quality and other attributes espoused by the third-wave coffee shops can be seen in some of the strategies of the mainstream coffee shops.
Data from Technomic support a shift toward higher quality. The firm in its recent Bakery & Coffee Café Trend Report found that 39 percent of bakery-café patrons would order a premium coffee instead of a regular blend if one were available. That percentage jumped to 47 percent among consumers aged 18-34.
The research also finds that more than a quarter of consumers — 27 percent at coffee cafes and 29 percent at bakery cafes — are more likely to patronize an outlet that serves organically grown coffee. A similar percentage of consumers expressed a preference for outlets serving “fair trade” coffee.
Mark DiDomenico, director of client solutions at research firm Datassential, says food purveyors in general, including foodservice coffee operators, “are looking at telling more of a story around the items they are serving.”
“Our big message for the past few years has been ‘authenticity,’” DiDomenico says. “Foodservice operators have been trying to get more authentic in what they are offering — things that have a regional style, that have some story behind them. This creates some excitement around the item.”
He cites hot sauce as an example, where restaurants are menuing specific flavors of hot sauce such as “habanero blend” or harissa.
“We are going to see that seep more into the coffee world,” DiDomenico says. “Rather than just dark roast, we are going to see Jamaican Blue Mountain dark roast, for example.
“People, especially Millennials, are looking for some specific marker on the foods and beverages they consume that tells them something special about it.”
DiDomenico notes that iced coffees also are still growing and becoming more popular.
“I think there is so much to do there,” he says. “[Operators] can just keep rolling through flavors and recipes, and keep the consumer engaged.”
Coffee drinkers also remain committed to convenience, and that is playing out in the coffee-shop segment in the form of increasing mobile-app functionality and a promise of delivery in 2015 from at least one of the major players.
“Despite the fact that the focus is still on the coffee, and the experience, and maximizing the value of the experience, at the other end we still have this much larger consumer trend, which is having everything on demand all the time,” says Friend of Euromonitor. “We are seeing this in the coffee shop as well, where people want everything included in that mobile app — they want to be able to pay, they want their loyalty included in that mobile app, they want to order, and they want it delivered if they can.
“These are sort of two polar opposite trends we see happening at the same time in the same space.”
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