Restaurant Profit Tips from RestaurantOwner.com
A Simple Solution on How to Motivate Your Staff
In a recent thread on our Member Only discussion forum one of our members asked for advice on how best to start an employee-of-the-month program. Though the answers she received were not what she was expecting, the replies provided her with creative ways to motivate staff to do a great job and create a positive culture.
One of those replies began like this, “Employee of the month has little to no value. You’ll always have that one person who doesn’t agree then will start a smear campaign against that person. It only creates a negative culture.
We use what we call a “WOW” card. We’ve printed up a little card that says “WOW on the front, inside it has a space to explain what the person did that was great. It also has a tear off portion that you can fill in the name of the person who the card is for and a place for the person that submitted it. The tear off goes into a jar and every month we add up who has the most WOW cards and they get a prize. Then we randomly pick a card and the person that submits a card gets a chance at a prize.
We trade other businesses and restaurants for prizes. We’ve had young employees who get a card and they cherish it. We’ve even had an employee give one to a customer.
It all is based on the “Ten Coins” concept. You start each day with 10 coins in one pocket. Each time you give a compliment to someone you transfer a coin to your other pocket. Your goal is to get all 10 coins transferred each day. It creates a healthy, positive environment in your restaurant!”
Another reply described the employee motivation program used by Pal’s Sudden Service, a 25-unit quick-service drive-thru that won the Malcolm Baldrige award for excellence. “They have a program called “Caught doing good” in which they post on a bulletin board notes written by both managers and staff peers whenever they catch another employee doing something that aligns with their mission statement or does something exceptional to enhance the guest experience.
It’s much more effective than an employee of the month award because it provides for more universal recognition as opposed to possibly disgruntling an employee that perpetually falls short when they feel they deserve the award but get passed over.”
What is your restaurant doing to promote and improve your staff’s culture?
Rising Food Prices Killing Your Margins? Fight Back With 5 Proven Practices
As you know, the prices on key products like meat, produce and a host of other food items are up dramatically this year and could go even higher. This means that even with stable sales and customer counts, food and other cost increases are putting additional stress on already narrow restaurant profit margins.
Now might be a good time to step back and make sure you’re employing smart purchasing practices and doing everything possible to maximize the utilization of the products that come in your back door and minimize losses to shrinkage, waste, spoilage and over-portioning.
He’s is a short list of practices adhered to by many of our most successful and profitable members’ restaurants. If you’re aren’t following them, now may be the perfect time to rethink and improve your food cost control systems.
- Don’t over-purchase. Buy just what you think you’ll actually use. This will reduce waste and improve portioning, as employees won’t think they have an endless supply to use.
- Check your product specs. Are you using the most appropriate grade or quality of product for the task? If 99% of your customers won’t notice the difference, maybe it’s time to change the specs on some products.
- Check your portion sizes. This can be tricky because you don’t want to lower customers’ perception of value. But when faced with price increases or tweaking portion sizes, well, take your pick.
- Consolidate purchases. Could you get lower overall prices by buying more products from one supplier? Some restaurant have lowered their food cost overnight 4%-5% and more by doing this.
- Calculate your food cost every week, not just once a month. Weekly food costing will make your kitchen staff more aware and accountable for food cost fluctuations. You’ll be able to respond to problems quicker and it will change the culture in your kitchen with regard to food cost control.
When food costs go up, you’ve got three options to maintain your margins. 1) Work smarter to control your costs, 2) raise prices or 3) a combination of both. Make sure you’re doing all you can to make the most of the food you do get at the best prices possible.
How to Prolong the Life & Reliability of Your Kitchen Equipment & Lower Your Repair Costs
According to the National Restaurant Association’s Restaurant Industry Operations Report, most restaurants spend anywhere from 1 percent to 2.5 percent of sales annually to repair and maintain equipment, buildings, and grounds.
Considering that the annual sales volumes for all respondents ranged from less than $500,000 to more than $2 million a year, we’re talking about differences of tens of thousands of dollars in annual R&M expenditures.
Naturally, the varying sizes, styles, age and locations of these restaurants account for much of these differences. (Larger restaurants need heftier heating and cooling systems, more kitchen and bar equipment, etc. Also, as a property ages, the need to repair or maintain the facility increases.) Even so, after factoring in all the variables, the fact is that some restaurants manage to control these expenditures much better than others do.
As long time veterans of the restaurant industry, we’ve found the reason for these kinds of cost differences among restaurants is most often the same reason there are differences in the quality of their food and service: management and systems.
Effective restaurant management requires a proactive rather than a reactive approach. Proactive managers anticipate events. They don’t wait for problems to occur; they’ve implemented systems to avoid them. When it comes to R&M issues, they never wait for something to break, but rely on their systems to keep their equipment, building, and grounds in good working order. These systems include the establishment of daily, weekly, and monthly tasks to ensure consistency, reliability, and lower repair and maintenance costs. Let’s take a look at one R&M best practice.
Most restaurant equipment failures are the result of incorrect or infrequent cleaning. For example, employees who are trying to get the job done faster often use hoses or pressure washers in the kitchen.
Raleigh Trotter, founder of Trotter Repair Services in Houston, offered us this piece of advice that would help restaurant operators lower their equipment repair costs. His said: “Take the hoses out of the kitchen. I’ve seen cooks use a garden hose to spray everything from ovens to floors. Water is one of the most corrosive substances there is. While a lot of equipment has stainless steel exteriors, burners, wiring compartments, and the undersides of equipment don’t have the same protection. The deflective spray from a hose tends to penetrate areas not intended for exposure to water.”
Trotter also says that if more restaurants cleaned their equipment according to the manufacturer’s instructions, he probably wouldn’t have as much work. “Rather than spraying water, use scrub brushes and degreasers on external surfaces, a manufacturer-approved oven cleaner for ovens, and wire brushes on burners.”
The bottom line: The best way to prevent failures, minimize R&M costs, and prolong the life of your equipment and facilities is to develop some simple equipment cleaning instructions (a system) to make sure everything is properly cleaned on a regular basis.
Should You REALLY Open That Second Restaurant?
The owner of one of the most successful independent restaurants in the country was asked why he never expanded beyond one location. His reply, “Every time I considered opening another restaurant, I always thought of something else I could be doing to make more money at this one.”
In a RestaurantOwner.com survey, well over half of our members, who now own one restaurant, say they plan on opening a second location within 2 years.
Considering the time, resources and risk entailed in opening a second restaurant, many operators would do well to ask themselves is they are already doing all they can to maximize the sales and profitability in their existing operation.
Here’s a shortlist of activities that could provide as much or more profit potential than a second restaurant at fraction of the investment and risk:
- Add a new dining room for banquets and overflow seating. Still a sizable investment but substantially less than a new location with less risk.
- Get serious about outside catering and/or delivery. You may already be doing this but are you maximizing your potential? Some restaurants make more profit on catering than in their dining room. For example, Corky’s BBQ in Nashville does nearly $1 million, over 30% of its annual sales, in catering.
- Have a birthday club. If you don’t have a promotion to bring customers into your restaurant on the day or month of their birthday you should. One of our members increased her sales 52% over 3 years with a simple birthday club.
- Customer database marketing. Smart independents, more than ever, are focusing their marketing efforts and dollars where they generate the most return, on their existing customers base. Many are have seen sales increases in excess of 20% a year.
Before you bet the farm on another restaurant, can you honestly say you’re maximizing the profit potential of what you already have?
5 Tips To Get Ready for 2014
It’s 2014 and very soon references to 2013 will make you appear out-of-date and may leave a negative impression that you’re not paying close attention to your business. It’s also a good time to check on a couple of important dates that you can’t afford to forget. Here’s a short list of things to note as we begin the New Year.
- Change the copyright date on your website to 2014. Don’t let potential customers get the impression that the last time you attended to your website was years ago.
- Speaking of websites, check to see if your domain name expires in 2014. To find out your website’s expiration date, type in your domain name at http://www.internic.net/whois.html or login to your domain register account.It’s a good idea to keep your domain name renewal several years in the future and to make sure your credit card / payment information is up to date at your domain service provider. With the importance and value of your restaurant’s website, don’t risk losing it by neglecting your domain name expiration date.
- Update any sales or marketing materials with 2013. Any references to a year other than 2014 will weaken your message, offer and image.
- If you have a blog, now is a good time to add something new so you look current and on top of the New Year.
Does your building lease expire in 2014? Now is a good time to check. More than one operator has failed to contact their landlord in advance of their lease expiration date and lost their lease to some other business well before their option periods would have expired.
Success in the Restaurant Business is NOT About the Food, directly from RestaurantOwner.com
People open a restaurant for lots of different reasons. Some have a passion for food and believe their obsession for serving exceptionally high quality food will drive their sales, profit and success. Others create unique menu offerings they think will give them a completive advantage.One thing that we’ve learned about success in the restaurant business – it isn’t about the food. Not even close.To prove it, just think about where you go when you want to have a really good meal or celebrate an anniversary or other special occasion.Who’s thinking about McDonald’s? Answer: Nobody.McDonald’s doesn’t serve good food. Their fry’s are okay but there are tens of thousands of other restaurants that make a better burger.They key to McDonald’s success is not their food but in how they do business. And how does McDonald’s do business, one word – consistently. McDonald’s is uncompromising and fanatical when it comes to consistency.Sure food quality matters and yes, McDonald’s is an effective marketer but here’s our point. One extremely important ingredient in any restaurant’s success is being able to put food on the plate to each and every customer the same way every single time.The mother of consistency is systems. Having some level of systems to ensure that your food is sourced, prepped, portioned, cooked and served the same way every time regardless of what employees are in the kitchen is the only way to have a shot at creating food that looks and tastes the same today, tomorrow and three weeks from now.Consistency produces predictability and predictability is why customers return. They come back because the expectation is that they’ll get the same type of food and experience they had the last time.
Want more customers to come back more often? Borrow a page from McDonalds, make your food more consistent and the experience more predictable with better systems.
10 Characteristics of Highly Effective Kitchen Managers, directly from RestaurantOwner.com
In most restaurants there’s no one person that impacts your day-in, day-out profitability and success like the one who manages your kitchen.Here are 10 traits that we’ve noticed consistently in kitchen managers of highly successful independent restaurants.
How Does YOUR kitchen manager measure up?
- The best KMs can be found in the kitchen, not the office.
- They keep the recipe binders up-to-date, in good condition and easy to get to.
- They make using the recipe cards mandatory. They don’t trust anyone’s memory.
- They plan for “teaching moments” every day.
- They conduct food demonstrations in shift meetings.
- They perform detailed line checks before every shift.
- They develop key people at the window and expo stations.
- They constantly encourage communication and organization.
- They are dedicated to achieving your ticket time goals.
- They manage the “flow” and don’t get tied to one task.
Bad Portion Control Can Hurt Your Restaurant – Here’s 3 Proven Ways to Fix It
With prices surging on key products, already thin profit margins and intensely value-conscious consumers, the last thing your restaurant needs is sloppy portioning practices. Product portioning affects your guests’ experience, food quality, food cost and how much money you make.
When a guest receives a smaller filet than the person across the table or a down-sized bowl of pasta is served when generous portions are the norm, customers notice and many will feel shortchanged.
Then there is the issue of food cost. Consistently over-portion a $6.00 per pound product just half an ounce and it adds almost 19 cents to the serving cost. Say you serve 100 a day, that’s $133 lost per week or almost $7,000 in a year and that’s with just ONE product!
Here are 3 practical ways to improve your portion control immediately:
- Use scales. Technological advances in scales and slicing equipment make it easier for employees to portion products faster and with much greater accuracy. The newest digital scales are portable, easy to read, have automatic counting functions and can be equipped with push button or hands free tare capabilities – this allows for zeroing out the weight of containers or individual ingredients.
- Use an assortment of low tech portioning tools. Like proper sized portioning scoops, cups, ladles, and baggies. HOWEVER, never expect what you don’t inspect. Have a manager or KM regularly verify that employees are actually using the correct portioning tools.
- Remind and reinforce good portioning practices every day. One sharp operator we know pulls one item off the line EACH SHIFT and weighs the key ingredients on the plate in front of his kitchen staff. If something’s not right, he addresses the issue immediately. He claims this ONE practice, more than any other, helps him control portion sizes and keep his food cost in line.
Any portioning improvements you make will result in happier guests, lower food cost and a healthier bottom line.
Controlling the Cash in Your Restaurant, content directly from RestaurantOwner.com:
Despite the ever-increasing use of credit cards, many restaurants still take in hundreds or even thousands of dollars of cash each day. To do so they must also keeps hundreds of dollars in additional cash for making change.Without a good cash-control system in place, operators often find themselves wondering if all of this cash is finding its way to their bank account – and eventually to the bottom-line.While, there are many best practices for controlling cash, one often overlooked practice is to keep a separate cash on hand account with a set amount and never mix it with cash receipts. The cash on hand account typically consists of bills and change needed for cash drawers, a backup change fund and optionally a separate petty cash fund. These funds must be kept separate from daily sales receipts and must be large enough for conducting business in between bank runs for additional change.Cashiers or bartenders should be issued a fixed amount for their cash drawers prior to their shift. As additional change is needed the manager simply exchanges larger bills from the cash drawer for change from the change fund, leaving the total amount of cash in the drawer and the change funds unchanged. At the end of their shift the cashier separates the beginning cash drawer from the rest of the cash and the manager returns it to the safe for use on another shift. The cash receipts are then matched against the register report and added to the daily bank deposit.
Restaurant profit starts and ends with you!
When a bank run is necessary to get additional change, the monies being exchange should be kept in a separate bag from that of the sales deposits. Amounts should be verified before and after each bank run.
Using a cash audit form, managers should count and record the cash on hand account each day. The total counted should always match; never changing from the fixed amount established in the cash on hand account. Discrepancies can be addressed at the time they occur rather than finding out days or even weeks later.
Your membership in RestaurantOwner.com includes access to world-class systems, materials and tools to help you run an efficient and profitable operation! If you’re not a member, you’re really doing yourself, your family, your associates and your guests a disservice!
To Your Restaurant Profit!