The Complete Restaurant Management Guide

Robert T. Gordon, Mark H. Brezinski

• Publisher: Routledge
• Year: 2016
• Print ISBN: 9780765603050
• eBook ISBN: 9781134898688
• Topic: Business
• Subtopic: International Relations
• Index: Business

Two highly successful veterans in the restaurant industry offer surefire tips to lower the risks of failure, avoid the common pitfalls, and make day-to-day operations smooth and profitable. Highlights of this practical handbook ---- menus: samples, special promotions, and charts and instructions to determine price for profit; -- food production: techniques for controlling food production, charts, sample records, and avoiding production problems; -- controlling costs: sound purchasing policies an good storage and handling practices; -- health and environmental issues: keeping up with governmental guidelines on environmental regulations and on dealing with food borne illnesses.The authors cover every detail of running a restaurant. Franchising, catering, changes in meat grading, labor management, cocktail lounge operations, computerized techniques in accounting, bookkeeping, and seating and much more are all covered at length. Restaurant owners and managers will surely find The Complete Restaurant Management Guide invaluable.

Chapter 1
Magic Keys to Making More Money in the Restaurant Business

Table of Contents

HOW TO SET OBJECTIVES FOR MAXIMUM PROFIT
HOW TO DEVELOP A PLAN AROUND PROFIT
HOW TO USE TODAY'S TOOLS TO COMMUNICATE YOUR PROFIT GOALS
POINT-OF-SALE SYSTEMS
VIDEO TRAINING
SEMINARS AND CONTINUING EDUCATION
WHY YOU SHOULD NOT OVERLOOK YOUR INTUITION
HOW TO MAKE THE BEST USE OF YOUR TIME
HOW TO GET BETTER CONTROL OF YOUR TIME: A CHECKLIST
HOW SMART SALES PROMOTION PAYS OFF BIG
THE GREAT "ATES"
PARTICIPATE: DON'T OVER DELEGATE
ANTICIPATE: STAY AHEAD OF THE CURVE
INNOVATE: BE A LEADER NOT A FOLLOWER
CELEBRATE: BE PROUD OF YOUR SUCCESS

Chapter 1

Magic Keys to Making More Money in the Restaurant Business

Imagine that back in 1990 you had $500,000 to invest and you were deciding whether to open a restaurant of your own or invest in a balanced stock portfolio. Since 1990, a $500,000 investment in stocks within the Standard and Poors 500 would have turned into about $1.4 million in 1998, on an average. In that same period, about 60 percent of all restaurants opened in 1990 are now out of business. Now, how important is profit? Let's explore the relationship further!

How to Set Objectives for Maximum Profit

KEY IDEA: The capital assets (i.e., building, land, equipment, etc.) are only valuable to a restaurant if they can contribute to the earnings of profits. Similarly, the staff (cooks, waiters, dishwashers) and the food and supplies are only valuable if they contribute to sales and profits. And it is the responsibility of management to use and direct these various elements properly to enhance the restaurant's profit potential. Therefore, planning and setting objectives are an essential part of every manager's job.

The most basic objective of all business ventures is to make a profit. Capital assets are only valuable if they contribute to or facilitate the making of a profit. Similarly, the staff, raw food supplies, and decorations are only valuable if they, too, enhance the restaurants' profit potential. Believing that merely providing the facility or the staff to serve food is sufficient to set profit in motion is a mistake many restaurateurs make. Although it may be noble to be perceived as a "Mom and Pop" business or have the charm of a helter-skelter operation, there are precious few restaurants that can or will survive without excellent organization.

What constitutes excellent organization? For starters:

• Short-range and long-range planning
• Sales and expense forecasting
• Organizational charting and structure
• Financial control implementation
• Monthly profit and loss statement compilation
• Job performance measurements
• Commitment to training programs

A dear friend and extremely successful restaurateur once said, "In the dining room and kitchen I operate like I've invited you into my home, but behind the office door I'm no different than IBM." The essence of his belief was that he needed to have two very different but essential skill sets, one as a host and culinarian and the other as a businessman who was no different than any other businessman in the community. To survive, or better to thrive, meant having more skills than merely providing a good product.

Perhaps the best organizational starting point is to define your concept and your goal. Mission statements have been all the rage in the nineties simply because they allowed entire organizations to share a common goal. Write down your own description of what your concept is and whom you're attempting to appeal to. It might be as simple as the following:

"Our concept (NAME) stands for high-quality, freshly made Mexican food served in an authentic atmosphere at a check average of no more than $6.00 per person."

It's amazing how quickly your staff and guests will begin to rally around your simple goal. From that simple sentence are born innumerable organizational challenges. To be "high quality" means attention to purchasing standards and production techniques. "Fresh" means making intelligent batch recipes, qualifying vendors, and installing proper product rotation guidelines. "Authentic" implies a commitment to honest efforts in recipe development, service training, and attention to design detail and cleanliness. A "$6.00 check average" means competitive purchasing, invoice reviews, standardized recipes, and portion controls. Notice how many "tools" are needed to back up a one-sentence goal.

And the effort doesn't stop there. Setting the staff up for success, thus setting the business up for profit, implies putting policies and procedures in place that direct your staff in the proper ways to perform their jobs. Guidelines must be formalized so that "interpretation" is minimized. Although you may wince at the sound of the phrase "chain restaurant," the proliferation of successful chains in the '80s and '90s has been predicated on this elimination of "interpretation" through specific and closely monitored guidelines. Although we promote the spirit of entrepreneurialism throughout this book, there is no harm in learning from the success of others. Organization is definitely not a dirty word. There are seminars, continuing education programs, and organizational consultants, all of which will help you become a better competitor. In addition, you will extract many tools from this guide that will put you on the right track.

How to Develop a Plan Around Profit

KEY IDEA: Great food without great goals and controls spells disaster, and a festive atmosphere without intelligent management is a doomed recipe as well. Understanding the relationship between profit and developing a plan around profit is no less important than being able to distinguish fresh from frozen food.

There is nothing sinister or negative about starting your plan by stating your profit goal. To begin by saying "I must make a net profit of 18 percent" is not only advisable but it is also becoming more necessary. To compete for excellent locations, to stand up to the deep-pocketed chain restaurants, or simply to be able to hire the best staff, you must be a profitable restaurant, regardless of your concept. If the goal is to be a successful long-term business, then there truly is no honor in being the cheapest restaurant in an area if it makes the profit margin thin. Your guests, your employees, and your landlord all expect you to make money. In a sense, their welfare, especially your employees, is directly tied to your ability to make a profit. Know how much money you need to make and commit to hitting your goal. Here are a few tips.

1. Develop a yearly budget. Be very specific in all sales and expense categories. Give yourself reasonable but aggressive targets to hit. There are many schools of thought regarding budgeting and there truly is no "right" or "wrong" way. Many individuals start with sales goals and project sales first before attempting to project expenses. Others start with a net profit goal and work upward on the financial statement using rules of thumb for major expenses and finally arriving at what sales need to be to achieve the desired net profit. Work with your accountant or business plan team to format a budget that works for you but, by all means, have a budget, not just a previous year statement to compare to.
2. Carefully price your menu to meet a specific cost goal If your budgeted food cost is 30 percent then it will only be achievable if your menu items cost out to no more than 28 percent to 30 percent on average. This is discussed in detail in Chapter Two.
3. Do "mock" schedules for all staff positions. Write schedules that you think would apply for the business volume(s) you are anticipating. Assign hourly wages and extend all costs for a one week schedule for all hourly positions. When all schedules have been costed for one week you will have a total projected weekly labor cost. Divide that cost by your anticipated weekly sales. That figure should compare favorably with your yearly budgeted labor cost
4. percentage. Depending on the type of food service operation, your hourly labor cost percentage (not including management or taxes) should be in a range from 15 percent to 20 percent. In other words, if you're projecting weekly sales of $ 12,000, your hourly payroll cost shouldn't be more than $2,100. If it is, you're in need of some schedule reviews!
5. Share your profit goal with key management. It is imperative that all managers who manage expense centers know what their budgetary goals are. Regular progress reports are critical if goals are to be achieved. If necessary, set the management team up on a bonus plan for exceeding the goals, but be careful not to reward behavior that compromises the guest experience. For example, a manager may decide to use an inferior linen product simply because it is cheaper and will minimize this expense. However, we all have used a nonabsorbent napkin and know how frustrating it can be to use.
6. Never stop promoting your restaurant. By far and away the best profit margin contributor is increasing sales. Once a break-even level of sales is achieved, extra sales carry only a variable expense against them. Most occupation costs and operating costs like utilities do not increase as volume increases, so generally extra sales dollars flow through to the bottom line in larger percentages. Although many promotional efforts may cost some money to implement, there are numerous community participation and business goodwill practices that cost little to nothing.

How to Use Today’s Tools to Communicate Your Profit Goals

KEY IDEA: You must maintain a clear and open line of communication with your employees at all times. Further, you should actively promote communications between employees. Encourage the exchange of information and the flow of suggestions, all for the good of the business.

Once you have accepted the notion that profit is not only good but necessary, it must be communicated to your staff how you intend to reach your goals. Having a common goal is only effective if there is a shared responsibility in reaching those goals. For many years ours has been an industry that has lagged behind in the information age. Communication tools such as point-of-sale system reporting, video training, and seminar attendance for continuing education are available at a more sophisticated level than ever before. Taking advantage of these tools becomes another link in the chain for your success. Specifically, here is how these tools communicate your intentions.

Point-of-Sale Systems

Almost everyone has heard the phrase "Watch the pennies and the dollars will watch themselves." Well, it isn't that long ago that watching pennies was not a computeraided function for restaurants. Today, point-of-sale systems help track sales down to the minute, the server, and the penny. By installing a point-of-sale system you are communicating to your staff that pennies mean something to you and should mean something to them as well. Sophisticated systems allow for each and every sales by each and every server or bartender to be tracked. Accountability goes hand in hand with profitability. And beyond the ability to monitor all income, systems allow operators to analyze operations in ways that were often left to intuition. Now we understand that the best decisions are those that are made using an intelligent mix of intuition and information. The opportunity to be profitable is enhanced when there is a system by which to analyze information. You can communicate better when your information is accurate, up to the minute, and accessible. A staff that realizes you have this ability is more likely to participate in your profit goals.

This is not to say it is suggested to remove a personal touch, so critical in the service industry. It is simply saying that possessing technical tools that help analyze and at the same time control your flow of information is an intelligent way to achieve profitability goals. Remember, systems are a subset of service, not vice versa.

Video Training

With the accessibility of video tools (cameras, recorders, monitors) there is a great opportunity to improve training communication in our industry. How often does your training program consist of teaming up a new employee with an experienced employee and then simply assuming your experienced employee is capable of communicating all the messages the new person needs to hear? When was the last time you worked a shift side by side with your so-called experienced employee trainers? The point here is that, especially in smaller operations, it is so much easier today to share your message with each and every employee. New cooks not only need to know how to follow a recipe, but also how to properly clean their cutting boards or store sensitive products. Simply ask any restaurateurs who've been closed down by a hepatitis scare or had their restaurants reported in the five o'clock news for poor sanitation scores how important information can be.

Whether you like it or not, this is the video age and people respond to video. Take a video camera and record a ten-minute speech from you personally ...

Table of contents

• Cover Page
• Half Title page
• Title Page
• Copyright Page
• About the Authors
• Acknowledgments
• What This Guide Will Do for You
• Instant Chart of Surefire Ways to Increase Profits
• Table of Contents
• Chapter 1 Magic Keys to Making More Money in the Restaurant Business
• Chapter 2 How to Plan, Choose, and Design Menus to Bring in Bigger Dollars
• Chapter 3 Money-Making Secrets of Food Production
• Chapter 4 How to Buy Food Right for Maximum Profits
• Chapter 5 How to Get More and Better Work from Your Employees
• Chapter 6 How to Get Service Help to Do Such a Great Job That Repeat Business Is Guaranteed
• Chapter 7 Hidden Gold in Your Cocktail Lounge
• Chapter 8 Internal Control: How to Keep Track of All Your Money
• Chapter 9 How to Increase Your Profits by Staying on Top of Changes in the Marketplace
• Chapter 10 How to Simplify Remodeling or Expansion Plans Including Franchises as a Strategy for Future Development
• Chapter 11 How to Make Advertising and Promotion Dollars Pay Off for You
• Chapter 12 How to Get Top Benefit from Tax Savings and Shelters, and Build Financial Security
• Index