Getting
your prices right is the most important aspect of catering.
1. STANDARDISE AND COST YOUR RECIPES
Every recipe for every menu item, both à la carte and
catered, must be standardised and costed correctly. This basic discipline
ensures consistency of product and ongoing profitability. While the initial set
up requires some effort on the part of the chef or management team, it allows
each item to be priced based upon its raw ingredient cost. Some ingredients
will change price quickly, so its important to revisit recipe costing on a
regular basis. Set up each recipe on a
separate worksheet in Microsoft Excel. This way you can amend the ingredient
prices and re-cost dishes quickly. Train
someone else in your team to re-cost also, this will lighten the burdon for
you.
2. PRICING BASED ON KNOWN COST STRUCTURE
The standard method of pricing is to take the cost of
each menu item and multiply it by an appropriate multiplier to cover the cost
of labour, fixed and variable costs. For instance if you multiply the cost of
the ingredients by 2.5, you will yield a 40% food cost, with a 60% profit; 3
times, will yield a 33% food cost and 66% profit. This simple formula is all
well and good, but if your revenues are below projections and/or your payroll
cost or overhead are higher than expected, you may still lose money. Given the
interplay of revenues, pricing, volume of business, and cost structure, these
numbers must be tracked closely and reviewed frequently.
3. PORTION CONTROL IS ESSENTIAL
Standardised recipes are costed based upon specific
portion sizes. If untrained or poorly supervised employees routinely serve
larger than costed portions, you can kiss your profitability goodbye. Costly
meat and fish products should be weighed to ensure correct portion size. Ladles
of specific sizes should be used to plate menu items. Pies, cakes, and other
baked desserts should be cut and served using templates to ensure the correct
number of portions are realised from a multi-portion. All kitchen staff must be
trained to serve the portion size that has been costed.
4. LABOUR CONTROL
Labour, both front-of-house and in the kitchen, is
the single largest expense in a food service operation; it is also a continuing
challenge to control. Electronic timekeeping systems make it easier for
supervisors to verify employee hours, but regardless of system used,
supervisors must monitor payroll hours daily. In my experience a ceiling of 20% of VAT
exclusive income should be adhered to, to ensure profitability if a 66% profit
is achieved.
5. BENCHMARKING REVENUES AND EXPENSES
Benchmarking is the act of measuring and analysing
operating performance. In a food service operation there are many things to
benchmark, such as meals served and average spend per meal period by day of
week; payroll hours by position by meal period or day; and beer, wine, liquor
sold per meal period and day of week. When tracked over time, these statistics
become the baseline to project and monitor future performance. Benchmarks also
allow measurement of customer reaction to foodservice initiatives such as new
menus or pricing. Most importantly, benchmarking makes supervisors more
knowledgeable about their operations. Such knowledge translates to improved
operations and bottom lines.
6. ROUTINE AND CONSISTENT INVENTORIES
Inventories are critical to monitor stock levels,
avoid shortages, control pilferage, and determine cost of goods sold.
Inventories can also be time consuming and inconvenient for hard working chefs.
Inventories sometimes get delegated to poorly trained subordinates who miss or
miscount key items. Sloppy inventories contribute to erratic cost of goods
sold. Poorly organised storerooms contribute to sloppy inventories. Keys to
accurate inventories include well-organized storage areas, knowledgeable
individuals conducting inventories, routine and timely inventories, and organised
receiving documents, invoices, and credits slips. Delegating counts is
acceptable if employees are trained. However, having the same employee conduct
all inventories without spot-checking and oversight will invite problems.
7. SUGGESTIVE SELLING TRAINING FOR EMPLOYEES
Service employees who are trained in the techniques
of suggestive selling can improve your average sale value and bottom line.
Whenever a new menu is put in place, all servers should be provided a “selling
sheet” that gives key information about each entree. Such information should
include cooking method, ingredients, time of preparation, and enticing
descriptors to help sell each item. Just as standardised recipes are important
in the kitchen for consistency of product, selling sheets provide the service
staff with the knowledge and information they need to sell the product. In
addition to entrees, special training should be given for the suggestive
selling of appetisers, desserts, wines, and speciality alcoholic beverages. The
time spent providing servers with the information and confidence to sell your
food and beverages will yield consistently higher average sales values.
8. CONTINUAL FEEDBACK TO EMPLOYEES
Every month’s budgeted food sales is made up of how
many meals are sold and how much each guest spends on average for a meal. By
breaking your projections down into meals and average spend per head and
posting your daily targets prominently in the kitchen, you provide your servers
with goals that connect their daily efforts to your profitability. By comparing
month-to-date actual meal counts and average spend per head to projected, you
give your employees a day by day record of their progress. Most people are
competitive by nature and this simple technique will become a powerful
incentive to servers. The same technique can be applied to appetisers,
desserts, and bottles of wine sold.
9. FORECASTING AND SCHEDULING
By tracking key benchmark statistics and keeping a
daily log of business levels and staffing, foodservice supervisors can develop
a routine system of forecasting business levels. While some level of volatility
can always be expected in guest patronage, the act of forecasting, when
formally done and evaluated after the fact, will assist in maintaining service
levels while controlling labour cost.
10. GUEST FEEDBACK
While some guests are vocal with their opinions, many
are not. Food service supervisors should make it easy for guests to provide feedback.
Comment cards must be readily available, periodic surveys should be conducted,
revenue benchmarks should be analysed to measure guest responses to offerings
and initiatives, and employees should be trained to routinely report comments
made or overheard to supervisors.
Every professional food and beverage manager is aware
of these necessary elements to success. Unfortunately, in the ongoing rush of
business they are often overlooked. At its root the problem is one of organisation.
By taking the time to establish systems to address each guideline, by training
and delegating tasks, by making each guideline part of the daily routine, each
of these steps can be easily integrated into your operation. While the initial
exertion may be great, so also is the ongoing payback.
Useful
formula
To
determine profit percentage = Gross Profit cash multiply by 100, and then
divide by VAT exclusive ssales price.
To
achieve a particular profit percentage = Take your desired % figure from
100. Then take the cost price of your
portion/product and divide it by the number you have left. Then multiply that by 100.
