Tough times call for tough measures. Here are 10 business tweaks that can help you weather the rough waters.
In today's survival of the fittest, are you doing all that you can to stay lean and mean? We scouted around for some ideas to trim the fat, and here's what we found.
1. It's always a no-brainer, but get a better handle on labor costs. Labor is a huge line item, so even small changes can make an impact on the bottom line. Shelley Lindgren, partner/wine director of A16 and SPQR in San Francisco, manages clock-out times at the end of shifts. “Since San Francisco has the highest hourly wage in the U.S., we try really hard to have as little overtime as possible,” she says.
John Shaw, c.o.o. of Hill Country in New York City, uses detailed weekly labor budgets based on sales projections to help determine hourly schedules. Projections reflect past performance, current trends, holidays, special occasions and large group events.
For larger operations and multiunit operators, scheduling can be a time-consuming ordeal. Ciccio Restaurant Group, which operates six units in Tampa, uses a program from Schedulefly to manage hours and shift trades and communicate with its nearly 350 workers. Because it works like a social networking site, it has been embraced by hourly workers and has relieved managers from the juggling act of scheduling.
2. Do it yourself. If your staff has the skills, or is willing to learn them, butchering meat in house is one way to get more product for less. “I might spend $15-$20 per pound for tenderloin of questionable grade, or I can go to a farmer and buy grass-fed beef outside at $2 per pound for a quarter or half of the animal. As long as you have a good technician in house, you win, and you can pass the savings on to guests,” says Phillip Walters, an owner of Chicago's The Bristol. Besides the tenderloin, the animal yields more value-oriented products that show up elsewhere on the menu — in burgers, Bolognese sauce, stews, braises, marrow dishes and more.
It might save on product costs, but Walters points out that butchering isn't a panacea. “You have to do the work,” he says, although he adds that his chef can break down a 150-pound pig in under 20 minutes. And you need to research local licensing rules before taking this step.
3. Manage your wine program strategically. There are any number of ways to approach a wine program. You want to make money without making guests wonder if they are being gouged. The Bristol's Walters offers this advice: “Be very selective.” His restaurant chooses wines “that are not pretentious and aren't going to confuse the guest but that we can get a good margin on.”
For The Bristol, that wine-by-the-glass margin is 300-500 percent; the restaurant balances those pricey pours with value-priced bottles. “If you need a 33 percent cost on wine, you might want to have a 500 percent markup on glasses, and a 100 percent markup on bottles. That way, you get a reputation for offering good value,” Walters says.
4. Watch your waste. Maybe you're not prepared to butcher your own meats, but you can take baby steps that yield savings. “The number one thing restaurants can do is focus on 100 percent utilization,” says Eric Skokan, chef/owner/farmer at Black Cat Farm-Table-Bistro in Boulder, CO. That might require the manager to closely monitor the trash receptacles for a few days to see what gets tossed. “For example, everyone peels carrots and throws the peels away,” Skokan says. “If the cook does a thorough job of washing them prior to peeling, they can be used in lieu of some whole carrots in a stock.” He points out that small changes like this can trim nickels and dimes from the cost of a dish, but those nickels and dimes add up.
“The quixotic campaign for the operator is to move the restaurant toward a place where 100 percent of what is purchased makes it onto a plate,” Skokan says.
At SPQR and A16 and elsewhere, bread is served only on request, and the practice hasn't drawn too much attention. “Many customers didn't want it, anyway. Their bread would have been a pure waste of product and labor,” says Lindgren.
Food isn't the only source of waste. Skokan points out other areas, such as paper products stored near where water can easily be splashed on them, worn-out door gaskets on refrigerators that allow cold air to escape, supplies that are poorly stored and wind up falling on the floor and becoming unusable.
Don't be afraid to ask your staff for suggestions on ways to trim costs, either. “I asked the question, ‘where are the 20 easiest fixes to our food cost problem?’” Skokan says. “I was looking for the easiest things to fix so that the whole staff would buy in and feel successful in tackling food cost with me.”
5. Buy smarter. If you ask for a deal, the worst that can happen is that your supplier will say “no.” But it pays to do some homework. “We seek quotes and pricing from three other vendors in all categories (from food, beverage, paper goods and linen, to marketing, small wares and maintenance) and review bids,” says Shaw. “Then we go back to our current vendor with the lowest prices and ask them to match those to hold onto our business. There's a good chance, especially if you are paying your bills on time in this economy, they will.”
Shaw also likes to buy when volume purchasing deals and price breaks are offered. “We can always run a special on that item and use the price break to create a promotion that drives more traffic and revenue,” he says.
6. Monitor ingredient costs and balance low- and high-cost items on the menu. “We cost out all menu items very carefully for both food and beverage,” Shaw says. To stay within a target budget, low-profit menu items are reengineered or balanced out with higher-profit choices.
7. Cross-training is a no-brainer, especially in the prevailing economic climate. At Oswego Lake House in Lake Oswego, OR, everyone pitches in wherever help is needed, says Janine Carnel. “For example, although I am the general manager, I also have marketing and advertising responsibilities. I have been known to clean bathrooms and vacuum the rug, run food, deliver drinks and bus tables when need be.” To be effective in ensuring that a downsized crew can cover all the bases, cross training involves more than just learning a different skill set, though. A work environment also must foster a sense of loyalty and ownership. “We treat the restaurant as if it is our own and do whatever is necessary to keep the restaurant clean and the food excellent and provide our guests with exemplary customer service,” Carnel adds.
8. Reward cost cutting. If managers and other employees have an incentive to do something, they'll obviously be more motivated. “We create aggressively targeted budgets for cost percentages in key categories such as food, beverage, retail, etc. and bonus managers responsible for ordering and inventorying these categories based on hitting pre-set goals,” Shaw says. Managers who schedule staffers have bonus goals based on labor cost targets, and general managers and chefs are rewarded based on the bottom line and costs on paper, linens, garbage removal, maintenance, small wares and other nonsales items.
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9. Use your space wisely. Tom Hoch, whose Oklahoma City-based firm designs facilities for hotels, restaurants and clubs, says owners need to look not just at aesthetics but also at the overall revenue potential when planning a restaurant. One of the key components of his revenue-based design approach is to make the layout more labor efficient, since wages are one of the biggest operation costs.
“A lot of that has to do with space adjacencies,” Hoch says. “Is your facility too big? How can you rearrange the space to create fewer processes for getting the food product to the customer? How can you rearrange the equipment to enable your staff to prepare foods faster and with fewer people?”
10. Keep your current staffers happy. Everyone in this business knows the costs of turnover — hiring, training, the learning curve. Seasoned employees can help the bottom line in intangible ways, by being capable of cross-training and by working more efficiently. They are, in a word, priceless.