#320 - Waste Control: Take a Closer and Harder Look
Do you know last week's food and beverage costs? Exactly, not just a guess...One of the main problems with waste control is the lack of reliable data: exactly how bad is the problem, and in what area? In many businesses, the bookkeeping operates in a separate cocoon, unrelated to the needs of chefs and managers - it doesn't help anyone.
If you're concerned about waste control, check these problem areas to see where improvements could be made. Results follow from action:
- How are results measured? Is there an obsession with the stocktaking process at the expense of analysis? When large groups do monthly stocktake, the results may take weeks to filter back to the managers, and problems will be identified too late. Quick spreadsheets are often better than massive POS reports that no-one can interpret. On the other hand, many small businesses hardly stocktake at all, relying on guesstimates.
- Are the control methods up-to-date? If costing and stock-take methods haven't changed in the last 2 years, you can be sure there will be short cuts ('estimates'). How long since unit sizes and descriptions were updated? How is daily waste recorded? Waste sheets or a waste diary can work, but only if monitored regularly and not forgotten in the rush.
- Apply 80/20 thinking to stocktaking: more than 80% of your costs are tied up in a small number of expensive items (even if it's not exactly 20%) eg meat, seafood and protein goods. These need more careful checking than the hundreds of low-value products - would it matter if you didn't check every item each time, but just the 20 most valuable?
- Are costs measured 'like-against-like' or lumped together? Old-fashioned costing includes coffee as a food item, so high profit margins on a cup of coffee will disguise food cost problems. Another weakness is to group all costs and compare them with all sales. It's essential that food costs are measured against food sales, and beverage against beverage. Within the beverage sales, high cost % items like cans and bottles of soft-drink (also popular with staff) should be measured against the equivalent sales. The results can be shocking - 60% cost-of-goods for bottles and cans, once theft & staff use was taken into account.
- Show costs weekly, so concerns can be handled at once. This often means doing a simple 'purchases divided by sales' cost figure, unless you do a stocktake every week. Purchases/sales gives a very useful figure, especially if averaged over several weeks.
- Portion weights don't usually show portion costs. Divide the total weight or volume of product bought by the number of items sold eg if 10kg of beef (at $10 per kg) when cut and trimmed yields 30 x 250g portions, do these portions cost $3.33 each or $2.50 each? Think about it - the second figure is neat, but misleading. Where else would this wrong thinking apply?
- Is the Point of Sale used properly? Are all sales registered correctly? If there's an Open Key, disable it! This can be where hundreds of wrong transactions are pushed, polluting the accuracy of figures.
- Spot check sales of one or two key items every week. If the POS shows 220 beef ribs were sold but you purchased 240, it's time to ask questions...and word will spread. Do this with cans of soft-drink and bottles of water. Should there be a figure for 'allowable waste'? If so, make it a number of items, NOT a percentage. Best of all, make the 'waste allowance' = 0 - Zero - None!
- Garbage inspections will reveal surprises. Make internal bins small and easy to inspect - this is not a great job! Some kitchens use clear-plastic waste trays rather than deep, dark bins.
- Ignore 'industry wisdom' on liquor cost variations. Some people say a 10% variation is fine - oh really? Best practice with controlled pouring and rigorous weekly stocktakes can get this down to less than 1%. That difference of 9% on sales of $100,000 per month is $108,000 per year!
- Manipulating waste reports can be an important part of fraud. Think through all the areas covered in the Fraud & Theft Control Department - what needs attention?
- What are the consequences for good or bad work? Is there praise and recognition if I regularly beat my budget? How do staff have to explain cost blow-outs? Many places pile on criticism quicker than praise - it doesn't do much for the honest, careful ones you want to encourage. Others shrug and blame problems on the economony...
[This article is not available for publication elsewhere] Other Useful Resources:
Fraud & Theft Control Department
Manager Skill Boosters: Quick Options - number skills, spreadsheets and financial analysis
How to Manage the Kitchen if You're Not a Chef
Measuring Bar Profits - Where Can You Improve?
Are You Overstocked? Common Mistakes and Corrections Ready Reference & Downloads for 1st Class Members:
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>> Starting a Cafe or Restaurant Workshop - 6 or 13 November in Sydney
3rd Great Year >> Food & Beverage Management Summit - Sydney 8-9 September
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With warm regards -
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