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A Restaurant Turnaround:
From Crash to Cash
August 14, 2012
Presented by
Don J. Avalier, FCSI, FMP, PrincipalManask Hospitality Group
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Don Avalier, FCSI, FMP 40+ years experience as a Restaurant Operator, Hotel Divisional
Food & Beverage Director, Court recognized Foodservice Expert andIndustry Restaurant Consultant
Opened more than 70 restaurants, 9 hotels and 6 country clubsthroughout career
Seminar Presenter, Industry Judge and Author
Memberships / Accreditations: California Restaurant Association
Foodservice Consultants Society International (FCSI)
Accredited Food Management Professional (FMP) through the EducationalFoundation of the National Restaurant Association
ServeSafe certified
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The RestaurantA Case Study Independent steak and seafood restaurant, 30+ years old, with
annual sales volume of 1.4 million
Recessionary economy had contributed to decreased cover countsand increased cost of food, beverage, labor and operating expenses
Restaurant owner was subsidizing the restaurant 12-15K monthly formore than 3 years
Many long-term management and hourly employees with 15+ years atrestaurant
Bottom Line: Client could no longer continue to subsidize losses andwas contemplating closing the restaurant
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Our Process1. Request of restaurant background information2. On-site meeting with owner
3. Tour of restaurant facilities
4. Key department heads introduction: Chef, Sous Chef, DayManager, Night Manager, Banquet Manager, Head Bartender
5. Food sampling
6. Wrap-up meeting with owner regarding priorities and next steps7. On-site evaluation
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Step 1: Restaurant Background Information Collect information before on-site evaluation
Prepare proposal detailing objectives/goals/priorities of engagement as discussedwith client during initial meeting
Prepare a D&I (document and information) request of financial, operational and
marketing materials from restaurant Three-year review of operating statistics and financial key indicators including:
Covers and revenue by day and by day-part
Prime costs
Food, beverage, labor and operating costs
Sales per labor hour
Sales per square foot
Set up the on-site evaluation timing
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Shutter or Save? That is the Question!
Client meeting to update engagement and prioritize on-site activities for maximumexposure to operations for all day-parts (weekday and weekend)
Conduct interviews with management department heads and hourly staff
Observation of kitchen operations including: purchasing, receiving, storage,preparation, production controls, scullery operations and inventory managementpractices and controls
Observation of front-of-the-house guest services including: guest reception, seating,table set-up, order taking, table-side service and sales technique, check
presentation and closing salutation
Oral and written recap of the on-site evaluation with client and determine next stepsto be taken
Step 2: On-site Evaluation
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Findings: Food Costs
No standardized recipes in place
No cost cards
No photoplating of items to ensure consistent presentation of items
No purchasing or receiving controls; i.e. specifications, order sheetswith amounts and pricing, no weighing of incoming products, noinspection of goods, no competitive bidding, no par stock or build-toinventory standards and no established potential or ideal food cost
No preparation/production controls to anticipated levels of business
No plating/portion controls
Chef was doing both the purchasing and the receiving!
No updating of inventory sheets in previous six months
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Findings: Beverage Costs
Free pouring of beverages
Over-pours for regular customers
No par stock or perpetual inventory system in place
No updating of beverage inventory sheets No full for empty policy for re-stocking daily beverage usage
(Breakage Report)
No established cost potential established for bar
Employees drinking at bar at close of their shifts
No tracking of Void, or No Sale rings on POS system
Drinks being prepared on-call before orders entered into POSsystem
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Findings: Operating Costs
No oversight of Chefs purchasing of food and supplies
No security to monitor the many exits from the restaurant
No linen controls (no credits for clean, but unserviceable linen, use ofnapkins for clean up, accepting vendor counts at delivery withoutrandom checking)
Flatware costs excessive (no monitoring of garbage cans for flatware)
No quarterly, or semi-annual, inventory of china, glassware andflatware
All equipment and utilities being turned on at 7:00 am although therestaurant did not open until 11:30 am
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Stopping the CrashRealizing a problem exists
Getting help as soon as possible
Setting up priorities to correct the problem(s)Instituting change communications (internal and external)
Staff involvement and empowerment
Measuring the results
Sharing the success
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Actions Taken: Food Cost Preparation of new standardized recipes and cost cards* Improve menu flavor profiles and plating presentations Photoplating of all luncheon and dinner items to ensure consistent production and
presentation of all food items Re-train staff to prepare menu items in accordance with new recipes and portion
controls Inventory updated to reflect current pricing Purchased digital scale to weigh items purchased by weight and instituted new
policies and procedures checklist for purchasing and receiving of goods Competitive bidding practices Comparison of quoted pricing to invoice pricing
Reduction in inventory on hand Inspection and weighing of all incoming proteins (meat, poultry, fish)
Establishment of a daily prep sheet Cost/benefit analysis of complimentary appetizer bar and happy hour
promotions* Sample hand-outs available
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Recipe Card
YOUR RESTAURANT NAME
RECIPE CARD
DATE: MEAL PERIOD:
RECIPE NAME:
YIELD: PORTION SIZE:
COOKINGMETHOD: TEMPERATURE:
INGREDIENTS AMOUNT MEASURE METHOD
PLATING/PACKAGING INSTRUCTIONS/GARNISH:
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Recipe Cost Worksheet
YOUR RESTAURANT NAME
RECIPE COST WORKSHEET
DATE:
MEAL PERIOD:
RECIPE NAME:
LAST UPDATE:
YIELD:
PORTION SIZE:
COST PER PORTION:
PROFIT PER PORTION:
CURRENT SELLING PRICE:
FOOD COST PERCENTAGE AT CURRENT SELLING PRICE:
RECIPE COST PER EXTENDED
PURCHASE UNIT OF UNIT OF INGREDIENT
INGREDIENT DESCRIPTION PRICE PER UNIT MEASURE MEASURE COST
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
TOTAL RECIPECOST: $0.00
SUGGESTED SELLING PRICE TO ACHIEVE A 2 8% C.O.S. N/A
SUGGESTED SELLING PRICE TO ACHIEVE A 3 0% C.O.S. N/A
SUGGESTED SELLING PRICE TO ACHIEVE A 3 2% C.O.S. N/A
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Actions Taken: Beverage Cost
Measured speed pourers on all bottles and staff re-training
Bottle identification program
Establishment of a par stock system for front bar
Updated pricing on beverage inventory sheets Instituted a full for empty policy for re-stocking daily breakage
33% reduction in wines by the glass inventory
Instituted new policies related to management and hourly employees
use of bar at close of their shift Random exchange of cash drawers during shifts, tracking of voids
and no sale rings, use of spotters, cash drawers closed at all times
Drinks being prepared before orders are input into POS system
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Actions Taken: Labor CostDeveloped 13-week (quarterly) covers history, by week, by day and
by day-part as basis for staffing*
Established benchmarking standards for dining room and loungestaffing
Cross training of service staff with hostess staffQuarterly training meeting for all front-of-the-house staff
Established job descriptions, for ALL front, and back-of-the-house,employees and provided each with a Table of Organization
Pre-forecasting of labor and projected costs prior to scheduling toallow for adjustments based on projected revenues*
New policies related to entry/exit to restaurant, use of sign-in sheets,parking and packages/purses/food being brought in, or taken
from, restaurant
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Covers Tracking Forecast - Dinner
YOUR RESTAURANT NAME
Quarterly Dinner Covers - Tracking Analysis
Week Endi ng 7/31/11 8/7/11 8/14/11 8/21/11 8/28/11 9/4/11 9/11/11 9/18/11 9/25/11 10/2/11 10/9/11 10/16/11 10/23/11 Total Maximu m Minim um Averag e
Dinner Forecast
Monday 0 0 0 #DIV/0!
Tuesday 0 0 0 #DIV/0!
Wednesday 0 0 0 #DIV/0!
Thursday 0 0 0 #DIV/0!
Friday 0 0 0 #DIV/0!
Saturday 0 0 0 #DIV/0!Sunday 0 0 0 #DIV/0!
Weekly Total 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Dinner Actual
Monday 0 0 0 #DIV/0!
Tuesday 0 0 0 #DIV/0!
Wednesday 0 0 0 #DIV/0!
Thursday 0 0 0 #DIV/0!
Friday 0 0 0 #DIV/0!
Saturday 0 0 0 #DIV/0!
Sunday 0 0 0 #DIV/0!
Weekly Total 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Variance +/-
Monday 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Tuesday 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Wednesday 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Thursday 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Friday 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Saturday 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Sunday 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Weekly Total 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
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Pre-Forecast of LaborYOUR RESTAURANT NAME
Blind Staffing Worksheet
Prepared by : Date:
Day of Week FRIDAY
Owner Manager Hostess Hostess Chef Kitchen Kitchen Kitchen Kitchen Dish Dish Server Server Server Server Busser Busser Busser Bar Server Server Server Tot. Hrs.
6-7 AM 0
7-8 0
8-9 0
9-10 0
10-11 0
11-12 0
12-1 PM 0
1-2 0
2-3 0
3-4 0
4-5 0
5-6 0
6-7 0
7-8 0
8-9 0
9-10 0
10-11 0
11-12 0
12-1 AM 0
TOTAL 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Category RATE # HRS TOTAL $
TOTAL HOURS SCHEDULED 0.0 HRS. $ %
Owner $ - 0 0.00 BOH LABOR 0.00 $0.00 #DIV/0!
Manager $ - 0 0.00 TOTAL DAY'S WAGES $0.00 FOH LABOR 0.00 $0.00 #DIV/0!
Hostess $ - 0 0.00
Chef $ - 0 0.00 EST PAYROLL TAX & BENEFITS $0.00
Kitchen $ - 0 0.00
Dish $ - 0 0.00 GROSS WAGES $0.00
Server $ - 0 0.00
Busser $ - 0 0.00 PROJECTED SALES for DAY $0.00
Bar $ - 0 0.00
Server $ - 0 0.00 LABOR PERCENTAGE 0.0%
$ - 0 0.00
0 $0.00
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Actions Taken: Operating Costs
Implementation of weekly operations meeting with Chef, HeadBartender, Banquet Manager and General Manager
New security system to cover front desk, and all entry points in andout of the restaurant
Competitive bidding of new linen contract
Use of magnets on garbage cans in dishwashing area and randomdumping of garbage to review contents
Implementation of 13, 4-week, accounting system to improvecomparative analysis of food, beverage and labor costs*
Restructuring of the financial reporting system to conform withUniform System of Accounts for Restaurants
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13 Period 2012 Calendar
2008 - 13 Period Year (28 days each)
Period 1 Period 7
MON TUE WED THU FRI SAT SUN MON TUE WED THU FRI SAT SUN
30-Dec 31-Dec 1-Jan 2-Jan 3-Jan 4-Jan 5-Jan 16-Jun 17-Jun 18-Jun 19-Jun 20-Jun 21-Jun 22-Jun
6-Jan 7-Jan 8-Jan 9-Jan 10-Jan 11-Jan 12-Jan 23-Jun 24-Jun 25-Jun 26-Jun 27-Jun 28-Jun 29-Jun
13-Jan 14-Jan 15-Jan 16-Jan 17-Jan 18-Jan 19-Jan 30-Jun 1-Jul 2-Jul 3-Jul 4-Jul 5-Jul 6-Jul
20-Jan 21-Jan 22-Jan 23-Jan 24-Jan 25-Jan 26-Jan 7-Jul 8-Jul 9-Jul 10-Jul 11-Jul 12-Jul 13-Jul
Period 2 Period 8
MON TUE WED THU FRI SAT SUN MON TUE WED THU FRI SAT SUN
27-Jan 28-Jan 29-Jan 30-Jan 31-Jan 1-Feb 2-Feb 14-Jul 15-Jul 16-Jul 17-Jul 18-Jul 19-Jul 20-Jul
3-Feb 4-Feb 5-Feb 6-Feb 7-Feb 8-Feb 9-Feb 21-Jul 22-Jul 23-Jul 24-Jul 25-Jul 26-Jul 27-Jul
10-Feb 11-Feb 12-Feb 13-Feb 14-Feb 15-Feb 16-Feb 28-Jul 29-Jul 30-Jul 31-Jul 1-Aug 2-Aug 3-Aug
17-Feb 18-Feb 19-Feb 20-Feb 21-Feb 22-Feb 23-Feb 4-Aug 5-Aug 6-Aug 7-Aug 8-Aug 9-Aug 10-Aug
Period 3 Period 9
MON TUE WED THU FRI SAT SUN MON TUE WED THU FRI SAT SUN
24-Feb 25-Feb 26-Feb 27-Feb 28-Feb 1-Mar 2-Mar 11-Aug 12-Aug 13-Aug 14-Aug 15-Aug 16-Aug 17-Aug
3-Mar 4-Mar 5-Mar 6-Mar 7-Mar 8-Mar 9-Mar 18-Aug 19-Aug 20-Aug 21-Aug 22-Aug 23-Aug 24-Aug
10-Mar 11-Mar 12-Mar 13-Mar 14-Mar 15-Mar 16-Mar 25-Aug 26-Aug 27-Aug 28-Aug 29-Aug 30-Aug 31-Aug
17-Mar 18-Mar 19-Mar 20-Mar 21-Mar 22-Mar 23-Mar 1-Sep 2-Sep 3-Sep 4-Sep 5-Sep 6-Sep 7-Sep
Period 4 Period 10
MON TUE WED THU FRI SAT SUN MON TUE WED THU FRI SAT SUN
24-Mar 25-Mar 26-Mar 27-Mar 28-Mar 29-Mar 30-Mar 8-Sep 9-Sep 10-Sep 11-Sep 12-Sep 13-Sep 14-Sep
31-Mar 1-Apr 2-Apr 3-Apr 4-Apr 5-Apr 6-Apr 15-Sep 16-Sep 17-Sep 18-Sep 19-Sep 20-Sep 21-Sep
7-Apr 8-Apr 9-Apr 10-Apr 11-Apr 12-Apr 13-Apr 22-Sep 23-Sep 24-Sep 25-Sep 26-Sep 27-Sep 28-Sep
14-Apr 15-Apr 16-Apr 17-Apr 18-Apr 19-Apr 20-Apr 29-Sep 30-Sep 1-Oct 2-Oct 3-Oct 4-Oct 5-Oct
Period 5 Period 11
MON TUE WED THU FRI SAT SUN MON TUE WED THU FRI SAT SUN
21-Apr 22-Apr 23-Apr 24-Apr 25-Apr 26-Apr 27-Apr 6-Oct 7-Oct 8-Oct 9-Oct 10-Oct 11-Oct 12-Oct
28-Apr 29-Apr 30-Apr 1-May 2-May 3-May 4-May 13-Oct 14-Oct 15-Oct 16-Oct 17-Oct 18-Oct 19-Oct
5-May 6-May 7-May 8-May 9-May 10-May 11-May 20-Oct 21-Oct 22-Oct 23-Oct 24-Oct 25-Oct 26-Oct
12-May 13-May 14-May 15-May 16-May 17-May 18-May 27-Oct 28-Oct 29-Oct 30-Oct 31-Oct 1-Nov 2-Nov
Period 6 Period 12
MON TUE WED THU FRI SAT SUN MON TUE WED THU FRI SAT SUN
19-May 20-May 21-May 22-May 23-May 24-May 25-May 3-Nov 4-Nov 5-Nov 6-Nov 7-Nov 8-Nov 9-Nov
26-May 27-May 28-May 29-May 30-May 31-May 1-Jun 10-Nov 11-Nov 12-Nov 13-Nov 14-Nov 15-Nov 16-Nov
2-Jun 3-Jun 4-Jun 5-Jun 6-Jun 7-Jun 8-Jun 17-Nov 18-Nov 19-Nov 20-Nov 21-Nov 22-Nov 23-Nov
9-Jun 10-Jun 11-Jun 12-Jun 13-Jun 14-Jun 15-Jun 24-Nov 25-Nov 26-Nov 27-Nov 28-Nov 29-Nov 30-Nov
Period 13
MON TUE WED THU FRI SAT SUN
1-Dec 2-Dec 3-Dec 4-Dec 5-Dec 6-Dec 7-Dec
8-Dec 9-Dec 10-Dec 11-Dec 12-Dec 13-Dec 14-Dec
15-Dec 16-Dec 17-Dec 18-Dec 19-Dec 20-Dec 21-Dec
22-Dec 23-Dec 24-Dec 25-Dec 26-Dec 27-Dec 28-Dec
29-Dec 30-Dec 31-Dec 1-Jan 2-Jan 3-Jan 4-Jan
(extra week every 5 to 6 years to keep make up for dif ference in calendar year (365or 366 days) and 13 period year (364 days)
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Benchmarking the Results Comparison of key operating costs to industry best
practices for similar operations as shown in theAnnual
Restaurant Industry Operations ReportFood cost
Beverage cost
Labor cost
Prime costSales per square foot
Sales per labor hour
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Cash Not Crash, or the 180 Turnaround
6 mos. Prior 6 mos. After +/-
Revenues $113,462 $125,807 +$12,345
Food Cost 42.0% 34.7% - 7.3%
Beverage Cost 27.3% 25.0% - 2.3%
Labor Cost 46.0% 37.0% - 9.0%
Total Cost Improvement (%) - 18.6%
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Cash Not Crash, or the 180 Turnaround
Monthly revenues ($) +$12,345
Food cost reduction ($) -$63,897
Beverage cost reduction ($) -$2,567
Labor cost reduction ($) -$127,953
Total Turnaround Savings ($) -$204,417
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Any Questions?...
Thank you!
Presented by
Don J. Avalier, FCSI, FMP, Principal
Manask Hospitality Group(818) 557-0635 or(800) 686-8813
