INSIDE FOODSERVICE
How to secure cost efficiencies in your foodservice operation

 “A lot of foodservice professionals are looking for that one silver bullet on how to ensure cost efficiencies, but there are so many variables.” So says industry veteran Gary Johnson, until recently the National Executive Chef for a leading national hotel group and now much in demand as a consultant to foodservice businesses.

But while eschewing the idea of a simple answer, Gary has plenty of insights to share. “When it comes to securing cost efficiencies I like to use the analogy of flying an aircraft – if you increase the altitude, you have to cut back on the fuel; there are lots of dials and gauges and any adjustment to these controls influences other aspects of flight.

LISTEN: Securing cost efficiencies

“It’s the same with looking at cost efficiencies – whatever adjustments you make in one area of your business will impact somewhere else, so it’s all a question of balance. For example, you can cut back on staff, but if you cut back too much you will adversely impact sales because you don’t have enough staff to service the customers and sell your product.

“At the end of the day you’ve got to try to hit the sweet spot. One of my favourite sayings in this respect is ‘In God we trust, but everybody else has to show me the data’. In other words, don’t fly blind, but take advantage of the data and research you have to make informed decisions.”

Plotting your break-even point

Gary says the foundation of cost efficiency in foodservice should always be to increase your revenue, in which case a lot of other issues go away thanks to increased sales. “Ideally you should know your business well enough to be able to plot your break-even point. That’s best to do in dollars rather than as a percentage, and once you hit that your curve rises exponentially to what we call incremental revenue; as your revenue continues to rise so does your profit, and while your fixed costs and your labour percentages will go down, your goods will remain commensurate with the increase in revenue, and the savings will be realised through productivity.

 “You might have four chefs on, in a restaurant with 100 covers an hour; if it rises to 120 covers an hour you can probably still service that without increasing the number of chefs, and you can continue to reach it but eventually you will reach that sweet spot. Once that’s the case you need to spread the load out across a couple of hours of service, rather than cramming it all into one hour.

Add value rather than discount

“It’s also important to focus on generating revenue by adding value, as opposed to discounting. Some businesses might think they need to discount to increase customer numbers or activity, but that’s an illusion. Discounting will only interfere with your profit. You’d be better off adding value by giving someone a free garlic bread with their meal if they come in at a certain time, rather than offering two for one meals.

“If you discount your top line this way, as opposed to adding value by offering a little bit extra on top, like a free garlic bread or soft drink, it’s not a good alternative. People will still pay $30 a steak as long as the quality is there – you don’t need to drop the price to $20 to get them through the door. And with most foodservice businesses running on a 10 or 20 per cent profit margin, once you start discounting too much your profit is quickly gone.”

Another way of increasing revenue is by adding more off-premise order options such as takeaway or delivery, or supplementing your regular menu with banquet or event offerings. “You should also look at regular promotions or specials, something you can sing about – even have a look at your menu prices compared to those of your competition, and ask yourself whether they’re too cheap. If the business across the road is selling a Caesar salad for $25 when yours is $20, you can afford to lift yours by a dollar or two. You can also look at expanding your seating capacity both inside and out – the more seats, the more dollars.”

From scratch vs bought-in

A further consideration should be what food needs to be made inhouse versus what can and should be ordered in readymade. “Ask yourself, what do we make inhouse that we’re really good at and that our competitors can’t match? It could be your braised beef cheeks, lamb shank curry, or maybe the barbecue sauce on your ribs is the best in town.

“If that’s the case, keep making those things yourself - but then look at what other ingredients you’re using that become components of finished dishes and see which of those you can buy in. It could be sauces, it could be pastry moulds, it could be cakes or desserts that you know cost too much in time and labour to make from scratch – and consistency issues also come into play here.

“When you buy those things in from a reliable supplier rather than prepare from scratch, you typically get the benefits of 100 per cent yield, 100 per cent assurance of food safety – and you can still add your signature touches to delineate the finished presentation from that of the competition.”

Streamlining the menu

Gary is passionate about streamlining the menu: “Chefs and business owners need to be able to put their hand on their heart and say, this menu is for my customers, not for my own vanity or as a showcase of my creativity. You need to engineer and streamline your menu as much as possible – these days if your menu has 40 or 50 dishes, that’s probably 20 too many.  

“Remember that the less food you have to prepare, that’s less labour you need, less time, less storage capacity. Eighty per cent of your sales typically come from 20 per cent of the menu in any case, so it’s not difficult to cut back.”

Plan the menu with kitchen ergonomics in mind

Menus should always be developed with the kitchen layout and ergonomics in mind. “If you have three chefs running four sections you might need to make changes to the equipment or add some innovation like sous vide thermocirculars, so most of the food can be prepared in advance, then vacuum packed ready to heat and serve. That way, when you get your order for beef cheeks, you put it into the pan, heat it up and serve it with mashed potato.

“The more running around for the team, the more movements you have, the more time and labour the whole process takes, and the slower the service goes. If I have 100 seats in my business, I want to turn that over one and half times every service at minimum. Some business, as successful as they are, can turn those tables over twice if not more - and the reason they can do that is the science behind the service.

“In other words, you need to design the menu around the kitchen and look at how many movements your staff need to make per plate. A good example is a hamburger – there might be six to eight ingredients per burger, which equates to six to eight movements. But if you put three ingredients – say the lettuce, tomato and onion – together in little piles, you’ve reduced the total movements by three. If you combine the mustard, tomato sauce and mayo into one and call it your special burger sauce, there’s three more movements combined. So now your burger takes four movements instead of eight. It’s a question of taking a close look at how your team is plating up and working out how to maximise the number of covers they can do per service.”

Keep an eye on staff productivity and retention

A related point is the importance of ensuring overall staff productivity. “When I talk to foodservice business, two of the things they always cry about are the rising costs of food prices and labour. I suppose as hospitality staff have become a little thin on the ground, we have ended up paying more to get the right people. That’s why we need to make sure that not only are our staff rosters efficient but that everyone is performing to maximum productivity – whether plating up as I mentioned, or in cooking procedures, or even just the setup of different back of house sections, because all these systems should be designed to save time and increase productivity. 

“You should also be looking at ensuring staff retention. If your business has a high staff turnover that’s a sign something’s wrong – you need to invest more in people to keep your team together, because the longer you retain them, the more experienced and valuable they become.

“You also need to take a close look at your operating hours and see where you might need to cut back. For example, some businesses offer all day dining, but how many customers did they serve on Tuesday afternoon between 3-5pm? Most likely not enough to pay for even half an hour of one team member, yet they might have had four team members on during that period. There’s no point in having your entire kitchen and team on in expectation of increased revenue when the customers aren’t there. And when you cut the hours back accordingly, you’ll not only save money, you’ll give your team more time off.”

In closing, Gary says “There are so many other ways to save money and cut costs that you can come up with, you just need to really think about it. For example, are you sending your menus out to be printed, or are you printing them inhouse? I don’t think anybody goes back to eat at a foodservice business because it has a nicely printed menu – it could be a piece of paper on a clipboard, as long as the food and service is up to scratch.”