 CEO Article Spotlight
Approaching the Perfect Food Cost - Part 1
It’s the question every club manager and board member wants answered – “what should our food cost be?” Sometimes called the perfect, theoretical or ideal food cost, the definition is more straightforward than the achievement. The perfect food cost is the cost required to provide exactly the amount of food required to meet the legitimate need for it during the period in question.
This number may be significantly different from the budgeted food cost number. Even if the food cost is equal to the budgeted cost, it could be as much as 5-10 points higher than the perfect food cost. This variance between actual and perfect food cost is simply defined as the cost of food used in excess of what was actually needed. It comes from a variety of sources, including waste, theft, spoilage, over-portioning and reduced yield. To the club with $1 million in F&B revenue, this variance represents between $50-100 thousand per year!
Tough to Calculate
Unfortunately, the perfect food cost is nearly impossible to calculate for all but the simplest foodservice operations. The calculation is fairly straightforward. Simply take the number sold of each menu item, multiply the quantity of each ingredient required by the menu item’s recipe by that amount, adjust for the yield of each ingredient, extend the accumulated quantity adjusted for yield by the cost of the ingredient and then add up all the costs for all the ingredients required by the sales of all of the menu items. This may be tough manually, but can be easily performed using appropriate software.
The difficulty relates to the recipes themselves. Menu items offer choices between sides, salad dressings, and other components of a dish, and guests have access to complimentary table items like bread baskets and condiments. Every ingredient of every choice and complimentary item must be considered in proper proportion, requiring averaging and popularity studies. The actual recipes required to calculate perfect costs (and correct menu item costs) look nothing like cooking recipes. A simple burger plate may have only 10 line items in the cooking recipe, but over 100 line items in a costing recipe. Even though high-end F&B management software can do the calculations, very few operators have the time or experience to build these types of recipes.
Starting Down the Path
So how can a club reduce variance and approach this perfect food cost if it can’t properly calculate it? The answer lies in what I refer to as the Path to Perfection. While it may not be possible to arrive at the finish line, every step along the path helps reduce the variance. It is also important to take these steps in the proper order, which makes the path analogy even more appropriate.
In order to reduce the variance, we need to attack its components. As mentioned above, waste, theft, spoilage, over-portioning and reduced yield are the primary causes of variance. Each step along the path is designed to address one or more of these components. The first section of the path deals with procurement and everything related to it. Next comes inventory management, followed by culinary processes, key item tracking and finally report analysis and action steps.
These steps do not require changes to the menu or pricing. They have nothing to do with what you pay your purveyors for food, and they do not require the kind of recipe construction described above. But done properly and in the correct order, they can reduce variances by 80%, resulting in savings of up to $80,000 per million in F&B revenue.
Stay Tuned
With the definition of the perfect food costs in hand, and an understanding of the basic sections of the path, we can start to examine each section. But given space limitations and the complexity of the discussion, we will need to do this over a series of articles. Up next – the procurement section of the Path to a Perfection.
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 New President: David Andow
System Concepts, Inc. (SCI), developer of the FOOD-TRAK Food and Beverage Management System announced the appointment of David W. Andow to the new position of company president. Mr. Andow will report to CEO and founder Bill Schwartz. Formerly COO of Coldstone Creamery, and more recently president of Small Box Energy – a provider of equipment and software for energy management to the restaurant industry, Andow brings the extensive background and skill set required to spark significant growth, which will be his focus with SCI.
"As great friends for over a dozen years, and an admirer of his business success – especially with regard to growth strategies and relationship building, I have always wanted David as a partner in my company," said Bill Schwartz, CEO. "When the timing finally worked out, I was thrilled to bring David in. He is the perfect choice for helping guide the company through the growth phase we are entering. "I don't think I've been more excited about joining a company," says Andow. "At first, it was the opportunity to work with Bill as a dear friend and the leading expert in F&B software, but after reviewing the depth and flexibility of this 37-year-old platform, I'm extremely excited to join Bill and help clients automate their F&B operations"
While Mr. Andow will focus on growing the business, Mr. Schwartz will focus on the FOOD-TRAK software development, support and implementation quality and processes required to sustain that growth.
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 Development News
Our Development team released version 5.2 this summer, which included cross browser capabilities for all Data Entry functions. System Administrative functions make up the final stage of this project and will be released in conjunction with version 5.3 in the next couple of months! Due to popular demand, the eSysco and Performance Food Group Vendor Interfaces have both been updated to include the ability to import invoices! Please contact your account manager for details. If you already have one of these interfaces, contact Technical Support for the new installation files! Don't forget to use the 24/7 Client Support Center. It's a great resource for troubleshooting tips, FAQ's, and more. Login directly to the Support Center to submit your case or to check the status of an existing case without having to call us.
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 Tech Corner
Looking to print reports from your tablet? Get the information you need - the moment you want it, from wherever you are! Reports are accessible and can be printed directly from your tablet to your network or Wi-Fi enabled printer. Popular printer manufacturers like HP and Brother have apps that can be downloaded from the App Store or Play Store. By downloading the app to your tablet and then running a FOOD-TRAK report (remember to always export as PDF when working on a tablet), you can easily print the PDF to any of your printers! If you use the FOOD-TRAK PAD Module, please remember to login to the desktop application to retrieve and print any reports from the Tasks queue that you executed from the PAD Module.
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 FOOD-TRAK University Featured Course
Inventory accuracy is critical for calculating profits, managing purchasing and production, and detecting shrinkage. Keeping a perpetual inventory enables you to keep tabs on expected levels, but errors can creep in over time unless a physical inventory is taken periodically. Whether you take inventory weekly, monthly or just occasionally, this class was designed help make your inventory process accurate and efficient. The instructor will demonstrate how to send an inventory template to the handheld device and will then proceed to show how to use the handheld to count inventory (scanning product bar codes, FOOD-TRAK bar codes and using an inventory template). Once the handheld inventory count is complete, it will be uploaded back to the FOOD-TRAK System. Attendees do not need a handheld device for this training. The FOOD-TRAK University featured course for September will be ACCT 200: Inventory with the Mobile Partner. Sign up below!
Training Date |
Time |
Friday, September 8 |
11:00 AM - 12:30 PM Eastern Time |
Wednesday, September 13 |
3:00 PM - 4:30 PM Eastern Time |
Wednesday, September 20 |
11:00 AM - 12:30 PM Eastern Time |
Thursday, September 28 |
1:00 PM - 2:30 PM Eastern Time |
Sign up here!
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Client Appreciation
| Welcoming our new client:
Niagara 21st Group
Niagara Falls, ON Canada |
 |
Congratulations on expanding:
Il Porcellino - Lettuce Entertain You Enterprises
Chicago, IL |
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Boot Camp 2017
September 26 - 29 Chicago, IL
Turn your 2017 F&B goals into tangible results by joining us this Fall for Boot Camp in Chicago! This 4-day instructor led training seminar provides attendees with an interactive and engaging classroom experience, including lectures, demonstrations, hands-on workshops and valuable interaction with other users. Plans have started for Boot Camp dates and locations for 2018, so if you're interested in hosting a seminar let us know! Fill out the form below to submit your location!!
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