 CEO Article Spotlight
Busting the Food Cost Budget
Every foodservice organization on the planet sets a budget for food costs. Chefs and F&B directors who can hit the budget are considered better managers than those who exceed it. From a financial standpoint, it is necessary to have a budget and try to stay close to it. I'm amazed at how unscientifically this number is determined, and even more amazed at how chefs and kitchen management teams are judged on their ability to hit a number they have so little control over.
Consider the chain restaurant that sets a budget for its stores at 30%. Manager "A" gets a 29% and Manager "B" at a different store with identical menus gets a 32%. We might be tempted to say Manager A is the better manager. If we could calculate the best food cost each store could possibly have run during the period, the conclusion could be quite different. This cost, sometimes called the theoretical, ideal or perfect food cost is based on the cost of using exactly the right amount of food by controlling theft, waste, spoilage and over-portioning. The calculation takes into consideration the number of each menu item legitimately distributed or sold, the item recipes and the yield potential of each raw ingredient.
If Manager A with the 29% could have run a 26% food cost (a 3 point variance), and Manager B with the 32% could have run a 31% based on the perfect cost (a 1 point variance), it is clear that Manager B ran a more efficient operation than Manager A. This points out the inherent danger of using the budget as a determinant of capability. Many managers and chefs have been terminated for missing their budget, even though they were running very tight operations. If the operation is running with little variance and still can't hit the budget, other adjustments not related to talent need to be made.
Actual food costs vary by meal period and day. Purchase prices fluctuate widely on food items. Choices made by restaurant patrons change as well, and item yields can vary significantly. Simply consider the difference in seasonality for all three key factors. Produce purchased off season can have lower yields AND higher costs. The addition of daily specials, catering and weather conditions increase cost variability.
Under these conditions, it is simply impossible to hit the budget number consistently. In order to do so, the menu, the recipes and the types of items purchased would have to either be set to produce the budget food cost (which is impractical), or be monitored and adjusted constantly. Since raw material costs change daily, it would be necessary to accurately calculate the food cost and sales on a daily basis, compare the results to the budget and adjust the three cost components. This would require at least one full-time accounting position, offsetting any gains in cost reduction. Even with software capable of performing the calculations, people would not be able to take daily inventories, make adjustments to recipes and correctly predict the next day's sales mix.
Chefs and F&B managers understand the basic unfairness of determining their competence based on performance against the budget. Some actually "fudge" period-end inventories or delay posting of purchases to make the numbers work. However, there are ways to tackle this problem and get as close as possible to the desired budget without changing staff.
Reducing variance between actual and ideal food usage is first. With low variances, the focus can shift to other factors that are far more controllable. Accurate and current recipe costs are the next step. This allows development of a product contribution ranking that provides most of the information needed to make good periodic menu change decisions. Slight changes to high contributors can have a more significant impact on food costs than major menu changes. Finally, using smart purchasing techniques such as purchase orders and bidding help reduce costs before the food enters the building.
Software is available to help with all these things, but it starts with the proper mindset. Busting the managers or chefs if they don't achieve what could be unrealistic budget numbers is only effective if they are allowing the operation to run with high variances. But if they already run a tight ship, bust the budget first. With good data dealing with variance, usage, costs and product contributions, adjustments can be made to develop realistic, achievable budgets.
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 New FOOD-TRAK Mobile App!
Hold the phone FOOD-TRAKERS! We are very excited to announce a new platform for our lineup of FOOD-TRAK Mobile device software. After more than a year of development, the FOOD-TRAK Mobile App (FMA for short) has just been released. Collect data where it lives, save time, improve accuracy and eliminate paper forms!
Available for Android and Apple mobile devices, the FMA is available from the Apple App Store or the Google Play Store for download to your Android or Apple devices. The app connects directly to your in-house or hosted FOOD-TRAK System over WiFi or cellular connection. With screens similar to the FMP, but with no need to synchronize, the FMA provides all the key data collection forms and even more functionality. Take inventory, create requisitions and transfers, receive goods - all with your smartphone or tablet! Easy to learn and fun to use, it also provides bar code scanning using the built-in camera, document printing, recipe viewing and much more.
Here is what our beta testers are saying:
"The FOOD-TRAK Mobile App will be extremely helpful for our Managers and Chefs since they will not have to go looking for a computer to put in a requisition. They will now be able to stay on the line or on the floor with the guests and order as needed."
Crystal Pirc, Inventory Analyst - Hilton Sandestin Beach Golf Resort & Spa
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 Development News
We are working hard on version 5.4, expected out early this summer. Among the many features built-in for all users is the newly embedded Business Intelligence platform. This platform provides our programmers with the ability to design interactive graphical analytics for key aspects of the operation. We will be providing spend, sales and transfer analysis capabilities in version 5.4 with more to come.
Each of these functions starts with a series of wizards allowing clients to define the scope of the analysis, such as dates, profit centers, groupings and other high-level scope boundaries. Once selected, the system will produce a high-level graph. Selecting an individual section of the graph will provide another graph breaking down that section in detail, from highest to lowest values.
Selecting an individual item in this graph provides a list of all forms (sales mix, invoice or transfer depending on analysis run) associated with the item during the selected time frame. Selecting any individual form will produce a report showing the form itself.
Using this approach, it is possible to create interactive comparisons and consolidations that deal with virtually any aspect of your purchases, sales or transfer activity with the ability to drill down to ultimate detail. More types of analytic reports are on their way, so stay tuned!
 
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 Tech Corner
Over time, transactions and item databases can become quite large and in many cases contain data which is no longer valid or needed. The result can be slower processing and confusion leading to inaccurate recipes and inventory accounting. We can help! You select a cutoff date (typically 2 years or so) and we run a script against your database removing all transactions (inventories, invoices, transfers, etc.) prior to that date. This reduces the size of your database and allows you to delete items and recipes related to those older forms. We can also help with that. Think Spring cleaning and ask your Account Manager about data truncation and other database clean-up services.
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 FOOD-TRAK University Featured Course
The benefits of FOOD-TRAK recipes are numerous. Not only will you know what your recipes cost, but your cost margin and food cost percentage are also calculated for each recipe. And it doesn't stop there! Integrating FOOD-TRAK with your POS system provides real-time insight into product mix profitability that enables you to make informed decisions and boost your bottom line. This course covers the creation and management of recipe categories, sub recipes and recipes. The featured course for April will be CUL 110: Recipes. Sign up below!
Training Date |
Time |
Monday, April 23rd |
2:00 PM - 4:00 PM Eastern Time |
Friday, May 4th |
2:00 PM - 4:00 PM Eastern Time |
Monday, May 14th |
11:00 AM - 1:00 PM Eastern Time |
Thursday, May 24th |
11:00 AM - 1:00 PM Eastern Time |
Sign up here!
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Client Appreciation
| Welcoming our new client:
BoomBozz Taphouse
Franklin, TN |
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Welcoming our new client:
Boxboro Regency Hotel
Boxborough, MA |
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Boot Camp 2018
May 15 - 18 Scottsdale, AZ
July 24 - 27 Chicago, IL
September 18 - 21 Denver, CO
November 6 - 9 Nashville, TN
Turn your 2018 F&B goals into tangible results by joining us for Boot Camp! 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. Boot Camp dates and locations have been finalized for 2018, so if you can't join us or would prefer to host a seminar at your facility let us know! Fill out the form below to submit your location!
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CEO Article Spotlight
Development News
New FOOD-TRAK Mobile App!
Tech Corner
FOOD-TRAK University Featured Course
