The Joys of Small Suppliers

My meat supplier is an obese, cigar-chomping Slovakian with an unpronounceable name and a staff of maybe 6 guys. His favorite hobbies include eating meat, talking about meat, and yelling at me about the Yankees, all of which he does without the cigar ever leaving his mouth.

He doesn’t have a website, a secretary, or an accounts receivable department and his office is basically a broom closet.

Sure, he doesn’t do much butchering himself anymore but he knows everything about every cut he sells and I bet he could still break down a side of beef faster than I can make a béchamel.

This guy is easily my favorite supplier.

I called him yesterday with a question about the size of the fat cap on their beef brisket and he went into the storeroom himself to check the product and get me an answer.

There’s none of this “please hold while I transfer you to some guy in the warehouse who also doesn’t know the answer,” no best guesses from uninformed sales reps, and no wondering if the full order is going to show up.

He stands behind his product and his service, and it shows.

This is why I (and plenty of other restaurants in this town) are happy to pay his slightly higher prices instead of working with the bigger, cheaper meat companies. 

The quality of his product is also the best, but that’s to be expected from a guy like him.

 

From the Restaurant Kitchen – Rules vs. Guidelines

 

When does your staff need a long list of incredibly specific rules, and when can you trust in their innate professionalism to make the right call based on your guidelines and expectations?

 

My team has a RULE that raw meat can never be on the same board as veg. But we have a GUIDELINE that we prefer not to accept Euros (we’re in a country that doesn’t use the Euro but is surrounded by countries that do).

 

If I see a cook toss a raw chicken thigh onto a board where he’s shredding lettuce, there’s no excuse in the world that protects him from the fire and lighting I’m about to rain down on him.

 

But when a tourist comes straight to our food truck from the airport and she only has Euros on her, my staff isn’t going to make her walk away hungry. They know that I might not love accepting foreign currency, but I really hate disappointing customers because of slavish adherence to arbitrary rules.

 

This dichotomy shows up everywhere in our business:

 

-Do you insist that your kitchen crew wear hairnets, or do you trust them to come to work properly groomed?

-Do you use transparent trash cans to monitor waste, or have you instilled the “NO WASTE” mantra into your staff for so long that they wouldn’t dream of throwing out usable product?

-Does your floor staff have a script of how to greet each table, or do you trust their charisma and instincts and let them improvise?

 

There’s no right answer.

 

Rules can make excellent guardrails for a fast food joint with a young staff and a high turnover rate. But there’s no faster way to demotivate an experienced, professional crew than by not trusting their judgement (sometimes).

CostGuard Food Costing and reciProfity Cloud Food Costing Software

If you are a current CostGuard Food Costing Software user and want to know why you should switch to reciProfity Cloud Food Costing Software we’re here to tell you:

  • Cloud based Food Costing Software! You can work from anywhere on any device that has a browser! Use iPads, Macs, etc. Licensing is per user, not per device.
  • Book of Yields is included in reciProfity cloud food costing software; you can select a Book of Yields item and all its conversion and prep info will be imported.
  • More pricing flexibility
    1. A single inventory item can be packed in any number of ways. reciProfity will price it properly when you select an alternate vendor with a different pack.
    2. Prep recipes have multiple units and can have shrinkage
  • Lots of changes to nutrition
    1. USDA 2017 rules including formatting, added sugars, etc.
    2. Added fields for labels: number of servings, serving size, weight, added sugar.
    3. Assign inventory groups as ‘non nutritional’ so items in those groups (such as packaging) don’t appear as nutrition exceptions.
  • Lots of changes in Inventory and Recipe Managers:
    1. Select/deselect columns
    2. In-line editing for many of the fields
    3. Options are remembered
    4. Drag and crop column names for multi-level sorting
    5. Filter for blank, e.g., what inventory items don’t have a vendor?
  • More key features for enhanced user experience
    1. Drag and drop ingredients when editing a recipe
    2. Save and stay in recipe (actually everywhere, but recipe was the most requested)
    3. Longer name fields
  • Data Optimization
    1. After converting your data, you can merge items. So where you have 2 different ‘sugars’ in CostGuard because they are packed differently, you can merge them into the same ‘sugar’ in reciProfity.
    2. You can also merge groups. So if you import new items from a supplier and include THEIR groups, you can merge that group with a current group. You won’t need to edit each item.
  • Better tools to get the most out of your data
    1. Search Engine logic is used widely to provide intelligent results: inventory manager, recipe manager, recipe entry, etc. You don’t need to click ‘full text search’ for a different set of results.
    2. Recipe Analyzer report; sorts your selling recipes by percentage in and out of the money. It’s like the Recipe Pricing Report, but is a clickable and sortable list of the recipes.

The Magic of Restaurant Software and Food and Recipe Costing

No, restaurant recipe costing is not magic. It’s just restaurant math. And this is where restaurant software comes in super handy. reciProfity is restaurant software that does restaurant food costing math for you. So it seems like magic!

If you’ve been running restaurants for years and doing restaurant food costing you’re likely already profitable and are using reciProfity to cost out your recipes and cut down on your admin work. But if you’re newer to the game, these articles will teach you how to conquer the profitability puzzle.

Here’s a quick primer on restaurant math: Spend 30% of your revenue on food and drinks to sell to your customers. Spend another 30% on your staff. Spend 20% on everything else: rent, electricity, gas, insurance, taxes, linen, maintenance, repairs, and light bulbs. Roll 10% back into the business to make it better and put 10% in your pocket. You’ve earned it.

To get this math right, it’s absolutely essential to have an accurate Food Cost. This is the most basic purpose of reciProfity. In other businesses this is called the Cost of Goods Sold (COGS) or Cost of Sales. Your Food Costing can be expressed in two ways:

  • As a number: exactly how much money do you pay for the ingredients in a recipe?
  • As a percentage: what percent of a recipe’s sales price goes to paying for its ingredients?

Here are some other terms you should know before we get into menu pricing strategies:

  • Fixed Costs, or Overhead, are the expenses connected with opening and operating your business everyday. This includes rent, electricity, gas, insurance, and anything else that stays the same (or almost the same) regardless of your sales volume.
  • Variable Costs are expenses that change directly proportionally to your sales volume. For our purposes, these are the same as Food Cost.
  • Payroll exists somewhere between Fixed Costs and Variable Costs. Even though your payroll costs vary depending on how busy you expect a service period to be, they can’t be expressed as an exact proportion of revenue so it’s not really a variable cost.
  • Gross Margin is the difference between revenue and food cost. In other words, it’s your profit AFTER paying for food but BEFORE paying your fixed costs. Also called Contribution Margin or Gross Profit.
  • Net Income is your profit after paying BOTH fixed and variable costs. From your accountant’s standpoint this is the same as your EBITDA: earnings before interest, taxes, depreciation, and amortization.
  • Breakeven Point is the amount of revenue you need to exactly cover all your fixed costs, variable costs, and payroll. In other words, it’s the amount of sales that results in exactly zero net profit/loss. Here’s how to calculate the amount of sales you need to do in order to hit your breakeven point:
    Breakeven Sales=Fixed Costs/Gross Margin %

Simple Example to illustrate these terms:
You pay $10 for a rib-eye steak and sell it for $30.
Food Cost: $10
Food Cost%: 30%
Gross Margin: $20

Once you begin to add recipes in reciProfity you’ll begin to see how we help you determine your food cost % and match it to a target.

If you see an Actual Food Cost % that is above your Target you’ll start thinking about how best to manage that.  We’re getting you off to a good start here.

Would you change the price you charge? Or modify your ingredients? Or have a talk with your supplier?

 

Next up: what your target and actual food cost % really mean. And how they differ depending upon the category of your recipes. Stay tuned!