Review your suppliers and check your supplier procedures to reduce inventory waste.
Not all companies purchase in such high volumes; nevertheless it is still a good practice to review your suppliers. How long have you been working with your current suppliers? Are they meeting your needs, (price, specifications, quality and delivery schedule)?
Make a schedule to meet with your suppliers over the next few weeks and have a closer look at what you spend with them and how your communications flow in each direction. Start with your largest, most strategic suppliers first.
Supplier evaluations are something that should be done a few times a year. I would suggest that it’s something you would want to do formally every 4 to 6 months with your big suppliers and informally every 2 to 3 months. Regardless of your establishment’s size, it really does pay off to have these reviews with your suppliers; after all, they carry as much risk as you do based on your success.
While I’m on the subject of Purchasing, here’s my latest article at Typsy!
Single versus multi-supplier strategies
Manage your suppliers to reduce costs and waste. Get your suppliers on-side and maximize profit.
How do you get along with your suppliers? Is your relationship adversarial or co-operative, or somewhere in between? A good supplier is worth more than their weight in gold. Remember, open communication must flow in both directions.
A number of years ago, I took over as corporate purchaser for a mid- to large-sized company. Among other supplier challenges, we were having trouble with a key supplier. As the new guy on the block, I meet with the sales rep and his boss on a number of occasions and expressed our need for delivery six days a week and not their pre-determined three or four. We were getting too much product at a time and it was difficult to store and control our high stock turnover rates while managing with a restricted storage space. We went back and forth for about three months with no change. I contacted their competitors, who were more than happy to deliver six days a week and at a lower price; 7% lower! It worked out to almost $12,000 a year in savings and I had the delivery schedule that met my company’s needs, plus the supplier rotated the stock on delivery to maintain FIFO (First in – First Out) and credited us for older potentially dated inventory they took back as returns. It was a winning solution for all but the old supplier! The old supplier’s response when we dropped them? ‘We didn’t realize it was important to you!’ WOW: after three months of talking about it you would have thought they would have clued in!
Make sure you keep that communication wide open so that the relationship works in everyone’s best interest. Keep asking questions until you get the answers you need. If they aren’t forthcoming, maybe it’s time to move on to a new supplier.
What new ways are there to recruit the best kitchen staff? Here are some tips.
Recruit from cooking schools. The students are chefs-in-training and are more than keen to work toward their own development and credentials as they bring new life into your establishment and likely, new life into your menu. In order for them to move into their careers and advance, practical work hours are a huge part of qualifying for their professional designation or credentials. Often a period of internship is required to accumulate hours of practical work experience. As interns or apprentices they may also come to you at a reduced hourly rate, or your company may qualify for a government grant to support their work efforts and grow their experience.
Can they work for you seasonally while in school, or work for you part time until graduation then come on board full time after graduation? The benefit will be a well-trained, qualified individual to work in your establishment that “knows the ropes” and will be well positioned to dig in to a busy summer or winter season. This also means little or no incoming training or orientation that may otherwise slow production in the way a new hire would.
Keep your student staff when they are willing to work, and work around their school schedule. Give them time for their exams. Flexible scheduling can work well here: they are mostly available when you need them and in school when you don’t.
Find the culinary schools in your area/city and attend any and all open house events, get to know the key people in the school so they can become referral partners for you. Get to know what the curriculum is for the students: where does that match the requirements of your establishment? How does this make your establishment more competitive? It’s a great way to support newcomers in the industry and give back to the community by supporting a student’s training and career development!
I am in the midst of getting my second book ready for publication and I am looking for a few good readers! I would like to add some comments/testimonials from industry pros like yourself to the book cover and my website. As a thank you for a quick read and a few comments on the final PDF draft, I will send you a print version of both, my first book, 69 Tips for Better Food & Beverage Profit and the second book, 101 More Tips for Food & Beverage Profit as a thanks for helping!
Please let me know if you would like to help out as I get ready to launch this second book a bit later this year! Send me an email and I will forward you the final PDF draft of 101 More Tips for Better Food & Beverage Profit!
Thanks, and cheers!
You can email me here at firstname.lastname@example.org or on LinkedIn!
What is good inventory management? Reduce your costs by managing your inventory.
Inventory management is as much about careful procurement strategies as it is about taking care of it once it’s in your establishment. Once there, it’s yours and that’s your money tied up in inventory on hand. You should be concerned about managing it so that it’s in its most optimal condition to use and sell.
Over the years I have found the most amazing things lurking on the back of a shelf that have gone unnoticed and have rapidly gone from deadstock to unusable garbage. If you paid $500 for it and it was unusable, you’re tossing out $1,500 in lost sales (assuming a 33% COS). At only a 4 or 5 percent profit, how much in sales are you going to have to generate in order to recover from the loss?
Put down what you’re doing and go and walk through your storerooms, coolers, fridges and freezers right now. Take a pad of paper and pencil with you: better yet, take your cell phone too and photograph each and every deadstock item you find as well as recording it on your note pad.
Calculate its inventory value plus its resell value. Using your current rate of profit, calculate how many dollars in sales you will have to sell just to recoup the loss.
The math at a 4% profit rate:
$1.00 / 0.04 = 25 X $500 = $12,500
The math at 5%:
$1.00 / 0.05 = 20 X $500 = $10,000
The lesson here is that the lower your percentage of profit, the more it will take to pay off the loss.
Front-of-house food and beverage industry workers are salespeople!
Surprisingly, many people in the food and beverage industry don’t understand that they are actually in the sales business. I teach and advise about 50 to 60 entrepreneurs each year and it always surprises me that they are thrilled to tell me about their pursuits into entrepreneurship, but few view themselves as sales people. It requires a change off thinking and a change of attitude. Whether you’re an entrepreneur or a food and beverage establishment, salesmanship should be your constant company mantra, for without sales there is no revenue and certainly no ability to maximize profits.
In the F & B industry it comes down to whether a server is an order taker or a salesperson. If you’re going to maximize your profit, you and your employees need to first and foremost understand that you are in the sales business and you just happen to achieve this goal by selling stuff, in this case food and beverages. Right from the get-go servers need to understand that they are in fact working in a sales position and fully understand that suggestive selling and up-selling (done right) is largely about offering better customer service. And you as manager or supervisor must be able to set up, continue, maintain and teach to that point each and every day. To drive this point further, as salespeople, servers do receive what are pretty good commissions of 10 to 20 percent paid daily and mostly in cash; to the rest of us they are called tips, and no less commissions paid on performance and paid on the spot by customers that have come into your place of business and have clearly pre-determined to spend money.
What current processes do you have that set up sales expectations among all of your servers, from the recruiting to the hiring, orientation, training and supervision stage. Where do you instill this? Indeed, all staff members that interact with guests need to be salespeople and have a sales attitude built in.
Daily, what do you include in your stand-up sessions with staff to put them and keep them in a sales-minded place to ensure that every staff member is actively involved in better customer service and increased sales to maximize profit?
How do you standardize recipes for reliability and consistency and how does it affect your bottom line.
Standardization of your recipes looks after a few things; mainly the quality and quantity you will produce. In a word: consistency. Standardization goes a long way to maintaining the reliability your guests come to expect and frankly the reason they come back providing that you have a good product and service in the first place.
Over time I have heard some interesting excuses for NOT following standardized recipes:
These reasons are ridiculous and hint at deeper systemic problems in your establishment. Standardized recipes are cornerstones to providing consistent menu items at a prescribed cost, meaning that if you can control your costs, you can control your profit.
What should happen and why: here are some tips!
Given these few examples, it’s hard to understand why people still want to resist standardization of their menu items.
Higher compensation (wages) is not the only way to reduce turnover and increase employee morale. Tossing money at a problem is not likely to fix it, at least not in the long term. There are other matters at play that need to be addressed, and higher wages will only work for so long before staff members move on to work for your competition.
When employees are receiving a fair wage in the first place, other strategies can be used to help reduce employee turnover and build a strong team.
High employee turnover and low morale are challenges in many industries but seem to be chronic in the hospitality sector. Fortunately there are strategies we can use to improve retention and help increase morale, or at the very least help it from becoming chronic and more problematic.
Here are some areas to consider. They aren’t in any particular order, as I believe they are all vital. Having said that, if there was one thing that I would put above all others, it’s communication
Think about these:
A significant investment is required to recruit, train and supervise all of your staff members. Hopefully, as a direct result of well thought-out recruitment, hiring, orientation and training programs, your employees will gain knowledge, skills and work experience and choose to stay and contribute this knowledge base to their own success as well as the success of the company. It’s always worth the extra effort to get it right from the beginning and plant the seeds for your employees to perform successfully within your establishment. If you can put this effort into your employees from the beginning, they will, in turn, put the effort into making you more successful as well. That means higher profit for you and more stability for your employees!
Mike has worked across Canada as a food and beverage professional and currently divides his time between writing and teaching people how to start and run their own businesses.