The International Network of Hospitality Consulting Professionals

The Art of Luxury in Hospitality

What is Luxury?

When thinking about luxury in hospitality, it helps first to define what luxury is. Luxurious experiences are often associated with premium-priced products or services. Luxury, therefore, is perceived as something that adds value to people’s lives via upgraded quality or service, normally in exchange for premium pricing. When saying people, we understand that each of us comes biologically outfitted with our own mind and personality.

As personality is a subjective characteristic of our individual being, it makes sense that different individuals will have different points of view about what constitutes a luxurious experience. Luxury should not be a necessity, however, worldviews tend to be misperceived in today’s day and age, where social media encourages us to compare the products and service experiences consumed by others.

Their shared experiences influence the opinions of others and therefore create new personal interpretations of what luxury is all about since we’re all driven by a strong sense of belonging. From the luxury service provider’s point of view, this can be problematic, but it also presents an opportunity.

Luxury is a Combination of Refined Service and Quality Product

Luxury is never determined by the physical product alone. Similarly, a product is never by itself innovative, but instead is the result of the combined effort of all inputs used. And so luxury always comes with its service sibling. Without a service component, luxury simply does not exist.

When it comes to luxury in hospitality, staying at a luxury hotel rather than a low-budget hotel will provide additional space, but without service, this satisfaction will only be temporary. Without any type of service component, a luxurious experience cannot exist.

The Evolution of Luxury

The meaning of luxury is constantly evolving. To clarify, let’s consider the past 100 years:

At the beginning of the 20th century – around the 1920’s – luxury was related to the product; be it hats, gloves, shoes or independent luxury hotels. These quality premium products and services consisted of the craftsmanship and quality of materials employed in the production process and also the level of service provided through a great number of dedicated employees.

Over the following decades – around the 1950’s – single products became easily-identified and synonymous with luxury brands. An established brand name became a source of competitive advantage, and albeit not always providing the highest-quality product (thus making it difficult for new market entrants to succeed), they were associated with luxury due to customer perceptions and past experiences.

What we can take away from this is that brands have long understood how to leverage their reputation by charging premium prices on their products. This phenomena not only explains why today’s premium brands are still resting on their laurels from the past but also how lethargic – or creature of habit – consumer behavior is enabling brands that resist change to continue to hold on in “survival mode”.

Luxury is an Experience

The turn of the century introduced a new phase in the luxury service evolution with the arrival of the “millennial” consumer. Combined with the internet revolution we have witnessed, brands have struggled to transition from “simply” delivering a product to now being forced to provide new customer experiences.

Strategies have changed and companies are adapting. Alone over the past decade, we have seen the sharing community post daily activities and experiences, be it around travel, meals, or simply the sharing and allowing for followers to participate in insignificant daily routine happenings. Living new experiences is the luxury of the 21st century.

Brands are coming to an understanding that they have to learn what new market segments expect, and they’re learning fast. A new way of learning today lies in gathering information and making sense of data provided to us through social media channels. New algorithms and artificial intelligence (AI) help us to filter through seemingly endless amounts of data. This is why today it is not unusual for brands to follow their customers on social media channels such as Instagram and Facebook to learn about their likes and dislikes as it pertains to creating new experiences.

Coming Full Circle – The People Factor

Luxury is all about experiences and experiences stem from service. So how then do we innovate and provide new experiences and create luxury in the hospitality service industry?

Similarly to products, service excellence requires key inputs such as energy, competency, and skills, which when applied, lead to unique new customer experiences. Service innovation must find its inspiration and source in the human touch.

Service excellence is not merely a competency, but mainly a mindset – a luxury mindset, to be precise. It’is when we strive for service excellence and perfection that we achieve the desired luxury experience. This requires a concentration on customer needs – knowing your customers, being interested and curious about them, and displaying passion and compassion in delivering uncompromising service and perfection. Finally, interest and curiosity are obtained from thoughts. Thoughts lead to ideas, stemming from individual minds so luxury service innovation is the effect of a mutual mindset in action. This is what we call the luxury mindset.

Luxury Experience is Key to Competitive Advantage

It is this uncompromising attitude or mindset, which is the key to competitive advantage. Successful operations are already taking advantage of this fact and it is, therefore, no surprise that the most effective companies today find their main source of competitive advantage in the people they employ. These companies go to great lengths to develop employee induction programs and place their employees at the center of their operations. Their credo is “Hire for attitude (mindset), train for skills.” For now, it will be these enterprises that will maintain a competitive advantage by shutting out the egos that ever so often distort focus and attention.

Finally, rapid growth in tourism over the coming years is expected to create a demand for the development of future leaders. This provides a unique opportunity for hospitality schools to position themselves with highly specialized segments, especially that of the high-end luxury industry. Having witnessed massive changes in technology, product, and service innovation, daily financial transparency of operations, big data inundation and highly specialized millennials will require an even greater adaptability and preparation.

It seems as though yesterday’s success model becomes outdated as early as tomorrow, and so frequent challenging of management, operations, and the status quo shall remain one of the key pillars of organizational success to ensure that we are still aligned with customer expectations, mastering change and a successful adaptation of tomorrow’s world of affairs.


About the Author:

Frank Schuetzendorf is the founder of Pariscape Consulting, based in Paris, France, and a senior lecturer in food and beverage at Ecole Hoteliere de Lausanne (EHL.) Frank built his 25-year career as an F&B professional in the luxury hotel market, working across Asia, North America and EMEA for Hilton International, Four Seasons, Dorchester Collection, Shangri-La, Althoff Hotels and Alain Ducasse Paris. Today his firm focuses on the translation of European standards and style of service into international destinations with a contemporary application. He is also a visiting lecturer at ESSEC Business School in Paris.

Transformational Leadership in the Restaurant Industry

The restaurant business has always been challenging, competitive and hazardous, with a recent study by Dr. HG Parsa pointing to a 59% restaurant failure rate within the first 3 years of operation.  In looking at all the factors affecting the business, a strong case can be made that highly effective leadership is the primary determiner of restaurant success.  This article proposes a path of transformational leadership for restaurant entrepreneurs to adopt as a way to maximize their chance for success.

What is Transformational Leadership?

Transformational leadership can be described as consisting of two major responsibilities:

  1. providing an ongoing vision for the business and the execution of that vision while always working on healthy strategic growth
  2. creating a work culture that continuously promotes active employee engagement, high productivity and a genuine commitment to the well being of the staff

Both responsibilities are vital to a restaurant’s continued success and also require very different skill sets that very few entrepreneurs possess when they first get started.  However, they are skills that entrepreneurs can develop with a commitment to learning and willingness to experiment and adapt.  In addition, the delegation of some of the responsibility with active oversight is another means of managing to implement the benefits of the two roles. The following are specific areas that comprise each of these responsibilities:

The Visionary Growth Executor

To paraphrase Bob Dylan and a line from The Shawshank Redemption, “Restaurants that aren’t busy growing are slowly (or in some cases, rapidly) busy dying.”  Every year, new and old competition is looking to take away your customers.  Rent, cost of goods and labor expenses are on the rise.   If an operator is not proficiently implementing an ongoing strategic and detailed growth plan, they’re falling behind.  Being a visionary is to see a future that doesn’t exist and create a path to it.  That takes courage, knowledge, and commitment.  The following are five key areas of focus to develop visionary transformational leadership:

  1. Dynamic Flexible and Realistic Growth Plan: Growth can take place in a variety of ways. If you are a single operator who has no desire to go beyond the love of your neighborhood place, growth can be the development of a more active strategy to retain and increase a regular customer base.  Other avenues for single operator growth could be a robust catering and delivery program, training staff to increase check averages with creative menu additions and promoting profitable special events. Localized growth can also mean an abiding commitment to continually move towards excellence and efficiency in the way your business operates. In addition, single unit growth can be seen as further developing staff and their financial rewards or becoming a leading voice in local sustainability or healthy food issues. If your goals are to go beyond your four walls, then solid infrastructure and brand development are key.  Growth can take the form of multiple units, franchised or company-owned, or developing a mix of different concepts or connected businesses, or building your reach to include branded retail products like dressings, condiments and other grocery shelf items.  Finally, as a leader, you can incorporate any combination of the above directions in your pursuit of development.
  2. Develop Staff to Support Growth: Successful growth demands highly competent and committed people to take on greater responsibility.  As a transformational leader, you need to have in place a clear program for developing and mentoring staff to take on the necessary work involved.  As well as creating internal growth positions within the restaurant, this could also involve forming partnerships with qualified staff in opening new business ventures.
  3. Continual Learning and Adaption of Industry Trends: This involves initiatives such as promoting new menu items and dietary trends like plant-based foods and gluten-free options, adopting new technology and social media that can impact your business and always looking to incorporate different creative ways to enrich the customer experience.
  4. Development of Diverse Income Streams: One way to counter the inevitable flattening out of a business trajectory is to build multiple income streams.  As referenced above, this could take the form of a variety of in-store income streams like catering or special events or developing outside business opportunities that continue to grow your brand.
  5. Commitment to Goals and a Mission Beyond Restaurant Success: Transformational leadership sees the mission of a business as significantly impacting the community outside of its four walls.  A business has an extraordinary opportunity to be a leading voice in affecting positive community change.   It has also been demonstrated that consumers and staff have a stronger connection and loyalty to a business that incorporates a wider mission than simply their own success.

The Culture Creator

Many experts estimate that most workers in this economy operate at a performance level of 50% or lower with no real understanding or connection to the goals of the businesses they work for.  A culture that can significantly raise that performance level while actively getting productive contributions from the staff creates a major competitive edge for the restaurant. This also would also impact minimizing costly employee turnover which has been a significant issue in the hospitality industry.  Imagine creating a workspace where employees look forward to being involved and are motivated to contribute to the success of the business.  The following are five areas of focus for the transformational leader to develop in creating a highly engaged and productive work culture:

  1. Hire Smart: You can’t bake a delicious tasting cake with the wrong or poor ingredients.  The ability to assess the character, chemistry and strategic placement of potential staff is critical to any future growth and success.
  2. Train and Coach for Success: Transformational leaders understand that a positive work culture involves constant training and coaching while allowing for failure as a way to encourage learning and contribution.
  3. Provide Opportunity for Growth and Security: Depending on whether an employee is ambitious and seeks opportunity or a grinder who just does their daily job consistently and with a great attitude, you need to understand how to help define clear motivation and goals.  The ambitious employee needs to take on greater challenges with more responsibility.   The grinder may look for long-term security and increased financial reward.  You need to be responsive to both to build a sustained and vibrant work culture.
  4. Be Highly Approachable and Genuinely Respectful: Be a leader who cares and demonstrate that by having an open door and genuine commitment to listening with the realization that every staff member counts and makes a vital contribution to the success of the restaurant.
  5. Family and Fun: Loneliness is the number one factor in dysfunctional mental health. In this age of social media with everyone having a broad width of acquaintances and a shallow depth of strong close friendships, a transformational leader can create a culture that counters this trend by providing a healthy family experience which is primal to everyone’s needs.  The goal is to have a highly productive staff feel at home while at work.

Transformational leadership is a way of being, not simply a list of tasks to be completed.  An entrepreneur who is committed to transformational leadership reflects it by the way they go about their daily business.  The act of balancing the visionary and culture creating roles is challenging yet ultimately deeply rewarding if the purpose is to make a real difference on multiple levels.  Transformational leadership provides the entrepreneur with a creative and practical approach to their most critical role: leading a business to successful growth in the full and dynamic sense of its meaning.


About the Author:

Alan SomeckAlan is a 30-year operator of high volume restaurants, in which he has managed all facets of the business. His experience and expertise have led him to develop a well-regarded expert witness practice. In his consulting practice, he has worked with many clients to create and establish their concepts. In addition, Alan has worked on assignments to develop food products for market such as protein bars, cookies, and brownies. He has also directed 7 EPA grants to train operators in Green sustainable practices. He has created an extensive network of industry professional who he works with on a regular basis. Throughout his career, Alan has supported the success of entrepreneurs through executive coaching and training. For the past 10 years, Alan also has taught at the Institute for Culinary Education in NYC and at NYIT where he has taught all aspects of the restaurant business. His students have opened fast-casual restaurants, cafes, bakeries, and fine dining operations.

 Restaurant and Hotel Safety: Preventing and Managing Accidents and Incidents

The pressure to run a successful hospitality operation is greater than ever.  Between rising labor, food and rent costs and an intensely competitive marketplace, owners are finding it tougher to reach a profitable bottom line.  Now add to this the fact that the industry is a popular target in the legal arena with wage, discrimination, harassment and accident lawsuits, which can often add up to significant expense for the operator.  For owners to successfully manage this difficult environment, they must operate at a very high and professional level and become proactive in addressing the threats to their business.  In terms of preventing and managing accidents and incidents, this means developing and implementing a system of safeguards that minimize exposure. This article will focus on accidents and incidents due to slips and falls, cuts and burns and foreign objects found in food.  The following are keys to creating a system for restaurant and hotel safety:

Preventing Accidents and Incidents

  1. Owner’s Attitude: Nothing of consequence will be developed unless the owner takes prevention seriously and passes on their concern to the rest of the staff in an effective and organized way. Focused attention needs to be paid to smart procedures.  Ownership needs to be fully engaged and supportive.  A “culture of safety” needs to be developed where staff recognizes and acts upon the importance of methods to minimize accidents and incidents.
  2. Specific Written Guidelines: The culture of safety needs to be translated into a written set of specific guidelines that are understood and followed by staff. This can also include videos and online training tools.  Ownership may want to bring in an outside consultant to help set this up or do the research themselves to apply best practices.
  3. Training and Reinforcement: Choose designated leaders to carry out training and reinforcement. First aid and possibly CPR training should be provided.  Use staff meetings as reminders of various safety issues.  Update training materials when necessary.  Have the proper supplies organized in designated areas.

Guidelines for preventing slips and falls, cuts and burns and preventing foreign objects from getting in food should include:

Slips and Falls

  • Do a full risk assessment of the operation. For example, if there are steps in the dining room leading to a basement, make sure there is proper lighting, signage and safe flooring. Make sure chairs are secure and repaired. Assess all potential areas of concern and address them with clear action steps.
  • Make sure floor surfaces in the front and back of the house and all stairs have acceptable traction to prevent slippage and high-quality mats that are not curled up are used where necessary.
  • Have a specific cleaning and mopping procedure in place for the kitchen and dining room. When possible seek out sustainable cleaning products as they pose less toxic threat to those who come in contact with them.
  • Make sure staff has proper shoes.
  • Keep all handrails secure and make sure all wiring is set up to avoid trips and slips.
  • Repair all uneven floor surfaces.
  • Make sure all drains are cleared.
  • Have specific procedures for when it rains: i.e. The use of mats and umbrella stands by the front door.
  • Designate specific staff with assigned tasks related to prevention.

Cuts and Burns

  • Ensure proper knife skills are taught and practiced by all kitchen staff.
  • Have staff always use the proper tool for the job.
  • Have knives sharpened on a regular basis.
  • Provide appropriate safety gear when needed such as glasses and gloves.
  • Make sure staff is fully aware of potential burn hazards.
  • Understand the use and potential hazards of all chemicals used in the operation. Look to replace standard highly toxic cleaning chemicals with effective low or non-toxic alternatives.
  • Make sure all equipment operates properly and is secured in a safe place to use.
  • Have a complete and updated first aid kit.
  • Have proper lighting in all prep and service kitchen areas.
  • Make sure all electrical equipment is grounded and outlets are properly secured.

Foreign Objects Found in Food

  • Use only reputable suppliers for food product.
  • Have clear and thorough procedures for the cleaning of food product.
  • Have no foreign objects within the vicinity of food prep.

Managing Accidents and Incidents

  1. Have Staff React Quickly and Efficiently: Staff needs to understand instantly what they are to do and carry out their responsibility. They have to quickly assess priorities and act on them. For example, in a slip and fall, first priority needs to be towards the guest or employee who has fallen and to make sure they are as safe as possible. Staff needs to immediately understand what they can and can’t do from a safety and medical standpoint, such as how to move an injured person, if at all. If there is a burn or cut, trained staff should immediately get necessary supplies and apply them. Be prepared to follow all proper procedures in handling any burns, including chemical. Calling for emergency help always has to be considered and acted upon quickly. Owner or other management should immediately take charge and direct other staff.
  2. Secure the Area: There needs to be a system in place to efficiently secure the area of the accident so the injured party stays safe and no other complications occur. For example, the use of bright colored cones and wet floor signs need to be placed in specific strategic areas. It also is important that the rest of the customers or staff is kept away from the incident area.
  3. Accident and Incident Reports: A written report should be thorough and completed as soon as possible when memory is fresh and witnesses are available. If a statement from a witness cannot be objectively verified, don’t take it as fact and phrases such as “witness alleges” or “witness claims” should be the preferred language. It may be helpful to create diagrams and take photos to enhance the clarity of the report. If appropriate, reports should be provided to the insurance company immediately.
  4. Accident and Incident Feedback Loop: No matter how well the operation is prepared, accidents and incidents will occur. It is critical to always get better and learn from any incident that takes place and share the evaluation with the rest of the staff. Management should do a thorough analysis of the incident with feedback given to the staff. Lessons learned should be discussed with an emphasis on improvement.

The hospitality entrepreneur needs to wear a multitude of hats in carrying out their business.  The prevention and management of accidents and incidents has become an area that operators more than ever must seriously pay attention to as they go about running their establishments.  Having a clear set of guidelines and procedures that are ingrained in a “culture” of restaurant and hotel safety is a most valuable insurance policy to carry.

Alan SomeckAlan is a 30-year operator of high volume restaurants, in which he has managed all facets of the business. His experience and expertise have led him to develop a well-regarded expert witness practice. In his consulting practice, he has worked with many clients to create and establish their concepts. In addition, Alan has worked on assignments to develop food products for market such as protein bars, cookies, and brownies. He has also directed 7 EPA grants to train operators in Green sustainable practices. He has created an extensive network of industry professional who he works with on a regular basis. Throughout his career, Alan has supported the success of entrepreneurs through executive coaching and training. For the past 10 years, Alan also has taught at the Institute for Culinary Education in NYC and at NYIT where he has taught all aspects of the restaurant business. His students have opened fast casual restaurants, cafes, bakeries, and fine dining operations.

Camp Foodservice Consulting Case Study – Improved Service, Satisfaction, Sanitation and Costs

Surprise Lake Camp Case Study

A Unique Foodservice Consulting Assignment

Surprise Lake Camp (SLC) in Putnam County New York desired improved food offerings and a service delivery focus to their campers and staff, along with any reduction in costs that could be realized. Leadership outlined concerns from the beginning with camper satisfaction to take priority in food quality and the delivery to dining rooms at the top of the list. Lopolito was brought in for foodservice consulting, and a 16-week contract was agreed upon to begin addressing menus, sanitation, training, ordering, and other conditions in pursuing improvements.

Situation Background

SLC is a kosher operation with one leading chef, two assistant chefs, and 40 support staff. Oversight by a Mashgiach is required to support a kosher facility. There are four kitchen facilities with three on what is called Main Side and one on Teen Side, with Teen Side kitchen a ½ mile trek to the opposite side of a large beautiful lake. SLC serves approximately 750 meals 3 times each day seven days a week, in addition to other food service needs each day. The coordination of foodservice has specific timing intervals throughout the day with strict staff protocols necessary to meet this demand. The Main Side Kitchens are separated in cooking meat and dairy on the ground level, and the Parve kitchen is on the second floor along with the
bakery. The Teen Side Kitchen is separated in cooking only meat and dairy and daily deliveries of product are necessary to support them.

Assignment Introduction

Upon LHC’s foodservice consultants arriving at SLC it was clear that there were a number of opportunities for improvement. Dry storage was disorganized, inventory was removed without process, freezer storage was limited and prevented effective ordering, ordering practices did not have accountability, and small wares like cutting boards, knives, and other preparation equipment needed to be replaced. Sanitation training was going to be a key focus with most of the 45 crew members being new employees for the 4 kitchens and 4 dining rooms. Additionally, eight weeks of menus needed to be discussed and revised, upgrades to product discussed, and prior years operational protocols needed to be understood and revised where necessary.

Meetings with the chef of 11 years were arranged to review anticipated menus for the season, and a full walk through of the kitchens took place to understand equipment needs and workflow patterns. The initial few weeks was preparation and organization for the arrival of the approximate five hundred campers and two hundred and fifty employees, but during startup a staff of about 50 were on property to prepare. Past Inventory practices were for staff to take supplies as needed without regard to issuing, par levels, or organizational controls. This in turn caused time delays in locating product, product outs, and last minute changes to menus. The leading chef demanded that the needs of the kitchens and dining room were immediate and the staff must be able to take anything they needed quickly and without burden. However, this practice did not allow for efficiency, caused elevated expenses, and resulted in a disorganization of inventory.

Case Observations Presentation

This is an overnight camp with 500 campers, 250 staff, serving 2250 meals per day seven days a week with a relatively new staff each season to coordinate and train.

  1. Food and beverage and all paper good costs needed to be addressed.
  2. The large inventory of dry and paper goods was untidy and carelessly stored.
  3. The chefs, cooks & dining staff removed inventory without regard to proper inventory procedures.
  4. Foodservice delivery to the four dining rooms was not timely and required improvement.
  5. Sanitation policies and cleanliness effectiveness required some improvements.
  6. The quality of certain proteins and main food ingredients required improvements.
  7. Freezer capacities were limited and past limitations caused shorts and storage difficulties.

Lopolito Hospitality Project Management and Foodservice Consulting Outcome

This project was effort intensive and Lopolito formed new ideas to meet the demands of this camp environment while adhering to commercial foodservice best practices. Providing product rapidly from inventory to the Main Side Kitchens became the first of many challenges. Secondary but equally important was the daily issue and orderly delivery to the Teen Side Kitchen, as this constant support is vital to their success. In order to track inventory and keep level pars, the past practice of taking items without regard would not be a suitable process going forward. Third and ongoing was the delicate assignment of reducing costs while at the same time improving the food product quality and improving dining room delivery services.

Lopolito instituted ideas that offered solutions and generated great results.

  1. Purchases were carefully considered. All ordering was precise in selecting the correct item size and quality, along with best price. These careful actions resulted in the savings of $35,000 under budget, and $25,000 less than the prior year’s expenses. Read more about Restaurant Expense Loss.
  2. A full displacement, organization, and replacement of all inventories were performed.
  3. Newly designated “issued product shelving” was created to allow staff to take goods quickly without issuing request orders. This product was replaced continuously from stock as necessary.
  4. Issue shelving significantly increased productivity in kitchen preparations, which in turn improved food service delivery to the dining rooms. This process allowed inventory levels to be maintained.
  5. New color coordinated cutting boards replaced older versions, sanitation buckets were implemented, and ongoing cleaning and sanitation training was initiated in all areas.
  6. Proteins like chicken tenders and improved meat cuts were added to replace frozen manufactured products. Fresh cut fries were also introduced. Camper and staff dining satisfaction improved.
  7. The idea of an additional freezer was discussed as necessary, and a 900sf freezer was rented. This additional freezer allowed larger ordering capacities, eliminated shorts, and allowed more productivity by eliminating product searching and replacing with appropriate inventory issuing.
  8. A master inventory list was created and regular inventory procedures were enacted.
  9. A master order list with product codes was created to assist in a consistent ordering process.

 


About the Author:

Jim LopolitoJim is president of Lopolito Hospitality Consultants and a veteran of the restaurant, country club and catering industries offering expert operational review, club management consulting, foodservice consulting, and team development. His consulting services include his proprietary “Expense Loss Review” program. The ELR program reviews variances between money that is currently unsystematically expensed on product, services, or equipment and the amount expensed upon our review and implementation of practical methods of spending behavior. Jim has worked in virtually every position in foodservice, from executive chef to general manager in restaurants, country clubs, and catering in well-known organizations throughout New York. His background includes 12 years in restaurants, 19 years in private clubs, and 10 years in high-end catering and concert production.

Sexual Harassment in the Restaurant Industry: Pervasive and Preventable

This past year has seen a flood of allegations and admissions of sexual harassment in the restaurant industry.  It’s been clear to many that incidents of this nature have been occurring for a very long time in a wide variety of ways.  A spark was needed to bring the issue into the spotlight and the calling out of high profile industry leaders became that catalyst.  This article will examine why restaurants have more sexual harassment claims than any other comparable industry and ways in which operators can prevent and manage harassment in their own operations.

Why Sexual Harassment in the Restaurant Industry is Widespread and Preventative Measures

Culture Created by Owners and Management

A respectful work culture begins with the vision and effective implementation of ownership’s goals. The culture in which the work and results get done needs to matter.   Staff needs to be more than just interchangeable and replaceable pieces and whose growth and well being are considered part of the restaurant’s success.  Ownership that is committed to the genuine development of its staff and reinforces that through daily activities and feedback can create a culture that contributes to a respectful work environment that does not tolerate sexual harassment.

Poor Hiring Decisions

Restaurant owners and management often make very poor hiring decisions.  They’re not clear what they’re looking for.  Prospective employee attitude needs to be a critical factor in the hiring process.  Skills can be taught; character is usually already in place.  Leadership needs to learn how to screen for the type of character that will contribute to a positive and respectful work culture.

Power Dynamic of Men and Women

Sexual harassment in the restaurant industry is just as much about power as it is about sex.  According to a 2012 study by S. Representative Donna Edwards and other advocacy organizations, 71% of servers are women with male managers.   A 2014 report from Restaurant Opportunities Center United estimates as many as 90% of women in the industry have experienced some type of sexual harassment.  Abuse of that power position can be pervasive if managers are not clear on the boundaries and ownership allows for it.

Staff Hours Together and Influence of Alcohol and Drugs

Staff is often together 12 + hours a day and abuse of alcohol and drugs is a common condition among restaurant employees. Add on late nights and you have a potential recipe for unwanted sexual behavior.  It’s up to management to diffuse the mix of these ingredients by smarter scheduling practices and awareness to minimize alcohol and drug use.

“The Customer is Always Right”

The customer is always right is wrong. There are some abusive customers who cross the line and no employee should be subject to that behavior.  Staff needs to have ownership back them when customers get out of line.  As an owner, you have the right to refuse service to customers who disrespect your staff.

The Impact of Tipping

The dynamic of needing to get tips for survival income often puts servers in compromising situations.  They put up with poor behavior so as not to jeopardize a tip.   Some restaurants have tried a no tipping policy, mostly without much success to this point.  There are a variety of other issues that are also impacted by tipping including the discrepancy between front and back of the house pay.   There needs to be continued work on developing a pay model that works for both the employees and ownership.  In the meantime, restaurants can support tipped employees by encouraging them not to put up with abusive customer behavior for the sake of a good tip and enforcing specific guidelines for customer behavior.

Some Other Strategies to Prevent Sexual Harassment in the Restaurant Industry

Develop Written Guidelines

Management needs to have in place written policies that make clear what constitutes sexual harassment. Consequences also need to be spelled out.  These guidelines should be gone over with staff and be reinforced especially whenever an incident occurs.

Managers and Staff Training

Ownership should provide extensive training for both management and staff. This would include bystander intervention training so everyone understands that allowing sexual harassment to go on in front of you makes you part of the problem.

Have an Open Door Policy for Staff

A culture of approachability, where staff can feel no hesitation in presenting issues to management, leads to a healthier work environment.  Employees need to feel safe in telling the truth about sexual harassment without fear or believing it won’t matter to say anything.

Zero Tolerance for Harassment

Incidents need to be taken seriously with zero tolerance for unwanted sexual behavior.  Act fairly and tackle all such issues immediately and openly so staff understands the policy.  Keep a written record of all incidents and make it a point to understand the legal issues connected to sexual harassment.

Create Opportunity for Women Leadership

Make efforts to create opportunity for women to take on leadership roles and encourage their active participation in decision making.

The events of the past year surrounding sexual harassment have created an awareness and call to action that will not be reversed or buried.  Smart restaurant operators should take the time to revisit the culture they’ve created and realize that they need to be proactive in welcoming a way of doing business that no longer tolerates old accepted practices.  Restaurant success can be a multi-dimensional vision that incorporates a solid financial model with exceptional food, service, and atmosphere as well as a respectful work culture that honors the staff that contributes to that vision.


About the Author:

Alan SomeckAlan is a 30-year operator of high volume restaurants, in which he has managed all facets of the business. His experience and expertise have led him to develop a well-regarded expert witness practice. In his consulting practice, he has worked with many clients to create and establish their concepts. In addition, Alan has worked on assignments to develop food products for market such as protein bars, cookies, and brownies. He has also directed 7 EPA grants to train operators in Green sustainable practices. He has created an extensive network of industry professional who he works with on a regular basis. Throughout his career, Alan has supported the success of entrepreneurs through executive coaching and training. For the past 10 years, Alan also has taught at the Institute for Culinary Education in NYC and at NYIT where he has taught all aspects of the restaurant business. His students have opened fast casual restaurants, cafes, bakeries, and fine dining operations.

 

The Challenges Restaurants Face in Going Green and What to Do

In the fast changing dynamics of the restaurant industry today, the mission of food service entrepreneurs is going through a significant transformation.  Not only is there more pressure than ever to deliver a high quality consistent product in a hospitable and attentive atmosphere, operators have begun to realize they have a greater responsibility to give back to their local community and in particular become proactive stewards of our precious environment.

Over the past decade, the call to adopt restaurant sustainable practices has continued to grow.  These practices in many cases have become integral parts of the restaurants vision and contribution to their community.  In particular, there’s been a significant increase in an understanding of strategies restaurants could utilize in the areas of energy and water efficiency, the use of low or non-toxic cleaning and pest control products and the utilization of waste management practices to counter the enormous waste that occurs in restaurant operations. These strategies have often proven to also be a profit bonus to operators who use them intelligently.

Innovative technologies in the area of monitoring waste have become as easy to use as pressing a few buttons on a smart phone. Chefs have become more motivated to come up with creative uses for once thrown away product.  Local governments and utility companies have provided financial and equipment incentives to restaurant operators who agree to install energy or water efficient equipment or incorporate other sustainable practices.  Surveys have shown that the consumer looks more favorably upon restaurants who promote green practices.  (Effects of Restaurant Green Practices, Jeong and Jang, 2010).

In addition it has been found, that a business that adopts sustainable practices is more likely to retain staff and have staff operate at a higher level of productivity.  So with all this positive reinforcement to go green, why is it that restaurants have been so slow as an industry to more fully incorporate green practices in their day to day operations?

There are several key reasons for restaurants resisting restaurant sustainable practices.  For one, most small independent restaurant operators are overwhelmed with the day to day pressures of running their businesses.  To them, the impact of an overdue produce bill, a sudden drop in brunch business or a sump pump seizing up and dying are all problems that appear much more tangible and immediate.

Those challenges are much easier to grasp than the impact of buying energy efficient equipment and seeing savings over time or noticing the impact of non-toxic cleaning chemicals or good waste management practices over time.  Most operators tend to think in terms of short term solutions to short term problems.  Cash flow is invariably a constant daily issue that influences what an operator thinks about as they go through their day.

Secondly, there is a common misconception that restaurant sustainable practices cost more.  This is often due to a lack of understanding.  Again, that understanding takes time which most operators never seem to have and the tangible results from that understanding are not as immediate as the other issues they face.

Thirdly, sustainable practices don’t appear to be what their core restaurant business is supposed to be about which to many of them is just serving good consistent food in a pleasant and friendly atmosphere.

So given the above scenario, how do green organizations looking to make significant inroads into the restaurant sustainable practices break through these challenges?  For the past 5 years, the Green Hospitality Initiative (GHI), a project funded by the EPA to the New York State Restaurant Association Educational Foundation, has faced this issue in attempting to educate and train operators in sustainable green practices.  Here are three conclusions that have been reached as potential roadmaps to achieving success:

  1. The owner and driving force behind the business needs to believe that green practices are a key part of the business model and purpose of the restaurant and not just a side project. They need to see the value and importance of operating sustainably and commit to it over the long term.  Education, consumer demand and the growing awareness of green practices can help support that change in operator thinking.
  2. If the belief is there on the part of the operator, they need to have the ability and commitment to instill that belief throughout the culture of the restaurant. Through educating and training staff and hiring people who already have beliefs in sustainable practices, the culture and actions of the restaurant will begin to reflect these values.
  3. There needs to be a go to green advocate in the restaurant who essentially has green practices as part of their job description. It would be up to them to continually show how green strategies could be used for the benefit of the restaurant and introduce new techniques and technology to the operation.  They would be the catalyst to helping overcome the daily challenges mentioned above that press upon all restaurant operators.

The transformation of the restaurant business model to incorporate sustainable practices has not and will not be an easy one.  Momentum has been building over this past decade but it is clear much more needs to happen.  It is up to committed green organizations and forward thinking restaurant operators to lead the way and demonstrate that it is possible and highly beneficial to the restaurant and community to adopt a more sustainable way of operating a food business.


About the Author:

Alan SomeckAlan is a 30 year operator of high volume restaurants, in which he has managed all facets of the business. His experience and expertise has led to him develop a well regarded expert witness practice. In his consulting practice, he has worked with many clients to create and establish their concepts. In addition, Alan has worked on assignments to develop food products for market such as protein bars, cookies and brownies. He has also directed 7 EPA grants to train operators in Green sustainable practices. He has created an extensive network of industry professional who he works with on a regular basis. Throughout his career, Alan has supported the success of entrepreneurs through executive coaching and training. For the past 10 years, Alan also has taught at the Institute for Culinary Education in NYC and at NYIT where he has taught all aspects of the restaurant business. His students have opened fast casual restaurants, cafes, bakeries and fine dining operations.

 

Concentrating on Restaurant Expense Loss

Restaurant Expense Loss reviews variances between money that is currently unsystematically expensed on product, services, or equipment and the amount expensed upon a review and implementation of practical methods of spending behavior. Expense Loss occurs when behavior is disorganized and money is expensed without regard to the benefits of considering alternatives, along with possible long term repercussions of your decisions.

If you are in any business you are expensing money on equipment, maintenance, repairs, sell-able product, food and beverage, fertilizer, chemicals, water, oil, electricity, and other material goods. Expense Loss occurs for many reasons and often because staff, manager, or owner is busy concentrating on building and running the business and the payment of invoices and doing business as usual becomes routine without a thought to other options. Failure to maintain a constant review and evaluation of expenses will always have a negative effect on profits and result in what I coined as, Expense Loss. I have included ten examples of Expense Loss along with solutions in the coming pages. An evaluation of operations helps alert you to the risks to your business solvency by determining areas causing such risk. With a proper assessment the results can provide a program for reducing and minimizing Expense Loss, and offers improved profits going forward. This is achieved without reducing internal service or product quality, and delivers a higher return on both.

While payroll can be a big contributor to Expense Loss I suggest keeping scheduling and the costs associated with this as a separate review process, for reasons that are manifold. Payroll is a fluctuating cost that can produce more profits even when high, and destroy profits even when low. Managing payroll is not like other costs that can be evaluated by reviewing invoices or comparing costs across a sample of goods or proposals, or by changing simple processes. There is much more to payroll costs than just reducing them. Alongside payroll is competency of each individual, the affect change has on product, service, cleanliness, and other factors, and to evaluate payroll costs properly the ability of each individual versus their performance, return benefits, and other factors must also must be part of the analysis. Therefore, I always recommend keeping this a separate review process.

People have said the following for as long as I can remember, “Get the customers in the door and expenses take care of themselves”. From my perspective if you are more diligent with your expenses your chances of succeeding greatly improve, however a change in mind set may be necessary for this to occur. Even if you are managing a successful business and you are earning good profits there are always overlooked opportunities, and if you think you have achieved all you can, look again. I have met with business owners telling me they are running a tight ship and at the same moment I am observing a 12 count alcohol pour at their bar, or a plate of served food that has an obvious cost close to or higher than the menu price, or signing an invoice for a product delivery that is out back and not inspected upon arrival. Also look to see if an employee has a higher amount of voids over all other employees, as this may be a red flag. Looking at all operations, food and beverage, pool, golf, tennis, facility management, receiving, repair and maintenance, and the accounting department, there are Expense Loss variances to be improved across all departments.

We all want the best price and quality product when we make purchases, but most locations are not doing everything they can to meet this goal, and certainly not across all departments. Very common responses to my encounters are; not having enough time, not having the knowledge, this is the way we have always done it, or I use the same companies to make my job easier. These are all excuses that will shorten the lifespan of your company.

Try and argue that it does not make any sense to learn new ways of lowering expenses. If you think about it, you could certainly have someone randomly watch over expenses if the results were continually positive. Having a weekly or bi-monthly review should be an acceptable method to consider, and a great way to maintain cost versus results on a long range plan. No one likes to spend money without assurance, although the carelessness that occurs in many business operations is much more devastating than spending money on someone to help you. Having a professional review your business can offer long term results, as long as the evaluation turns up a scenario of positive changes(s) that offer the return of the professional’s expenses, and an ongoing additional profit to the business going forward. A solid evaluation will provide a positive result because there are always ways to improve. Additionally, a proper evaluation should be performed by someone not associated directly with the business. Family members helping to run the business are great, but an outsider evaluating operations offers an impartial assessment with an open mind to differences that can be rewarding.

If you could take all of your expenses for the month, every month, and reduce them by three percent across departments, the decision to have someone evaluate your business is made easier. Most businesses achieve this modest result without any difficulty, and I have evidenced much greater results with only a little effort. On $30,000 of purchases per month (product, equipment repairs, and maintenance cost reductions) or procedures that reduce waste (receiving, storage, and inventory) this translates to $10,800/year in additional profits when achieving a 3% Expense Loss reduction.

Stop paying for something just because you have been handed an invoice, told an amount, or this is how you learned how to operate. Every dollar that you do not spend on expenses is profits, because if you did not spend it, the money is still in your bank account.

Here are some examples of where Expense Loss can occur, with an example solution on each topic. A short list, but it provides a range of what businesses encounter and some of the reasons why they may have burdening costs or even fail over time. A proper evaluation and training is always the best method for results.

  1. Equipment Expense Loss
    Equipment breaks down and a quick call to the mainstay vendor for repairs to get this off your mind. Not including emergencies, an immediate acceptance on costs, therefore not taking the time to research the part(s) and labor to determine if there is an alternative option. In many cases the invoice for repairs is received one to three months after the work is performed, hindering your recollection of what transpired.
    Reducing Equipment Expense Loss
    Take the time to evaluate the reasons for the breakdown before you call for repairs, ie: preventative maintenance or staff not keeping equipment clean, obstruction from other equipment or airflow, abuse, review of maintenance vendor performance over time. Review internal training procedures to determine if repair can be performed in house. Check if equipment remains under warranty. Request signatures and an invoice at the time the repair is made. Initiate an internal and external Repair & Maintenance Log to support repair or replacement decisions, and to document the occurrence.
  2. Delivery Expense Loss
    Deliveries are not properly received, weights not verified, product not opened and checked, and signatures and shorts or variances not provided on receiving invoice, therefore you are unable to determine if you are losing money on the product you purchased, who checked it in, or what was ordered actually arrived. If you are not following effective receiving procedures, you will experience significant Expense Loss.
    Reducing Delivery Expense Loss
    Have a verifiable receiving procedure on all goods. Open all boxes and containers, count and weigh all products, record all deficiencies directly on the invoice. Maintain a significant communication practice between receiving and accounts payable, and build a reliable set of procedures that communicate damage, shorts, and other variances to reduce and eliminate costly accounts payable processing.
  3. Food Purchase Expense Loss
    Individual cuts of protein are purchased for portion control (steaks, fish, & chicken) and the quoted or purchased price per lb. is used in the menu price calculation creating a miscalculation in the figures.
    Reducing Food Purchase Expense Loss
    Calculate cuts of protein using individual product cost extensions off invoice divided by number of portions received to achieve actual portion cost. Using quoted price per pound results in an incorrect price per piece assumption because the weights of each portion vary slightly.
  4. Cooking Yields Expense Loss
    Cooking yields are not taken into account when calculating menu costs for items that are cooked in their bulk weights and portioned after cooking. ie: Prime Rib, Roast Sirloin, and Roast Turkey as examples. This is especially true for caterers, and cuts of meat with the fat cover in place, or when the bones are removed.
    Reducing Cooking Yields Expense Loss
    Dividing uncooked bulk weight into purchase price or using the quoted price per pound delivers a false assumption of cost. Weigh bulk product before and after cooking for recording yields (the yield is the variance between the uncooked weight and the cooked weight) and apply to purchase costs for correct cost analysis. A 20lb Prime Rib can lose 10%-15% or more in its’ initial weight during cooking, thus delivering less portions than anticipated if assumed using the full bulk raw weight. Over time an average assumption can be used in forecasting costs.
  5. Low Menu Price Expense Loss
    A menu price on an item is too low because you did not assume all costs, so you are not earning the amount of profit expected. This is not about loss leaders and pricing decided specifically for specials or on purpose, however if you create arbitrary menu pricing the results are always undesirable.
    Reducing Low Menu Price Expense Loss
    Evaluate all ingredients into the menu mix by weight, yield or portion, and current price. Maintain an ongoing review of pricing fluctuations in ingredient costs and adjust menu costs and prices accordingly. Adjust for substitution of ingredients into menu mix with unavailable product, as this can have negative effects on results if not accounted for.
  6. High Menu Price Expense Loss
    A menu price on an item is too high, or is not selling, and you are experiencing product spoilage.
    Reducing High Expense Loss
    Evaluate why a product may not be selling to determine price adjustment or removal off menu. Change recipe based on customer requests to revive the item.
  7. Same Vendor Expense Loss
    There is a practice to use the same vendor for a particular product, piece of equipment, chemicals or fertilizer, a service or goods, or due to proprietary reasons, and you do not question their price, or you have never researched market pricing for the product, goods, or service.
    Reducing Same Vendor Expense Loss
    Initiate procedures for price evaluations on all products, goods, and services from competitive vendors, and associated or like businesses. Evaluate further when the need to purchase a specific product, good, or service from only one vendor due to quality or specialty needs of the item, and/or if available elsewhere ask for price reduction and maintain same vendor relationship. While I support consistency in vendor relationships, the association must be equally beneficial.
  8. Warranty Expense Loss
    A repair is paid for without realizing there remains a warranty on the equipment.
    Reducing Warranty Expense Loss
    Review internal procedures for tracking the accounting of equipment under warranty. Initiate an internal and external Repair & Maintenance Log. Review and determine why the vendor did not alert you to this information.
  9. Inventory Expense Loss
    Inventory is not immediately stored or kept under lock and key with limitations and accountability on access.
    Reducing Inventory Expense Loss
    Immediately remedy inventory control issues when product remains at receiving for too long, is not refrigerated, locked up or guarded, and initiate space allocation and the placement of caging and security measures if available. Being carefree about your inventory translates into early spoilage, breakage, theft, improper HACCP, and can violate Health Department Regulations.
  10. Oil Heating Expense Loss
    You purchase heating oil from the same company that services your boiler. This is common, and while most vendors are reliable and honest, this is a red flag. Heating equipment can be adjusted to burn more fuel than necessary, and running but poorly maintained is not good either.
    Reducing Oil Heating Expense Loss
    Verify nozzle size on oil burners is within manufacturer specs. Have an independent evaluation of your equipment performed to check that nozzles, pumps, pressure and pressure reducing valves, expansion tank, heat exchanger, and all other parts are operating as required. (An outside review allows confidence in a decision to continue using same company for both).

If you are having any similar circumstances, or would like someone to come in and train your team in improved Expense Loss practices, reach out to me. I am in the New York region, but I will travel to your location if you are serious about improving your profits.


About the Author:

Jim LopolitoJim is president of Lopolito Hospitality Consultants and a veteran of the restaurant, country club and catering industries offering expert operational review, club management consulting, foodservice training, and team development. His consulting services include his proprietary “Expense Loss Review” program. The ELR program reviews variances between money that is currently unsystematically expensed on product, services, or equipment and the amount expensed upon our review and implementation of practical methods of spending behavior. Jim has worked in virtually every position in foodservice, from executive chef to general manager in restaurants, country clubs, and catering in well-known organizations throughout New York. His background includes 12 years in restaurants, 19 years in private clubs, and 10 years in high-end catering and concert production.

Case Study: Restaurant Profitability in an Established Operation

A Case Study: Increasing Restaurant Profitability in an Established Operation

This is a summarized version of the restaurant profitability case study. The full Case Study is available at: www.LopolitoHospitalityConsultants.com

Restaurant One – For financial and business confidentiality the actual business name has been replaced in this study.

Assignment Outline:
Restaurant One in Orange County New York desired improved restaurant profitability, as well as Front-of-House (FOH) services to their customers and an understanding and possible improvement of the other perceived deficiencies. Restaurant One offers both a casual dining room and sports bar dining atmosphere with a separate banquet room for parties. Hours of operation occur all 7 days with lunch and dinner service, and there is an abundance of local competition and variety of cultural food styles in the area. Lopo lito Hospitality Consultants was asked to review the location and to assess how to improve service and increase profitability.

Introduction:
The review of Restaurant One, by the restaurant & bar consultants, began in February 2017 where initial observations exhibited numerous neglected core efficiencies causing unreliable service and a negative effect on bar and restaurant profitability.

There was a consistent absence of immediate attention to the customer upon their arrival, followed by a common showing to the table and throwing down menus. This was followed by a service standard of simply taking orders and delivering product with no special steps to create an elevated customer experience. There were compounding service issues with regular and similarly made errors on food and beverage orders that were distressing customers, as well as, FOH and BOH effectiveness. In addition to the FOH training needs that were apparent, issues distressing profits included evidence of severe over pouring with occasional under pours of alcohol, Call brands poured when Well brands were charged, inexperienced wait staff mixing their own alcoholic beverages for their tables, frequent food and bar item returns, no inventory taking procedures, arbitrary menu price practices instead of formula based, lack of training in secondary floor managers, and there was a neglect to parking needs affecting diners coming to the location especially during parties, and this was additionally burdened with employees taking up guests parking spots.

Case Observations Presentation:

  1. The general manager was never trained in essential skills like inventory management, COGS, menu engineering, and is unfamiliar with the percentages that are necessary to understand cost evaluations.
  2. There were no employee position descriptions in place, onboarding or training programs.
  3. Wait staff make their own drinks for their tables resulting in poor quality. Call brands are being poured when Well brands are charged, there is no recipe consistency.
  4. Upon our initial review we performed a short audit of alcohol cost percentages by reviewing of invoices and sales during the same time period. These first month results are as follows;
    1. Bottled wine pouring percentages were at 45%-63%.
    2. Wine by the glass pouring percentages were at 24% to 44% on paper, however most wines by the glass were being over poured so these results were estimated lower than actual.
    3. Alcohol pouring cost percentages were at 40%. d) Beer pouring cost percentages on bottled and tap combined were estimated at 35%.

LHC Management and Outcome:

  1. Position responsibilities were formulated and LHC wrote a guide for each of the four segments; Front Desk, Runners, Bussers, and Wait Staff. Training to each segment progressed.
  2. Meetings with the general manager began in March to train in inventory and COGS management.
  3. Inventory training with the General Manager included the creation of their first inventory spreadsheet, understanding FIFO & COGS, and evaluation and calculations of alcohol pouring cost percentages.
  4. To address the inconsistent drink making, over pouring, and other cost issues, LHC designed a 4 hour comprehensive alcohol pour training program for all wait staff and bartenders to attend.
  5. June 2017 presented a second full month of strong inventory and COGS results for pouring cost assumptions resulting in the following.
    1. Wine combined COGS is $3,119 on $14,381 revenue for a 21.7% cost to sales (down 7.3% from May)
    2. Bottled & Tap Beer combined COGS is $5,981 on $21,510 revenue for a 27.8% cost to sales (down 2.2% from May) c) Alcohol COGS is $5,080 on $22,447 revenue for a 22.6% cost to sales (down 10.4% from May)

Discussion:

This case was coordinated over a 9 month term, February 2017 to October 2017. The initial project concerns by the owner was training of the FOH staff in better service standards and perhaps the idea that no inventory taking was affecting profits.

Conclusion:
A discussion of financials in October 2017 offered an average increase to restaurant profitability of $3,000 per month over the term beginning June 2017 through September 2017. If maintained, the resulting outcome for 2018 has a minimum expected 2% increase in annual profit, or $36,000 additional profits based on $1.8 million revenue.

Follow –Up:
A follow-up call was made to the manager at 3 months following the completion of this project. Here are the results of this conversation.

Q: LHC introduced and trained staff in drink making and how to use the recipe books LHC created for the bars. We also introduced and trained to use the jiggers. Are the bar books and jiggers being used?
A: Yes, continually used, especially by new staff working with the recipes. Also, we do not push the few seasoned bartenders to use the jiggers when very busy, but all wait staff use them continuously. Customers have become accustomed to the jiggers.

Q: LHC introduced a comprehensive program of training with materials for bartenders, wait staff, bussers, and runners. How well has this program continued?
A: Staff is performing better with fewer mistakes. Drinks are more consistent for us with the bar recipe books LHC designed. We have a number of new employees that recently started, and they will receive the position descriptions. Fewer mistakes are occurring with orders though.

Q: Have you reviewed financial with the owner regarding profits?
A: Yes, while I have not seen the recent reports myself, the overall talk is profits are better and are continually getting better since LHC program implementations.


Meet the Author:

Jim LopolitoJim is president of Lopolito Hospitality Consultants and a veteran of the restaurant, country club and catering industries offering expert operational review, club management consulting, foodservice training, and team development. His consulting services include his proprietary “Expense Loss Review” program. The ELR program reviews variances between money that is currently unsystematically expensed on product, services, or equipment and the amount expensed upon our review and implementation of practical methods of spending behavior. Jim has worked in virtually every position in foodservice, from executive chef to general manager in restaurants, country clubs, and catering in well-known organizations throughout New York. His background includes 12 years in restaurants, 19 years in private clubs, and 10 years in high-end catering and concert production.

Obstacles in Restaurant Performance and the Transition of Responsibility

Obstacles in Restaurant Performance and the Transition of Responsibility

Obstacles can be a significant constraint to restaurant performance and can create reasons for employees to resign, customers to leave, and profits to diminish, with owners and managers contrarily disregarding the constant remedy opportunities employees offer them. Although my focus of profession is hospitality consulting, the fact of the matter is that obstacles are in every company. It does not matter the type of business you own or manage, as obstacles are present and can even hinder your culture if they are not recognized as limiting the service abilities of your staff.

Obstacles can be anything, but in restaurant performance they can be preparation limitations in a poorly designed kitchen, a coffee machine that has only one working heating element, an ice machine that continually breaks down, or a walk-in refrigerator that has no room to even walk in. Add them all up in your business and then look at performance issues.

These common types of obstacles prevent employees from being effective in their role to the owner or manager, but are not always considered when an employee is being charged with poor performance. The obstacles that are occurring in your business may transition to interference’s against your employees, conceivably resulting in a complaining employee, poor service, and unhappy customers.

Time after time the expectations we place on employees are jammed by obstacles that encumber their role in service. In almost all instances the burden of poor service falls on the employee when in fact the owner or manager can be directly at fault for these instances. How often has an employee informed an employer that a door causing concern needs fixing, or there is not enough silverware in stock to accommodate a party, or shelving is not sufficient to properly manage inventory, or a piece of equipment is in disrepair but everyone must use it. Many employers just say deal with it, and go on with their misunderstanding of why their business has slowed, or staff has left. Address these circumstances and perhaps a different outcome can prevail.

My contentions that employers do not consider conditions that may prevent an employee from performing to the level of expectations is real and common, and in my view a direct reflection on the performance of the manager or owner. When employees decide to leave for reasons like poor working conditions, management must consider the obstacles in their business that if addressed, could have prevented these failures. Eliminating obstacles that directly affect employee performance can result in better service, gratified staff, and reduced turnover.

Solutions to obstacle are not always easy, and there is generally a monetary value to result an obstacle. However, when your business thrives on service and you have areas in your shop that are preventing your team in their performance, fixing obstacles becomes more valuable to your bottom line then the commonplace action of inaction.

Today I want you to walk through your business and observe, and accordingly, ask a question to your employee’s specific to what is preventing them from doing their work. If you can, really pay attention to what you see or hear, and perhaps fix your obstacles. While this may not be the only reason for restaurant performance issues, it goes a long way with employee appreciation.

If you have any questions, feel free to contact us!


About the Author:

Jim LopolitoJim is president of Lopolito Hospitality Consultants and a veteran of the restaurant, country club and catering industries offering expert operational review, club management consulting, foodservice training, and team development. His consulting services include his proprietary “Expense Loss Review” program. The ELR program reviews variances between money that is currently unsystematically expensed on product, services, or equipment and the amount expensed upon our review and implementation of practical methods of spending behavior. Jim has worked in virtually every position in foodservice, from executive chef to general manager in restaurants, country clubs, and catering in well-known organizations throughout New York. His background includes 12 years in restaurants, 19 years in private clubs, and 10 years in high-end catering and concert production.

The Million Dollar Question – Cocktail Profitability and Recipe Deviation Cost

Million Dollar Question

When is the last time you examined the relationship between production cost and recipe deviation rates or calculated cocktail profitability? It’s probably been a long time, if ever. Everyone is quick to tell you what they think about cocktail profitability, but reluctant to disclose why. Reluctant disclosure is pure speculation influenced by opinion. Unfortunately, speculation is the foundation for failure in the bar business.

Two things are certain. Money is the byproduct of success, and accidentally succeeding in the bar business does not occur.

High volume nightclub operators, restaurant tycoons and the best bar owners all have one thing in common. They embrace bar math because it empirically proves cocktail profitability. I constantly tell clients, “Don’t tell me what you think. Show me the numbers because numbers don’t lie.” Regardless of your role in hospitality, seniority level or executive title, abandon what you think it costs to create a cocktail and do the math. Bar math begins with calculating cost per ounce and portion cost. Cost per ounce (CPO) determines how much an ounce of liquor costs. Calculating requires dividing the wholesale liquor bottle cost by its total ounces. For example;

·         Liter = 33.8 ounces

·         Liter Bottle Cost ÷ 33.8 oz. = CPO

·         750ml = 25.4 ounces

·         750ml Bottle Cost ÷ 25.4 oz. = CPO

 

Vodka Bottle Cost Bottle Size Ounces CPO
Smirnoff $24.98 LTR 33.8 $0.74
Smirnoff $15.47 750ML 25.4 $0.61

Portion cost (PC) examines the relationship between cost and serving size. Calculating portion cost requires establishing cost per ounce (CPO) then multiplying by serving size (SS).

·         Liter = 33.8 ounces

·         Liter Bottle Cost ÷ 33.8 oz. = CPO

·         Cost Per Ounce × Serving Size = PC

·         750ml = 25.4 ounces

·         750ml Bottle Cost ÷ 25.4 oz. = CPO

·         Cost Per Ounce × Serving Size = PC

 

Vodka Cost Size Ounces CPO SS PC
Absolut $26.23 LTR 33.8 $0.78 0.25 $0.20
Absolut $26.23 LTR 33.8 $0.78 0.50 $0.39
Absolut $26.23 LTR 33.8 $0.78 1.00 $0.78
Absolut $26.23 LTR 33.8 $0.78 1.25 $0.98

These calculations are phenomenal barometers for gauging cocktail profitability. However, gauging profitability and achieving it are radically different Achieving profitability requires application. Cocktail production is the most powerful application in the bar business, but systematic cocktail production per recipe is the most profitable.

A great cocktail is always profitable because it does not fluctuate. Taste and cost to manufacture remain constant. Systematic production ensures consistency. The most profitable way to make a cocktail is right the first time. By right, I mean per recipe based on beverage cost. For example, a seven ingredient Adios costs $0.89 to manufacture.

Bottle Bottle Bottle Recipe Portion
Adios Cost Size Ounces CPO Ounces Cost
Taaka Vodka $7.99 LTR 33.8 $0.24 0.25 $0.06
Taaka Gin $6.99 LTR 33.8 $0.21 0.25 $0.05
Ron Rio Rum $6.99 LTR 33.8 $0.21 0.25 $0.05
FC Triple Sec $6.99 LTR 33.8 $0.21 0.25 $0.05
FC Curacao $6.99 LTR 33.8 $0.21 0.25 $0.05
Sprite $81.98 5 Gallon 640 $0.13 3 $0.38
Sweet & Sour $52.58 5 Gallon 640 $0.08 3 $0.25
Adios Beverage Cost $0.89

Recipe deviation rates destroy cocktail profitability. A bartender’s unwillingness to prepare cocktails per recipe is financially debilitating. Witness the profit destruction incurred by ingredient substitution and over pouring. The $0.89 production cost inflates to $2.40.

Bottle Bottle Bottle Cost per Serving Portion
Adios Cost Size Ounces Ounce Size Cost
Absolut $26.23 LTR 33.8 $0.78 1.5 $1.17
Taaka Gin $6.99 LTR 33.8 $0.21 .25 $0.05
Bacardi Silver $15.68 LTR 33.8 $0.46 1 $0.46
FC Triple Sec $6.99 LTR 33.8 $0.21 0.3 $0.06
FC Curacao $6.99 LTR 33.8 $0.21 0.3 $0.06
Sprite $81.98 5 Gallon 640 $0.13 4 $0.52
Sweet & Sour $52.58 5 Gallon 640 $0.08 1 $0.08
Adios Recipe Cost Per Ounce $2.40

Recipe deviation rates cause production cost inflation. Rising cost equal profit loss. Over pouring and ingredient substitution yield a -$1.51 loss. Losing -$1.51, per Adios compounds faster than polished steel. Selling 1,060 Adios annually, with a 20% recipe deviation rate, yields -$320 loss.

Adios Loss Sales Forecast Deviation Rate Adios Sold Loss
-$1.51 1060 20% 212 -$320
-$1.51 1060 30% 318 -$480
-$1.51 1060 40% 424 -$640
-$1.51 1060 50% 530 -$800

At first glance, a -$320 annual loss seems inconsequential, but appearances are deceiving. This loss only reflects one cocktail with a 20% deviation rate. Reality sets in when you realize your product mix reflects 90 cocktails. The million-dollar question is “how many cocktails are going across the bar for a loss and how do you fix it?”

Hiring a bar consultant is the answer.

About the Author:

RideoutWith more than 20 years of hands-on operating experience, Preston has a proven track record of success for developing sustainable bar business models, bartender training, cocktail creations, cost control and profitability, Preston is the author of a number of books, manuals and articles pertaining to bar operations, profitability, standard operating procedures and achieving excellence in customer service.

Preston’s expertise is highly sought by casino executives, distillers, bar owners, architects and nightclub management companies. His consulting methodology is transparent, simple and straight forward. Preston identifies problems, creates operating systems and provides long term sustainable solutions.