TACTICS TO COMBAT RISING FOOD & OPERATIONS COSTS

WARREN DIETEL, CEO, PUFF ’N STUFF CATERING, ORLANDO & TAMPA, FL

It is a fact of life that food and operations costs continue to rise. The financial squeeze between the retail price and the cost of food and operations often results in a reduction of bottom line profits. In today’s session we share a number of our best practices for combating these rising costs while protecting and increasing margin.

❖ Develop standardized systems to reduce costly waste❖ Use menu engineering when designing cost-effective menus❖ Determine true production and overhead costs❖ Different factors to consider when strategically raising prices❖ Effective purchasing practices

TACTICS TO COMBAT RISING FOOD AND OPERATIONS COSTS

Presentation available at: http://www.slideshare.net/WarrenDietel

DEVELOP STANDARDIZED SYSTEMS TO REDUCE COSTLY

WASTE

• Involve all department managers• Meet weekly• Focus on top 3-5 goals per department• Take ownership & report minutes

• Director of Purchasing• Identifies cost effective items • Looks forward to both short & long term needs• Educates sales – promotions, new recipes, A-B-C list

• Quality Control Team

BUILD A SYSTEMS-FOCUSED TEAM

• Form an executive team focused on quality

• Develop Food and Service Standards – every member looking out for quality, hospitality and service.

• Involve the team in full strategic plan - Great for culture.

• Helps waste with hours, safety, efficiency of decision making, four eyes on each event

• Entire company knows who the QC Team is.

• Independent person reviews food before departure

QUALITY CONTROL TEAM

Velocity Reports• MPM velocity report by menu item • Friday report by month, YTD, by concept • Pricing & purchasing strategy direction

PEAR Report “Post Event Analysis Report”• Caption completes 8-9 pages• Average portion/person• What was returned? (Interview Dishwashers, look at

garbage)• Cost out party after the fact to measure GOP

REPORTING: WORK SMARTER, NOT HARDER

Blend food & labor costs • Labor is a significant portion of menu cost• Example: Lobster is a high food cost, low labor cost

Utilize technology to:• Scale recipes & prep• Determine required items

Leverage small efficiencies• How many chefs chop parsley each day?• Consider offering screw top wine

EFFICIENT TEAMS

Search for cost-effective ingredients • Start with the most costly: Proteins,

Produce, Fruit • Tenderloin: switching from 8 oz. to 7 oz.

saves $1,000/ month• Look at Cost Cycle and use velocity reports

EFFICIENT MENU ITEMS

It’s not just for meat anymore

Cryovac Everything!

Create hors d’oeuvres based on your typical

waste Leftover and end products of Cheese, Beef, Fish

Grow what you use!

Great marketing and sales tool to demonstrate fresh

product.

Grow a Garden

MENU ENGINEERING

• Designing Menus for in-season foods• When food is in-season, what can you make, can or cryovac?• When designing a Seasonal Menu, Seated Dinner or Suite

Experience – design for use of same product throughout the menu to reduce the amount of items to purchase and prep labor.

• Considering labor intensive vs. labor efficient menu items

WHAT IS MENU ENGINEERING?

The Basics:• Avoid too much variety and menu waste• Train to prepare low volume purchases• Tenderloin – Sirloin – Rib eye• Cut to first Tenderloin, even if it’s a smaller portion• Custom proposals

Bonus: • Put more expensive Items at end of buffet on the left • Less people tend to eat these items

STREAMLINE YOUR MENUS

• Culinary alerts sales on items that need to be sold

• Weekly menu meetings to discussed featured items

• Strategically develop last minute events menus based on featured items

COMMUNICATION IS KEY!

• Understand your clientele• Rural people• Women drink

coffee, men indulge in protein

• Portion vs. production waste

PRACTICE PORTION CONTROL

Chef/Management is allowed to reduce quantities based on knowledge of events or

guest counts.

Guests Go Right – for station events, put more expensive items to the left and reduce

quantities.

Quantities: Tricks of the

Trade

EFFECTIVE QUANTIFICATION

• Start with a common item/sauce/ concept for variations• High-end menu items can be tailored for the appropriate

course and portion size• Lobster Mac ‘n Cheese = 7 service options• Hors d’oeuvre (2), buffet, plated, family style & action

stations (2) • Find a winning balance between budget and brilliance!

VALUE ENGINEERING

Lobster Mac ‘n Cheese is a rich interpretation of a classic comfort

food.

This dish debuted on our menu an a luxurious hors d’oeuvre Chef Bar

combining fresh Maine lobster meat, savory pasta, Prosciutto de

Parma, petit pois, and rich cream in a decadent eighty pound Grana

Padana cheese wheel.

The finished dish is garnished with a basil leaf and presented to delighted guests on a crisp

Cheddar and Edam cheese tuile.  

LOBSTER MAC ‘N CHEESE

Options 1 & 2: Hors d’Oeuvre•Smallest portion sizes•Tray passed•Perfect for large groups

•Medium portion size•Cost effective service style•Presented in chaffing dish

OPTION 3: BUFFET

• Plated meal • Medium portion size• Elegant service style• Introduce refined ingredients to

more simple meals

OPTION 4: FIRST COURSE

Options 5: Family Style• Presented on a shared

platter • Most generous portion• Relaxed service style

fosters conversation

Options 6 & 7: Action Stations•Prepared to order vs. pre-prepped•Most exciting and original presentation•Most expensive execution•Cost can be controlled by adjusting chef’s service style

1. $ Hors d’oeuvre – Butler-passed in an edible cup2. $ Hors d’oeuvre – Butler-passed as a mini plate3. $$ Buffet – presented in chaffing dishes4. $$ Plated – as a first course5. $$$ Family Style – presented on a platter6. $$$ Action Station – served from a chaffing dish or cooked to

order

VARIED OPTIONS FOR VARIED BUDGETS

DETERMINE TRUE PRODUCTION & OVERHEAD

COSTS

REMEMBER THE 80/20 RULE!

20% of Costs - impacted by smart purchasingRemaining 80% - managed by operational controls

“What you do once products arrive at your backdoor”

• When creating menus, we calculate labor, OT and fudge factor into the mix by historical numbers

• Four kitchens around the city and a Food Truck. Chefs speak to each other weekly to see what food items we can reuse. Chefs do cost transfer between profit centers.

• Certain kitchens are slower/busier at different times of the year. Use those down times to trade staff, save overtime, make and freeze bulk items that hold up.

• Stagger Staff in and out of parties. Tell staff that they must sign out at X time and that they need to come to the Captain. Force efficiency.

HOW TO MAKE YOUR KITCHEN LABOR WORK FOR YOU

Pricing• Set a base sell price for each menu item• Use software to mark-up based on venue commission, other

factors• Put a per person “Cleanup and Disposables” charge into

every menu

Venues• Develop different menus for different venues

Labor• Electronic & smart phone tech for time & attendance• Stagger labor arriving and departing• Capture accurate time for work produced

LET YOUR SOFTWARE DO THE HARD WORK

STRATEGICALLY RAISING PRICES

• Know what prices went up and what didn’t• Know your place - a position of strength vs. weakness • Raise prices all at once

• Go up on only 1/3 of each menu – by 3 years, all up.• All prices across board rise 5%.• Administrative Service charge rise 2%

• Create a cycle, review prices each November• Menu type and by guest size volume

NOT IF, BUT WHEN YOU RAISE PRICES…

• Items with long shelf life• Bought $35,000 in

disposables because we knew price was going to increase by 35%

• High volume usage

• Build menus using hi-yield items (chile relleno)

PLAY THE MARKET

• We have an exclusive agreement with one major purveyor, but we still constantly shop. Other purveyors still know we can buy from them and bring us great deals.

• Go direct to manufacturers. Negotiate hard with purveyors. Remember BATNA for negotiating and Wayne Gretzky.

• Alcohol – saved us a ton of money going with one distributor. Better price on all products. Great incentives when we need to close and event or save money. 30 cases of Breckinridge Vodka and Bourbon for Skin & Bones.

• After negotiating to the bone with one purveyor we asked them to buy half of our box at Sports Authority Field and they did. It came from a different budget.

PURCHASING: DON’T BUY ALL YOUR EGGS FROM ONE BASKET

• Give away less! • Use a

charity/donation reponse form

Donations

EFFECTIVE PURCHASING PRACTICES

1. Build and leverage relationships

2. Negotiate3. Manage

ordering/payments4. Manage in-house

processes

EFFECTIVE PURCHASING STRATEGIES

THE CARDINAL RULE

“Don’t chase the lowest price.”

Buying from multiple distributors dilutes your purchasing power.

THE CARDINAL RULE

• Leverage your volume with a select few• Create win-win relationships with

distributors by clearly explaining your “definition of success”

• Listen to distributors’ challenges and needs• Remember – loyal and educated customers

receive better pricing

GROUP PURCHASING ORGANIZATIONS• Goal is simple: Contribute to the bottom line of the

members while increasing sales for participating suppliers• Analyze your organization and specific purchasing history,

needs, and future requirements• Develop unique purchasing strategies• Leverage the combined purchasing power with Distributers

and Manufacturers• Negotiate Master Distribution Agreement with Distributers

and Manufacturer Agreements

• Receiving product• Invoice price• Product handling• Portioning/menu item

costs• Waste• Theft (Industry average

= 3%)• Appropriate pricing• Implementing systems

and controls

YOUR ROLE

FOOD FOR THOUGHT…

Develop your own network of fellow caterers or restaurants of similar size and philosophy to share

the best practices and learn from each other

THANK YOU!

Warren Dietel | warren@puffnstuff.com | 407.629.7833

To download a copy of my slides, go to: http://www.slideshare.net/WarrenDietel

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