Memo

Date: May 6, 2013To: Connie Inukai, Professor of Technical Writing

University of Maryland Eastern Shore at the Universities at Shady GroveFrom: Kyle Bissett

Sharon MooreYongkyoung ParkSakura ShuSynergy Restaurant Consulting 9630 Gudelsky DriveRockville, MD 20850

Subject: Proposal for How Cost Control Can Reduce Waste in Bakery Operations

Attached is the proposal from our restaurant consulting company, “How Cost Control Can Reduce Waste in Bakery Operations.” Kyle, Sharon, Yong and I have formed Synergy Restaurant Consulting, which focuses on providing technical and efficient ideas to food service operations with the goal of helping those operations to increase their bottom line performances.

We researched different methods of reducing waste in bakery operations. In the attached proposal, you will find how staff training, menu design, industry technologies, and managerial systematic approach can increase efficiency in bakery operations and help reduce waste production.

On the basis of our research, we suggest that a combination of these methods will be the most resourceful way to increase operations’ performances. We greatly appreciate the opportunity to present you with our research and we forward from your feedback and hope for the chance to work with you in the future.

If you have any questions, please contact us anytime at 123-456-7890. Again, thank you very much for the opportunity and we hope to hear from you soon.

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How Cost Control Can Reduce Waste

inBakery Operations

Prepared by Synergy Restaurant Consulting

9630 Gudelsky DriveRockville, MD 20850

123-456-7890

www.synergyconsulting.com

Kyle BissettSharon Moore

Yong Park

How Cost Control Can Reduce Waste in Bakery Operations

Submitted on May 7th, 2013

Kyle BissettSharon Moore

Yong ParkSakura Shu

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ABSTRACT

“How Cost Control Can Reduce Waste in Bakery Operations”

Prepared by: Kyle Bissett Sharon Moore

Yong Park Sakura Shu

In April 2013, Connie Inukai, English Professor at the University of Maryland Eastern Shore at the Universities at Shady Grove, asked four students in her technical writing class to do research on how bakery operations can cut cost and reduce waste through cost control.

To perform this research, the students looked into several areas in the baking industry that management could exercise control, keep waste to a minimum, and utilize resources as efficiently as possible. These areas included training, the systematic approach to cost control, menu design, and tools and utensils.

The students have discovered that cost control involves much more than cutting cost and reducing waste. It is an on-going strategic plan that involves the vision of an operation’s success, monthly and annual financial goals, and daily evaluation of productivity. It is also one of the most important elements necessary for an operation to compete in the marketplace effectively.

The students recommend that every bakery operation, regardless of its size or method of service, should have a cost control system in place. Every decision made is related to an operation’s financial success. Therefore, owners and managers need to regularly access and review information about the expenses incurred and the revenues received. In addition, since technology is changing every aspect of the baking industry, management should be aware of the various software and computer programs that are readily available for their use and benefits.

Keywords: cost control, bakery operations, waste reduction, systematic approach, productivity

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Table of ContentsAbstract 4

List of Illustrations 6

Executive Summary 7

Internal Hand-on Training to Enhance the Cost Control8

Methods 8

Results 10

Conclusions 11

Systematic Approach 12

Methods 12

Results 13

Conclusions 14

Designing Bakery Menu to Enforce Cost Control 15

Methods 16

Results 17

Conclusions 18

Tools and Equipment to Control Cost 19

Methods 19

Results 20

Conclusions 20

Appendixes 22

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List of IllustrationsFigures

Figure 1 Five Steps of Training Cycle 8

Figure 2 Steps of Training 9

Figure 3 An Example of Bakery Menu 15

Figure 4 Menu Engineering Chart 18

Tables

Table 1 Process of Systematic Approach 12

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Executive Summary

Connie Inukai, the English professor at University of Maryland Eastern Shore at the Universities at Shady Grove, asks four students in her technical writing class to research the methods cutting waste in bakery operations and reduce food cost percentages. In order to cut costs and waste through training, one would have to hire employees with previous bakers’ experience.

The systematic approach to cost control can cut costs and waste by reducing the space in work area. For example, the preparation table is located between the walk-in cooler and the oven, which eliminates footstep and time. Another approach is time management in terms of how each employee is scheduled efficiently based on previous sales history.

In order to cut costs and waste through menu design, management may choose menu items that are complementary to another based on the need of the same ingredients. Another useful method would be to format the menu in such a way that it gives the customer optimal choices as well as touching on the focal points the owners choose to accentuate.

An efficient use of tools and utensils would include baking goods of a similar nature at the same time. For example, baking cakes and cupcakes in the same batch reduce the time that the cakes are baking in the oven, and therefore reduce utility costs. Another effective tool is the use of the CakeBoss software which allows the bakery to configure and calculate recipes, convert yields, print orders and shopping lists, and manage accounts receivable and payable reports.

From their research, the students concluded that the four most important aspects of cutting cots and reducing wastes in a bakery are effective training, systematic approach, creative menu designs, and strategic use of tools and utensils.

In order to complete this research, the students looked at:

o Various local bakeries

o Various restaurants’ point-of-sale systems

o Kitchen layout

o Reduction of waste through the production

Based on research, the students recommend all four methods to achieve profitable bakery operations. The ability to incorporate all of the aforementioned methods will result in the most financially efficient food service businesses.

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Internal Hand-on Training to Enhance the Cost Control

As with many other industries, cost control is a crucial factor for a bakery business.

Employees can be taught in cost control skills through training. The development of internal

hands-on training for a business can reduce the cost of planning a training program and can be

optimized for its unique situations. Thus, developing the most comprehensive internal training

plan is crucial for a bakery business. Based on research, the usage of the training cycle is the best

cost control training approach.

Methods

The training cycle is the series of steps or stages that comprise a complete training program.

Figure 1. Five Steps of the Training Cycle.

o Define the needs of training

All of the necessities and purposes of training must be addressed to achieve the

best results. Some of the most crucial training needs are:

Improving morale of employees

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Requiring less supervision

Lowering the occurrences of accidents

Providing a chance for promotion

Increasing productivity

o Develop internal training program

Once training needs have been identified, the next stage is to develop the actual

training program. It should be aimed to ensure that this systematic approach is

complied with the training needs. This developed training program should be

consistent and updated when required.

o Conducted the training

Training should be led by experienced and skilled facilitators such as executive

chef for the kitchen or the manager for the front. It is essential that training is

regarded as a type of reward and valuable experience. Also, training facilitators

need to understand and cater to different learning and communication styles.

Training can also be applied to improve skills performance.

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Figure 2. Steps of Training

o Monitor the training

This stage is to ensure that all learning outcomes are applied and reinforced in

practice within a mistake-permissible environment. It is also the stage to monitor

the development of individual learners and review their progress.

o Evaluate the training

This stage deals with the collection of information on the result of the training. It

is important to know the extent to which the training program has succeeded,

which can be measured thorough established evaluating methods such as a written

test or practical demonstrations by the trainee.

Results

o Through research on defining the needs of training, it confirms that training improves the

employees’ morale by helping them to acquire job security and satisfaction. Well-trained

employees will need less supervision, additional training, as well as a lower chance of

mistakes. Also, employees become more eligible for promotion through training because

their skill set increases exponentially. Practical applications in real life encourages

employees to be even more productive.

o Development of internal training programs becomes more efficient once the needs of the

training are identified. Training programs that are customized, comprehensive, and yet

easy to understand can be produced.

o If the training is conducted with the notion of the different learning levels and styles of

the trainees, the employees become more engaged with the contents of the training which

enhance the result of the training. Also, by paying close attention to the individuality of

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employees, social relationships may develop between the management and the staff

members, leading to a cooperative, cohesive unit of operation.

o Monitoring the applied training provides crucial opportunities to observe the effects of

the training, and suit to practical needs.

o The evaluation stage helps those who evaluate learning program to make sure whether

the current training satisfies the needs of training or needs any improvements.

Conclusions

As stated above, training needs must be first identified for the program in order to be

successful. The result will always be beneficial to the business. A poorly trained employee will

eventually lead to poor performance, which would ultimately result in costly mistakes. Therefore

it is critical that the business invests in a proper training program to ensure that it is worthwhile

for their business to teach the employees. Through research on the internal training program for

the bakery industry, we found that the one of most effective training methods is through the

systematic approach of the training cycle.

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Systematic Approach

Cost Control is an on-going strategic plan that involves the vision of an operation’s

success, monthly and annual financial goals, and the daily evaluation of productivity. It involves

much more than managing waste and is one of several important elements necessary for an

operation to be able to compete in the marketplace effectively. Control means to exercise

authority over and restrain. Every foodservice operation, regardless of its size or method of

service, should have a cost control system in place. Owners and managers need together and

review information regularly about the expenses incurred and the revenues received. They need

to compare the actual results to established standards and budget guidelines for purposes of

analysis. No one can possible see everything that can cause costs to be out of line. Hence, cost

control is vital and can be the difference in the success or failure of a business.

PLAN ORGANIZE LEAD CONTROLVision & Mission

Strategize

Goals & Objectives

Organization Design

Culture

Social Networks

Leadership

Decision Making

Communications

Groups/Teams

Motivation

System/Processes

Strategic Human Resources

Table 1. Process of Systematic Approach

Methods

A large part of cost control is to keep waste to a minimum and to utilize resources as

efficiently as possible. This includes and is not limited to the purpose of cost control, which is:

Provide management with the information necessary to make day-to-day

operational decisions

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Monitor the efficiency of individuals and departments

Inform management of what expenses are being incurred, what incomes are being

received, and whether they are within standards or budgets

Prevent fraud and theft by employees, guests, and purveyors

Be the basis for knowing where the business is going, not for discovering where it

has been

Emphasize prevention and not correction

Be proactive and not reactive

Maximize profit and minimize loss

Results

After all the methods mentioned above are accomplished, managers will have an

effective cost control system in place. They must remember that cost control is a part of the

entire management process and can accomplish this by having a systems approach or a

documented plan with procedures for how to handle each operational element. The systematic

approach of planning, organizing, leading, and controlling will improve the cost control strategy.

Planning involves designing a menu and establishing your food and labor cost standards. It gives

you a clear picture of what it is you want to accomplish. Organizing focuses on establishing the

procedures for accomplishing your objectives. Leading is using the information gathered to

guide the activities and efforts of your employees. Controlling measures the actual results and

compares them to your plan. All the results ensure that a cost control system is effective and

valuable.

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Conclusions

Cost Control encompasses all areas of a business, from purchasing and checking

deliveries, bookkeeping and cooking, to making bank deposits and paying bills. It is an on-going

process and requires the complete cooperation and participation of all employees for success.

Therefore, as managers, it is our responsibility to establish, support, monitor, and enforce an

effective cost control system. We have to lead by example and set the standards for employees to

follow. The success of a business does not happen by chance, but as the result of some very

careful advanced planning, organizing, leading, and controlling. Every decision we make is a

financial one and has a significant impact on our success or failure. This is a good reason we

must have a cost control system as part of our overall and daily business plan.

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Designing Bakery Menu to Enforce Cost Control

When other factors such as purchasing, receiving, storing, issuing, and production are all

in management’s control, menu format and product pricing may be the only factors that affect a

bakery’s profit margins.

The menu is an effective way for the managers to communicate with guests. In many

bakeries, menus are separated based on categories: cakes, pastry, cookies, bread, etc. Regardless

of the menu format, the menu is an excellent way to build sales and communicate any special

within the operation. Therefore, it is necessary to design menu that promotes what bakery owners

want to sell.

Figure 3. An Example of Bakery Menu

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Methods

When designing a bakery menu, managers need to consider the appropriate menu format

and item selections that are appropriate to the target market. After the menu is finalized, it is

important to keep an accurate sales history and conduct sales analysis.

In a typical food service operation, menu format is designed in the following categories:

o Standard- printed menu that are recited by the staff.

o Daily- menu that changes everyday.

o Cycle- menu in effect for a specific period of time.

As important as the format is to a food service operation, the menu selection is just as

important. The options an operation select to put on a menu has a dramatic effect on the menu

cost and waste. To elaborate, each ingredient an operation purchase for production should have

multiple usages and purposes. For example, when a bakery imports fresh fruit, not only can the

kitchen staff incorporate it into fresh fruit cakes and tarts, the “mediocre quality” of the fruit can

be used as jams and sauces and reduce waste.

Menu engineering is defined as the study of technique that displays a list of product or

service offerings for consumer choice. The goal for menu engineering is to increase profit

margins by identifying the most popular and least popular items in a food service establishment.

It is almost certain that every bakery establishment has a few best sellers and other items that are

not as popular. Therefore, the goal of menu engineering is to determine which products are

generating more profits and which products the bakery should get rid of. In order to determine

the menu mix, the bakery operation must first figure out the contribution margin and the number

of each items sold.

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o Contribution margin is determined by subtracting the items’ cost from selling price.

o Number of items sold is derived from accurate sales history.

Results

When determining the appropriate format for a bakery menu, it is important that the

menu design is more flexible than restaurant establishments. Unlike restaurant, bakeries and cafe

generally use a combination of all three formats; there is a printed menu behind of main service

table and for guests to take home, a daily menu that changes with daily and seasonal offering,

and also a cycle menu when the bakery wants to market a “Friday special”. Therefore, it is easier

for a bakery to make adjustments to its original. The operation will feature an item as a daily or

monthly special. And once the item as gain popularity, it can be adjusted into a permanent menu.

When choosing items to sell in a bakery operation, it is important to choose items with

ingredients that are least perishable and complementary to other items on the menu. During

production, waste can also be eliminated if the kitchen staff turns “waste” into a usable “menu

item”. For instance, when producing a chocolate cake, the cake tops and crumbs can be used to

make cake-pops, a new, trendy item that is popular in younger age group customers.

Menu engineering is the technique that food service operation use to determine which

items stays and leaves the menu. It is important that an accurate sales history is kept at all times

and the calculation of food cost is accurate. To represent the calculations in matrix, menu items

are on a graph.

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Figure 4. Menu Engineering Chart

The contribution margin (x-axis) and number of items (y-axis) are used to determine the

placement of menu items. When an operation conducts sales analysis, the menu items are placed

on the menu mix chart to determine its status. Depending on the position of an item, management

may need to make decision to improve its status, such as using different ingredients to cut food

cost or to simply cut it off the menu.

Conclusion

Menu design is a crucial element in determining the success of a food service operation.

The format, item selection, and sales analysis are all useful tool in promoting the products in the

restaurant and helping reduce waste in the operation. It is our job to inform restaurant managers

that we must turn the potential food waste to actual profit.

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Tools and Equipment to Control Cost

As with most businesses, cost control is a huge factor that takes place in the success of

the business. Equipment, tools, and software can be intergraded into ones bakery to help the

bakery carry out daily functions and operations. This is proven to be true because of how labor

intensive the jobs are, the long shifts, order times, and customer service. Therefore, by upgrading

our systems and installing programs will help us understand what customers want. And

purchasing more modernized tools will make a noticeable difference in our daily operations.

These include cutting costs and turning a higher profit.

Methods

Acquiring tools and softwares will allow our customer to design exactly what they want

and allow the staff to create a product that meets their specifications.

These tools include:

Cake boss pro

o A software which allows the baker to do everything from a computer, except

making the actual cake. It converts yields, cost out recipes, prints shopping lists

and invoices, tells one the exact cost of cake, track expenses, calculate profit and

run reports to see exactly where revenue is coming from.

Wedding cake design pro

o This directly designed for wedding cakes it allows the baker and customer to sit

down with one another and create the cake the customer wants. The program has

hundreds of color schemes and design patterns to choose from. They can decide

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on number of tiers, shape, size and layers. The colors, designs and floral prints

can be mixed and matched until the desired product is achieved.

KopyKake’s

o A company with a product line specific for the baker, they offer numerous tools

to help improve efficiency. They make tools such as printers, projectors, stencils,

edible ink cartridges for printers, edible ink markers and pens for drawing or

tracing. They have paper you feed through the printer which will print a picture to

be inserted on top of the cake and it is a 100% edible.

We can also set up a “build your own” template on our website to give our customers and

idea of what we are capable of.

Results

Once the employees have finished proper training and understand the systematic flow of

the new tools and software, they can start using them in their everyday operations. From there,

we will meet with the customer, gather the exact specifications, and create a product at cheapest

cost to us regarding ingredients and labor hours. Using these tools will cut down on both

financial and economic costs. Reducing the time spent on free hand design of the product will

reduce the labor wage costs and the ease of software design will cut down on the economics

costs. Using these tools will also cut down on the amount of “do-over” caused by a simple

mistake in the design and implement phase.

Conclusion

Insuring our employees have the proper knowledge of the software and how to

implement it into recipes and actual production itself will greatly benefit a bakery operation.

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This will also help the employees stay focused and ensure the customers’ exact needs are

fulfilled. Incorporating this software will increase the amount of baked goods sold and increase

production from our organization. In addition, it will offer services that we could not create

without the software, therefore expanding business, increasing production and revenue while

keeping costs down. Through research on the tools and software for the bakery industry, we

found that the most effective ways of cutting costs is through proper training, systematic

approach, creative designs, and efficient equipments.

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Appendixes

Bakery Reduces Ingredient Waste and Bad Batch Costs by $39,158. Retrieved Apr. 26, 2013,

from http://doranscales.com/success-story/bakery

CakeBoss pricing software, recipes, tutorials, and more for bakers and cake decorators.

(n.d.). CakeBoss pricing software, recipes, tutorials, and more for bakers and cake

decorators. Retrieved May 2, 2013, from http://www.cakeboss.com/

Hine, S., Thilmany, D., Kendall. P., & Smith, K. (Feb. 2003). Employees and Food Safety: Is

Training Important to Food Service Managers. Journal of Extension. Retrieved from

http://www.joe.org/joe/2003february/rb1.php

Kopykake Enterprises (Official Site). (n.d.). Kopykake Enterprises (Official Site). Retrieved May

2, 2013, from http://www.kopykake.com/

Master the Art of Menu Engineering. Retrieved Apr. 26, 2013, from

http://www.nestleprofessional.com/united-states/en/SiteArticles/Pages/Master-the-Art-of-

Menu-Engineering.aspx

n.d. Training & Coaching Advices. The Training Cycle. Retrieved

fromhttp://www.thetrainingcycle.co.uk/

Training cycle. (n.d.). In Businessdictionary.com. Retrieved from

http://www.businessdictionary.com/definition/training-cycle.html

Wedding Cake Design Pro Software from Topplestone, LLC. (n.d.). Wedding Cake Design Pro

Software from Topplestone, LLC. Retrieved May 2, 2013, from

http://www.weddingcakedesignpro.com/

Wilke, J. (Jul 24, 2006). The importance of employee training. Jacksonville Business Journal.

Retrieved from http://www.bizjournals.com/jacksonville/stories/2006/07/24/smallb2.html

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