Books On Topic 

The Book of Yields: Accuracy in Food Costing and Purchasing

by Francis T. Lynch

Amazon Price: (as of 10/11/2008)

Food for Fifty (12th Edition)

by Mary K. Molt

Amazon Price: $78.39 (as of 10/11/2008)

Recipe Cost Models 

Building Blocks for Profitable Menus

The Recipes Are Wrong!

Variance reports frequently identify huge differences between actual item usage and the calculated ideal usage. There are many reasons for these major red flags. To eliminate the obvious, you need to review the fundamental calculation of actual usage. Recheck your counts from the two inventories. Go over the invoices for the period. Check for very small and very large quantities. Make sure you did not miss an entire invoice. Pay strict attention to invoices near a cutoff date. Anything received after the ending inventory should be excluded.

Once you have adjusted your actual usage to reflect changes, take a second look at the variance. You need to switch your focus to the recipe model. If an item is butchered, trimmed, cleaned, processed or if the item increases in volume when cooked (e.g. rice, pasta, etc.), you need to check your standard yields. Make sure you haven't entered the reciprocal figure in a subrecipe yield.

The final check is in plate recipes and portion sizes. These quantities should be exact and at this phase allowances for tiny variation should be avoided. Your plate recipe model should not be soft. You need exact portion sizes to tie to POS counts.
Whenever possible, line cooks should use pre-portioned items in the final production.

If you finish your review and find the inventories were accurate, purchases were all in order and the recipe model is accurate, you have an operational problem. There are certain problems which persist in our industry.

Employee consumption of food and beverage items has a bigger impact in slow periods. During the off-season or slow days of the week, employee meal cost will be higher as a percentage of sales. Adjust your expectations to this reality and move on to much greater concerns.

Collusion with vendor delivery staff is the first possible problem. You need to only pay for food actually received. Make sure receiving controls are rock solid. Limit your testing to invoices with large variance items. Problems may occur on certain shifts or on a specific day of the week. Check each invoice for the delivery person and your receiving person. Look for patterns.

Chronic, unintentional food overuse needs to be identified and halted. Training will correct future overuse. Portions of salads, starches (including french fries), garnishes, soups, sauces and all other discretionary prep items need to be clear. If the operation uses forecasts to prepare for a busy period and perishable items need to be discarded, fill out waste sheets and record the reason as bad forecast.

Your storage areas should be easy to count and high cost items should be difficult to steal. Small portions of tenderloin, shrimp, lobster tails and crab may require additional controls. Pull sheets are helpful. Sheets should be completed with initials and checked by the manager each shift change.

Late night and early morning are the times of greatest probability of theft. Delivery times are just as bad as the close. If you have surveillance systems in place, these periods should be highly scrutinized. We have found brazen thieves taking full cases of food to the dumpsters, trunks of their car, etc. It's best to terminate these people at once.

When I first started my consulting practice, there were two excellent articles on theft. The Wall Street Journal had a survey conducted by F.W. Dodge in which they interviewed food service employees. Of the respondents, 44% admitted to theft. I went to see if there was any other sources on employee theft. I found a general psychology article (source unknown) which stated about 20% of workers are very honest and 20% of workers are very dishonest. The middle 60% tend to follow the herd. If they are working with a completely honest person, theft is minimal. However, when they work with thieves, they will often steal to the same extent as their dishonest co-worker.

Over the years, I have seen major mistakes made by honest workers. One person left spare ribs unattended on a grill to check a delivery and they were inedible. Another person decided to pre-cook a huge number of rotisserie chickens for a special promotion on a low traffic day. In both cases, the employees made mistakes which were one time events. Both of my clients said nothing to the employees. They both realized their mistakes and brought them to management's attention in the first place. Keeping records on simple waste sheets encourages this honest loss activity to be quantified and archived for future period comparisons.

It's difficult for me to leave the theft issue hanging and management often can't see how major theft is possible. However, over the years we have found managers with relatives in the pizza business filling a van with flour, cheese and canned tomatoes. A multi-unit chain in New York tracked a vendor delivery person who visited five of their stores trying to sell cases of shrimp as a "cash only" special. Someone lost the shrimp due to poor receiving controls. My first consulting client ever couldn't believe the long time chef was a thief until the employee admitted he stole two blocks of 16-20 shrimp a week.

If you believe you have reviewed and corrected all the items mentioned above and your variances still don't make sense. Review the POS setup for all menu items which call for the variance item. Look for specials, the OPEN FOOD key and buffets. You may even find the item is wrong in the system. Some companies allow managers to overwrite the menu item names on the POS. I'm not a fan of this method. The entire history is ruined with one small change.

If the operation has no issues at all, check the recipe. Maybe it really isn't correct. Sometimes the wizards make mistakes.

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Navigating Through The Recipe Jungle

From time to time, certain issues surface when recipe standards are effected by seasonal shifts. The common high impact issue concerns produce yield and price as seasons change. For example, the Romaine lettuce you purchase in the off season may not only cost more. The yield will be far less than peak season. Often you will see a case price double and the yield decline.

These times of high priced, low yield purchases should trigger a menu shift. In winter, I'd recommend as the special each night a wonderful soup made from seasonal root vegetables. Steer the customers away from the popular Caesar Salad to Minestrone.

At this time, we in the Northeastern USA will see prices plummet on beautiful peppers. Menu items with roasted peppers, stuffed peppers and sauteed peppers will fully utilize the high yield, low price cases. On the other hand, this may be the absolute worst time of year to buy apples. With a few weeks to go until the apple harvest begins, current offerings are often of poor quality and from 50% to 70% above prices you can expect to pay in one month.

If your menu is inflexible and some highly popular items must be produced from ingredients which are out of season, create a completely new recipe calling the
poor yield item at the inflated price. Save your main recipe for the peak season.
Now when your food cost percentage trends upward, you'll be able to quantify the impact of the limitation in your menu.

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Yield Analysis

If you expect to hit a consistent food cost percentage, make sure you actually receive everything you've paid for on all the invoices.

Once the goods have been safely stored in freezers, coolers and dry storerooms, the next biggest source of variance is production. Over production is a huge issue in food service since the value of produced food declines rapidly. Finished products should be served as intended whenever possible. You can't ask someone to pay a premium price for a twice roasted piece of meat.

All production starts in the prep phase and the most expensive mistakes are generally made with protein items. Perhaps you need to slice a peeled tenderloin into 8 ounce steaks. Maybe you are a gambler and have decided to butcher a veal rack. Generally, every operation has at least one major prep item which significantly impacts food cost.

If you hit the shore, most good operators can tell you how much it costs to make a crab cake (based on the most recent delivery). The deli managers can see the cost of a sandwich change based on examining the exterior fat on the briskets. Even french fries have a tendency to yield below average portions.

The one item I find lacking in the prep and butchering operation is a sense of standard yield. People seem to be aware of major discrepancies. If the short loin yielded 75% instead of 81%, there is plenty of discussion but not many know their cost of goods sold will be 8% higher.

A lack of standard yields turns many problems into anecdotal discussions in the weekly management meetings.

Try to develop standards and track actual results against these figures. You'll start to see why a particular vendor always has a lower price per pound. You will develop an awareness of delivery mistakes which allow you to request and receive credits.

Pay the right price for what you actually receive and make sure you get the precise standard expected.

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The Portion Cut Decision

In the early 1990s, I sent a monthly newsletter (POSitive ROI)to 500 restaurateurs using WinFax. At the time, most chefs were new to technology and the computers found in most kitchens were not well utilized. Despite the lack of back office expertise, the restaurants were all buying POS systems.

I was fortunate to have two very trusting early clients who let me explore the data flow on the front lines. My monthly reports became more insightful and readership grew as I featured stories on specific report capabilities and interface options.

One day, a chef who had received three stars from Bryan Miller of The New York Times contacted me. He invited me to his kitchen for a meeting and a cup of espresso. We discussed production issues and menu ideas. The New York restaurant goers were being treated to 4 and 5 course meals for $19.92 at the time. The Democratic Party Convention was in town and the meal special was hot.

At this restaurant, the menu was very ambitious and popular items included Wild Boar and spectacular Veal Chops. They had the right equipment to butcher large cuts and this chef had many marvelous ideas for use of the trim.

From a purely technical perspective, he could rip apart his personal computer and replace boards and cards with newer versions. On the software front, he had some basic spreadsheet models for calculating the cost of various menu ideas. We chipped in and bought a back office package with recipe costing and menu analysis.

To hit the cost percentage he required and give a full meal with dessert and coffee for $19.92, he relied on pasta entrees. During the time I spent onsite, we would explore the feasibility of selling butcher yields and menu suggestions to top-flight chefs with no computer expertise.

We spent hours tearing apart butcher yield sheets and built models for Veal Rack 306, Veal Loin 331 and lots of fresh fish. He preferred the meat cut from large animals because the ratio of meat to bones was better. To get the best utility from each large cut, he looked for a second high price menu option whenever possible.

I came away from all these sessions with a bias for portion control meats. The butcher yield sheets documented the huge additional portion costs involved when a particular piece yielded one less steak or chop. Most kitchens do not have the right equipment or a chef with Alpine training in butchering and yields.

If you decide to butcher an expensive cut of meat, I recommend a credit of zero for bones, ground meat trim and stew meat trim. To truly benefit from the trim produced, you need a menu designed to utilize all the meat.

The zero credit will force you to focus on getting the proper menu prices for the work and risk involved. Use the bones in stocks. Try some unique uses for the trim (e.g. ravioli filling). The trim should help you create some hugely profitable chef specials. This is a big advantage over competitors who may be serving "blowout" items about to spoil.

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Timely Portion Control

A packed pub in a historic Boston hotel serves lots of burgers, fries and draft beer. The food cost was significantly higher than their ideal calculation projected. With a very fast turnover and tight receiving controls in place, management reviewed portion control policies.

The burgers were easy to test since they used portion control patties. Both the buns and patties were counted daily. Since the counts were in line, we tested the french fries. Way off!

Plates left the kitchen with well portioned stacks of fries. In fact, the cooks weighed the fries before placing them on the plate. So where was the problem?

We checked the garbage and found loads of fries.

The busy lunch period the next day illustrated the problem. A complete bag of fries was placed in the basket and properly cooked. These fries were seasoned and the orders were filled. Then the cook moved the garbage pail beneath the leftover fries and swept them into the garbage.

A quick training session solved the problem.

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