accurate recipe costs 3 27 ecdi
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DESCRIPTIONThis is a slide show presented by Mark Kelnhofer, owner of Return on Ingredients.
- 1.Boost Your Profits WithAccurate Recipe Costs &MenuMen EngineeringEconomic and Community Development InstituteColumbus, OH March 27, 2012 2012 Return On Ingredients LLC P.O. Box 2387 Westerville, Ohio 43086-2387 614.423.4410 Fax 614.340.7946
2. Mark Kelnhofer BA in Accounting and Business Administration in 1993 Masters in Business Administration (MBA) in 2005 Ohio Dominican University, Columbus, Ohio Manufacturing Cost (1993 2012) Plastics, Lighting, Tire Repair Kits, Buses, Restaurants Bravo/Brio Restaurant Group (2002 2010) Return On Ingredients (2009 Present) Bravo/Brio Restaurant Group, Eddie Vs Pistacia Vera Bob EvansGroup V s,Vera,Farms, Gordons Gourmet, Midwest CulinaryInstitute, Luce, Crme de la Crepe, Coopers HawkWinery, Zauber Brewing Co. Ohio Dominican University (2007 Present) Adjunct Faculty, Financial & Managerial Accounting Midwest Culinary Institute (2011 Present) Adjunct Faculty, Food, Beverage & Labor Cost Controls 3. Bravo/BrioRestaurantGroup BBRG Food Cost Trend 2005-201030.0%29.3%29.0% 28.8%28.0%27.6%27.4%27 4%27.0%26.0%25.5%25.0%25.1% 25 1%24.0%23.0%23 0% FY 2005FY 2006FY 2007 FY 2008 FY 2009FY 2010 Food cost 4.2%=$millionsinsavingsReturnOnIngredientsLLC P.O.Box2387 Westerville,Ohio430862387 614.423.4410 Fax614.340.7946 ReturnOnIngredientsanditslogoareregisteredtrademarksbyReturnOnIngredientsLLC 4. Brio Tuscan Grille Easton Town Center Columbus, Ohio 5. Bravo! Cucina ItalianaVirginia Beach, VA 6. Bon Vie Easton Town CenterColumbus, OhiC lbOhio 7. Mark Kelnhofer BA in Accounting and Business Administration in 1993 Masters in Business AdAdministration (MBA) in 200 ( A) 2005 Ohio Dominican University, Columbus, Ohio Manufacturing Cost (1993 2012) Plastics, Lighting, Tire Repair Kits, Buses, Restaurants l h Bravo/Brio Restaurant Group (2002 2010) Return On Ingredients (2009 Present) Bravo/Brio Restaurant Group, Eddie Vs, Pistacia Vera, Bob EvansFarms, Gordons Gourmet, Midwest CulinaryInstitute, Luce, Crme de la Crepe, Coopers Hawk Winery &Zauber Brewing Co. Ohio Dominican University (2007 Present) Adjunct Faculty, Financial & Managerial Accounting Faculty Midwest Culinary Institute (2011 Present) Adjunct Faculty, Food, Beverage & Labor Cost Controls 8. Other Food Manufactures Restaurants Casinos Hotel & Lodging Sports Arenas Hospitals Colleges and Universities Catering and Banquet Centers Theme Parks Horse Race Tracks .and others! 9. Restaurants vs. ManufacturingRESTAURANTSMANUFACTURING IngredientsRaw Materials 10. Restaurants vs. ManufacturingRESTAURANTS MANUFACTURINGPrep Production Work In Process 11. Restaurants vs. ManufacturingRESTAURANTS MANUFACTURING Menu Item Finished Goods 12. Restaurants vs. ManufacturingRESTAURANTS MANUFACTURING BOH ( h f) /(chef)Direct L bDi t LaborFOH (bartender) 13. Restaurants vs. Manufacturing RESTAURANTSMANUFACTURINGFOH (Waiter/Waitress)Indirect Labor 14. Restaurants vs. ManufacturingOther manufacturing aspects as well Prep Time = Labor Routing Customer Order = Manufacturing Order OOverhead (Dih d (Direct & I di t Indirect)t) Recipe = Bill of Material (BOM) 15. Top Reasons To Know Your Costs! Y C t ! 16. TheRestaurant Industry I d t 17. The Restaurant Industry2012 Restaurant Industry Forecast in the U.S. Sales of $lf $631.8 b llbillion in 2012 compared tod$610.4 billion in 2011, a 3.5% increase Employs 12.9 million in 2012; forecasted top y ;be 14.3 million in 2022 In Ohio in 2012, 530,500 people areemployed by the industrySource: National Restaurant Association restaurant.org/research2012 Restaurant Industry Forecast 18. The Restaurant Industry 19. Specialty Foods IndustryState of Specialty Foods Industry 2011 Sales of $ lf $70.3 b llbillion with $ h $55.9 b ll billion inretain sales Specialty foods represent 13.1% of all retailpy pfood sales Cheese and Cheese Alternatives are thelargest specialty food category $3.2 billion $3 2 Categories with the greatest percentages ofall food sales refrigerated sauces, salsasand di d dips Gluten-free product showed sharp gainsSource: National Association of Specialty Food http://www.specialtyfood.com/nasft/press-office/industry-facts/ 20. The U SU.S.Economy y 21. General U.S. Economy General economic indicators Unemployment is improving Housing market values are continuing to drop Unpredictable future actions of Washington p g States and Cities on the verge of bankruptcy Cities defaulting on municipal bonds European Debt Crisis (Greece Italy)(Greece, 1 in 7 on food stamps U-3 unemployment rate 8.3% (02/2012) U-6 unemployment rate 14.9% (02/2012) Discretionary income drops E iEating out d i i decisions are made l d less often f Highly competitive environment 22. U-3/U-6 Unemployment18.0%17.0%16.0%15.0%14.0%13.0%12.0%11.0%10.0%10 0% 9.0% 8.0% 7.0% 6.0% 6 0% U-3U-6 Source: Bureau of Labor Statistics, http://www.bls.gov/news.release/empsit.t15.htm 23. U-3/U-6 UnemploymentU-3 UnemploymentTotal unemployed as a percent of the civilian labor force (official rate)unemployed, rate).U-6 UnemploymentTotal unemployed, plus all persons marginally attached to the laborunemployedforce, plus total part-time employed for economic reasons, as a percentof the civilian labor force plus all persons marginally attached to thelabor force (total rate).Source: Bureau of Labor Statistics, http://www.bls.gov/news.release/empsit.t15.htm 24. Long Term Unemployment Wall Street Journal, 07/21/2011 Long TermLong Unemployment by State 25. General U.S. EconomyThe Wall Street Journal, 03/12/2012 26. General U.S. EconomyThe Wall Street Journal, 03/03/2012 27. General U.S. Economy The Wall Street Journal, 03/02/2012 28. General U.S. EconomyWall Street Journal, Housing Still Drowning inUnderwater Mortgages, 03/02/2012 29. General U.S. EconomyWall Street Journal, 03/02/2012 30. CommodityCommoditCosts 31. Food InflationCleveland Research Company01/12/2012 32. Food InflationReuters/ /02/23/2012 33. Cost of FuelSource: http://fuelgaugereport.aaa.com/ 34. Commodity ResearchSource: American Restaurant Associationwww.americanrestaurantassociation.com1-888-423-4411 Fax 941-953-4034Forecasting and Managing Food and Energy Commodities 35. ckChees Blocse,Commodity Research Source: American Restaurant Association (ARA), http://www.americanrestaurantassocaition.com 36. Beef, GroundGd Commodity Research Source: American Restaurant Association (ARA), http://www.americanrestaurantassocaition.com 37. WCR PorkR Commodity ResearchSource: American Restaurant Association (ARA), http://www.americanrestaurantassocaition.com 38. Pork Ham kCommodity ResearchSource: American Restaurant Association (ARA), http://www.americanrestaurantassocaition.com 39. conPork Belly, BacPCommodity Research Source: American Restaurant Association (ARA), http://www.americanrestaurantassocaition.com 40. WheatCommodity Research Source: American Restaurant Association (ARA), http://www.americanrestaurantassocaition.com 41. Industry Ind strFailure Rate 42. Restaurant Failure RateThe Dick Pope Institute for Tourism Studies, UCF Rosen College of Hospitality, Parsa/Green/Terry 43. Restaurant Failure RateThe Dick Pope Institute for Tourism Studies, UCF Rosen College of Hospitality, Parsa/Green/Terry 44. Restaurant Failure Rate Controls According to the National Restaurant Association (2009), a Ad h NlR A(2009) typical restaurant in America earns a net profit under 10%. That means 90% of revenues are used to defer the cost of doing f f fg business. Thus, managers that do not understand the importance of cost controls are bound to fail in the restaurant business. Two major costs in the restaurant industry are food cost and labor jt i th tti d tf d t dl b cost. These two costs together are referred to as prime costs. For a restaurant to succeed, the prime costs are expected to be less p p than 60% of revenues. It is a rule of thumb and a good rule to follow. Most restaurants that have failed often were found to have prime costs exceeding 60% indicating greater potential to failure.The Dick Pope Institute for Tourism Studies, UCF Rosen College of Hospitality, Parsa/Green/Terry 45. The Missing Link+Culinary Arts The Numbers 46. ROI MethodologyRecipe costing is the base for many other aspects of the operations. 47. The Reality Is Some restaurant operators do notphave any written or documentedrecipes. Some have recipes that are writtenare only for execution, not costing. The few that have costing in manycases do not take a manufacturingapproach.approach Menu pricing in some cases is notbased on proper analysis and data data. 48. What is in your control? Knowing your costs 49. What is in your control? Knowing your costs Establishing your sellingprice 50. Types of Recipes Batch or Prep Recipes Larger quantities Become their own uniqueinventory item when produced Can be used in other recipes Serving or Menu Item Recipes Ultimately is what is sold to theguest or customer 51. Weights & Measures Portion control thro gh the use ofthroughseutensils(Tbsp, tsp dishers, spoodles, etc.)(Tbsp tsp, dishers spoodles etc ). Accuracy of weights and measuresis paramount.1 cup, Basil Leaves 1 cup, Granulated Sugar0.2 ounce6.8 ounces 52. Batch Recipes & Yields Batch recipes should account for theproper yield (what the result is)including known waste and thegprocess (labor) When the purchased product hasppchanged form in any way, a batchrecipe should be created to accountfor hf the cost. If you dont account for the processand yields, your menu l d i ldlevel costs il t inmost cases is understated! 53. Batch Recipe Example #1 We purchased Basil, Fresh at p ,$8.50/# or $0.531/ozBASIL PICKEDIngredientsQuantity UOM Cost ExtendedBasil, Fresh 16.0 oz$0.531$8.500Yield11.0 oz The new item Basil Picked now Basil Pickedhas a correctly stated value of$0.773/oz or $12.36/# 54. Batch Recipe Example #2 We purchase P&D 31/40 Shrimpp / pat $5.50/# or $0.344/ozP&D 31/40 SHRIMP THAWED/ Ingredients Quantity UOM Cost ExtendedP&D 31/40 16.0Oz$0.344 $5.500S