accurate recipe costs 3 27 ecdi

Boost Your Profits With Accurate Recipe Costs & Men Engineering Menu Engineering

Economic 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

Mark Kelnhofer

• BA in Accounting and Business Administration in 1993

• Masters in Business Administration (MBA) in 2005Masters in Business Administration (MBA) in 2005

• Ohio Dominican University, Columbus, Ohio

• Manufacturing Cost (1993 – 2012)

• Plastics, Lighting, Tire Repair Kits, Buses, RestaurantsPlastics, Lighting, Tire Repair Kits, Buses, Restaurants

• Bravo/Brio Restaurant Group (2002 – 2010)

• Return On Ingredients (2009 – Present)

• Bravo/Brio Restaurant Group Eddie V’s Pistacia Vera Bob Evans Bravo/Brio Restaurant Group, Eddie V s, Pistacia Vera, Bob Evans Farms, Gordon’s Gourmet, Midwest Culinary Institute, Luce, Crème de la Crepe, Cooper’s Hawk Winery, 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

Bravo/Brio Restaurant Group

30.0%

BBRG Food Cost Trend 2005-2010

29.3%

28.8%

27.6%27 4%

28.0%

29.0%

27.4%

25.5%25 1%

26.0%

27.0%

25.1%

23 0%

24.0%

25.0%

23.0%FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010

Food cost

4.2% = $ millions in savings

Return On Ingredients LLC P.O. Box 2387 Westerville, Ohio 43086‐2387 614.423.4410 Fax 614.340.7946Return On Ingredients® and its logo are registered trademarks by Return On Ingredients LLC

Brio Tuscan Grille – Easton Town CenterColumbus, Ohio

Bravo! Cucina ItalianaBravo! Cucina ItalianaVirginia Beach, VA

Bon Vie – Easton Town CenterC l b OhiColumbus, Ohio

Mark Kelnhofer

• BA in Accounting and Business Administration in 1993

Ad ( A) 200• Masters in Business Administration (MBA) in 2005

• Ohio Dominican University, Columbus, Ohio

• Manufacturing Cost (1993 – 2012)

l h• Plastics, Lighting, Tire Repair Kits, Buses, Restaurants

• Bravo/Brio Restaurant Group (2002 – 2010)

• Return On Ingredients (2009 – Present)

• Bravo/Brio Restaurant Group, Eddie V’s, Pistacia Vera, Bob Evans Farms, Gordon’s Gourmet, Midwest Culinary Institute, Luce, Crème de la Crepe, Cooper’s Hawk Winery & Zauber Brewing Co.Zauber Brewing Co.

• Ohio Dominican University (2007 – Present)

• Adjunct Faculty Financial & Managerial AccountingAdjunct Faculty, Financial & Managerial Accounting

• Midwest Culinary Institute (2011 – Present)

• Adjunct Faculty, Food, Beverage & Labor Cost Controls

Other Food Manufactures…

• Restaurants

• Casinos

• Hotel & Lodging

• Sports Arenas

• Hospitals

Colleges and Universities• Colleges and Universities

• Catering and Banquet Centers

• Theme ParksTheme Parks

• Horse Race Tracks

• ….and others!

Restaurants vs. Manufacturing

RESTAURANTS MANUFACTURING

Ingredients Raw MaterialsIngredients Raw Materials



Prep Production Work In ProcessPrep Production Work In Process



Menu Item Finished GoodsMenu Item Finished Goods



BOH ( h f) / Di t L bBOH (chef) / FOH (bartender)

Direct Labor



FOH (Waiter/Waitress) Indirect LaborFOH (Waiter/Waitress) Indirect Labor


Other manufacturing aspects as wellOther manufacturing aspects as well• Prep Time = Labor Routing• Customer Order = Manufacturing Order

O h d (Di t & I di t)• Overhead (Direct & Indirect)• Recipe = Bill of Material (BOM)

Top Reasons Top Reasons To Know To Know

Y C t !Your Costs!

The The Restaurant Restaurant

I d tIndustry

The Restaurant Industry

2012 Restaurant Industry Forecast in the U.S.

l f $ b ll d• Sales of $631.8 billion in 2012 compared to $610.4 billion in 2011, a 3.5% increase

• Employs 12.9 million in 2012; forecasted to p y ;be 14.3 million in 2022

• In Ohio in 2012, 530,500 people are employed by the industryemployed by the industry

Source: National Restaurant Association restaurant.org/research

2012 Restaurant Industry Forecast

The Restaurant Industry

Specialty Foods Industry

State of Specialty Foods Industry 2011

l f $ b ll h $ b ll• Sales of $70.3 billion with $55.9 billion in retain sales

• Specialty foods represent 13.1% of all retail p y pfood sales

• Cheese and Cheese Alternatives are the largest specialty food category $3 2 billionlargest specialty food category $3.2 billion

• Categories with the greatest percentages of all food sales – refrigerated sauces, salsas

d diand dips

• Gluten-free product showed sharp gains

Source: National Association of Specialty Food Source: National Association of Specialty Food http://www.specialtyfood.com/nasft/press-office/industry-facts/

The U S The U.S. Economyy

General U.S. Economy

• General economic indicators• Unemployment is improving

• Housing market values are continuing to drop

• Unpredictable future actions of Washingtonp g

• States and Cities on the verge of bankruptcy

• Cities defaulting on municipal bonds

• European Debt Crisis (Greece Italy)• European Debt Crisis (Greece, Italy)

• 1 in 7 on food stamps

• U-3 unemployment rate 8.3% (02/2012)

• U-6 unemployment rate 14.9% (02/2012)

• Discretionary income dropsE i d i i d l f• Eating out decisions are made less often

• Highly competitive environment

U-3/U-6 Unemployment

15.0%

16.0%

17.0%

18.0%

10 0%

11.0%

12.0%

13.0%

14.0%

6 0%

7.0%

8.0%

9.0%

10.0%

6.0%

U-3 U-6

Source: Bureau of Labor Statistics, http://www.bls.gov/news.release/empsit.t15.htm

U-3/U-6 Unemployment

U-3 UnemploymentTotal unemployed as a percent of the civilian labor force (official rate)Total unemployed, as a percent of the civilian labor force (official rate).

U-6 UnemploymentTotal unemployed plus all persons marginally attached to the labor Total unemployed, plus all persons marginally attached to the labor force, plus total part-time employed for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force (total rate).

Source: Bureau of Labor Statistics, http://www.bls.gov/news.release/empsit.t15.htm

Long Term Unemployment

Wall Street Journal, 07/21/2011

“Long Term Long Term Unemployment by State”


The Wall Street Journal, 03/12/2012


The Wall Street Journal, 03/03/2012


The Wall Street Journal,03/02/2012


Wall Street Journal, “Housing Still Drowning in Underwater Mortgages”, 03/02/2012


Wall Street Journal, 03/02/2012

Commodit Commodity Costs

Food Inflation

Cleveland Research Company01/12/201201/12/2012

Food Inflation

Reuters02/23/2012/ /

Cost of Fuel

Source: http://fuelgaugereport.aaa.com/

Commodity Research

Source: American Restaurant Association www.americanrestaurantassociation.com1-888-423-4411 Fax 941-953-4034Forecasting and Managing Food and Energy Commodities

Commodity Researchck

se, Blo

cC

hee

s

Source: American Restaurant Association (ARA), http://www.americanrestaurantassocaition.com

Commodity Researchd

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Commodity ResearchR

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Commodity Researchk H

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Ind str Industry Failure Rate

Restaurant Failure Rate

The Dick Pope Institute for Tourism Studies, UCF Rosen College of Hospitality, Parsa/Green/Terry

Restaurant Failure Rate

Controls“A d h N l R A (2009)“According to the National Restaurant Association (2009), a 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 f gbusiness. Thus, managers that do not understand the importance of cost controls are bound to fail in the restaurant business. Two

j t i th t t i d t f d t d l bmajor costs in the restaurant industry are food cost and labor 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 pthan 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

The Dick Pope Institute for Tourism Studies, UCF Rosen College of Hospitality, Parsa/Green/Terry

prime costs exceeding 60% indicating greater potential to failure.”

The Missing Link

+

Culinary Arts The Numbers

ROI Methodology

Recipe costing is the base for manyRecipe costing is the base for manyother aspects of the operations.

The Reality Is…

• Some restaurant operators do not phave any written or documented recipes.

• Some have recipes that are written are only for execution, not costing.

• The few that have costing in many cases do not take a manufacturing approachapproach.

• Menu pricing in some cases is not based on proper analysis and databased on proper analysis and data.

What is in your control?

Knowing your costs Knowing your costs

What is in your control?

Knowing your costs Knowing your costs

Establishing your selling price

Types of Recipes

• Batch or Prep RecipesBatch or Prep Recipes• Larger quantities

• Become their own unique Become their own unique inventory item when produced

• Can be used in other recipes

• Serving or Menu Item Recipes• Ultimately is what is sold to the

guest or customer

Weights & Measures

Portion control thro gh the se of • Portion control through the use of utensils (Tbsp tsp dishers spoodles etc )(Tbsp, tsp, dishers, spoodles, etc.).

• Accuracy of weights and measures Accuracy of weights and measures is paramount.

1 cup, Basil Leaves 1 cup, Granulated Sugar

0.2 ounce 6.8 ounces

Batch Recipes & Yields

• Batch recipes should account for the • Batch recipes should account for the proper yield (what the result is) including known waste and the gprocess (labor)

• When the purchased product has p pchanged form in any way, a batch recipe should be created to account f h for the cost.

• If you don’t account for the process d i ld l l t i and yields, your menu level costs in

most cases is understated!

Batch Recipe Example #1

• We purchased ‘Basil, Fresh’ at p ,$8.50/# or $0.531/oz

Ingredients Quantity UOM Cost Extended

Basil, Fresh 16.0 oz $0.531 $8.500

BASIL PICKED

• The new item ‘Basil Picked’ now

Basil, Fresh 16.0 oz $0.531 $8.500

Yield 11.0 oz

The new item Basil Picked now has a correctly stated value of $0.773/oz or $12.36/#


• We purchase ‘P&D 31/40 Shrimp’ p / pat $5.50/# or $0.344/oz

/Ingredients Quantity UOM Cost Extended

P&D 31/40 16.0 Oz $0.344 $5.500

P&D 31/40 SHRIMP THAWED

Th it ‘P&D 31/40 Th d’

P&D 31/40 Shrimp, frozen

16.0 Oz $0.344 $5.500

Yield 14.2 oz

• The new item ‘P&D 31/40 Thawed’ now has a correctly stated value of $0 387/oz or $6 19/#$0.387/oz or $6.19/#


• We purchase ‘Lobster Bisque Soup’ p q pby the bag/8# for $16.95 bag.


Lobster Bisque 1.0 Bag $16.950 $16.950

LOBSTER BISQUE SOUP YIELDED

Th it ‘L b t Bi S

Lobster Bisque Soup

1.0 Bag $16.950 $16.950

Yield 0.98 gal

• The new item ‘Lobster Bisque Soup Yielded’ now has a correctly stated value of $17 30/gallon or $0 136/ozvalue of $17.30/gallon or $0.136/oz


• We purchase ‘Bananas’ for p$0.513/#.


Bananas 16.0 Oz $0.032 $0.513

BANANAS PEELED

Th it ‘B P l d’

Bananas 16.0 Oz $0.032 $0.513

Yield 10.5 oz

• The new item ‘Bananas Peeled’ now has a correctly stated value of $0 049/oz or $0 782/#$0.049/oz or $0.782/#

Packaging

• Packaging is part of the raw g g pmaterial cost, similar to the ingredients

• Packaging includes:

• Boxes

• Labels

• Wraps

The Costing Problem

Ingredients

Prime Cost

Ingredients Labor

Total Cost

Ingredients Labor

Overhead

Labor & Overhead Costs

• Your labor and overhead can be accounted for in the recipe

• Prep Time, Labor Routing• Time/motion studies (stopwatch)

• Time (hours) is loaded on every recipe

• Standard Labor (BOH) Rates• By market

• Includes wages and fringes

Time Motion Studies

• Stopwatch time motion studyp y

• Must be in a live environment

• Must be a controlled testMust be a controlled test

• Must be the personnel that will actually execute the recipesy p

Batch Recipe ExamplePrime CostPrime Cost



Basil, Fresh 16.0 oz $0.531 $8.500

BASIL PICKED

Basil, Fresh 16.0 oz $0.531 $8.500

Labor 0.167 hr 12.00 $1.999

Total $10.499

Yi ld 11 0

• The new item ‘Basil Picked’ now has a correctly stated value of

Yield 11.0 oz

has a correctly stated value of $0.954/oz or $15.27/#

Direct (BOH) Labor Rate

• The direct (BOH) labor rate should ( )include the base rate plus any other additional fringes associated

h h lwith those personnel• Unemployment Insurance

Workers’ Compensation• Workers Compensation

• Social Security & Medical

• Health, dental and vision insurance plans

• 401(k) or other retirement plans

• Vacation & Sick Pay

Child• Childcare

Overhead Rates

• Based on budgeted expenses and

Predetermined Overhead Rate

g pdirect labor hours (BOH) by location.

Total Budgeted OverheadTotal Budgeted Overhead

Direct Labor BOH Hours = $0.000/hr.

OverheadRate

Overhead Rates

• FOH Labor & Fringes

Predetermined Overhead Rate

• FOH Labor & Fringes• Advertising & Marketing• Repair & Maintenance• Supplies• Training• Utilities Utilities • Communications• Landscaping• Research & Development• Research & Development• Occupancy• Taxes

BudgetedDirect Labor

HoursHours

Batch Recipe ExampleTotal CostTotal Cost


BASIL PICKEDIngredients Quantity UOM Cost Extended

Basil, Fresh 16.0 oz $0.531 $8.500

Labor 0.167 hr $12.00 $1.999

Overhead 0.167 hr $40.00 $6.664

Total $17.163

Yield 11 0 oz

• The new item ‘Basil Picked’ now has a correctly stated value of

Yield 11.0 oz

has a correctly stated value of $1.56/oz or $24.96/#

Efficient Batch Designsg

• Are the batch or prep recipes p p pdesigned for efficiency?

Batch #1Yields: 28 oz

Batch #2Uses

24 oz of Batch #1

Efficient Batch Designsg

• Are the batch or prep recipes p p pdesigned for efficiency?

Automatically incurs 4 oz of waste each time

Batch #1Yields: 28 oz

Batch #2Uses

24 oz of Batch #1

Sales Mix & Execution

Review of the sales mix with assigned grecipes for each station

Station #1 Station #2 Station #3 Station #4 Station #5

Where is the distribution of the sales mix?Where is the distribution of the sales mix?

Execution vs. Costing

• Recipes are written differently for p yexecution than they are for costing.• Execution usually states what utensils

to utilize

Costing involves weights and • Costing involves weights and measures

Execution vs. Costing

Execution Costing

BALSAMIC MARINADEIngredients Qty UOM Qty UOM

Olive Oil Blended 90/10 3.0 cups 24.0 oz

Balsamic Vinegar 1.0 cup 8.0 ozg p

Salt and Pepper Mix 0.25 cup 2.025 oz

Chopped Shallots 0.25 cup 1.20 oz

Chopped Parsley 0 25 cup 0 45 ozChopped Parsley 0.25 cup 0.45 oz

Yield 38.0 oz

Menu Level Costing

Menu Level Costing

Prime Cost

Menu Level Costing

Total Cost

Menu Engineering

The Guest

MENU

ReputationCommunity

MENU

BusinessFamilies

Employees

Menu Engineering

• Your menu(s) are what you are in ( ) ythe business to do.

• Types of Menus• Lunch

• Dinner

• Brunch

• Banquet

• Kids

• Pricing Structures• By Markets, Demographics

Cost-Volume-Profit (CVP)

The components that we will be analyzing:The components that we will be analyzing:

• Menu items in the category

Quantity/volume sold• Quantity/volume sold

• Selling Price

U it C tPRODUCT COSTS:I di t Di t • Unit Cost

• Cost Percentage

G M i P Pl

Ingredients, Direct Labor and Variable

Overhead

• Gross Margin Per Plate

• Contribution Margin PERIOD COSTS:Fixed Overhead

and Profit

Cost-Volume-Profit (CVP)

The components that we will be analyzing:The components that we will be analyzing:

• Menu items in the category

Quantity/volume sold• Quantity/volume sold

• Selling Price

U it C tTOTAL COSTS:

I di t Di t • Unit Cost

• Cost Percentage

G M i P Pl

Ingredients, Direct Labor and Total

Overhead

• Gross Margin Per Plate

• Total Profit PROFIT

My Famous Quote

“You cannot place You cannot place percents in your percents in your

pocket!”pocket!

My Famous Quote

Change the focus from cost Change the focus from cost

percent to gross margin dollars

Menu Item Qty Sold

MenuPrice

Unit Cost

Cost % UnitGM $s

Pasta Fettucine 1 $11.99 $1.98 16.5% $10.01

Filet Mignon 1 $32.95 $12.49 37.9% $20.46

Which one would you rather have?Do we focus too much on cost percents?f p

Loss Leaders

Items that are sold at a loss Items that are sold at a loss that will result in other menu items being sold at a profit.

Loss Leaders

Items that are sold at a loss Items that are sold at a loss that will result in other menu items being sold at a profit.

Drive profits!Drive profits!

Dog/Star Graphex

%

StarHi h PI % Hi h GM $

PlowhorseHigh PI % Low GM $s

ty I

nd

e High PI %, High GM $sHigh PI %, Low GM $s

pu

lari

t

PuzzleDog

Po Puzzle

Low PI %, High GM $’sDog

Low PI %, Low GM $s

Average Unit Gross Margin $

Dog/Star Graph Flaws

Flaw #1Flaw #1Traditional Dog/Star reports only

l lanalyze entrees only.




Flaw #2The calculation looks as unit

gross margin as a basegross margin as a base.




Flaw #2The calculation looks as unit

gross margin as a basegross margin as a base.

Flaw #3The graph plots all entrees together.

Cost Volume Profit Example

Which menu item should be reviewed?

Menu Item MenuPrice

Unit Cost

Cost % UnitProfit $s

SALADS Menu in place for 6 months.

Chopped Salad $5.50 $0.43 7.8% $5.07

Wedge of Iceberg $5.50 $0.33 6.0% $5.17

Caesar Salad $5 50 $0 41 7 5% $5 09Caesar Salad $5.50 $0.41 7.5% $5.09

House Salad $5.50 $0.48 8.7% $5.02

Averages $5.50 $0.41 7.5% $5.09



Menu Item Menu Price

Unit Cost



Chopped Salad $5.50 $0.43 7.8% $5.07

Wedge of Iceberg $5.50 $0.33 6.0% $5.17

Caesar Salad $5 50 $0 41 7 5% $5 09Caesar Salad $5.50 $0.41 7.5% $5.09

House Salad $5.50 $0.48 8.7% $5.02

Averages $5.50 $0.41 7.5% $5.09

If the decision was based on cost percent alone, the ‘House Salad’ would be reviewed for action. House Salad would be reviewed for action.



Menu Item Qty Sold

Menu Price

Unit Cost


Total Profit $s


Chopped Salad 1,664 $5.50 $0.43 7.8% $5.07 $8,437

Wedge of Iceberg 1,183 $5.50 $0.33 6.0% $5.17 $6,116

Caesar Salad 1 508 $5 50 $0 41 7 5% $5 09 $7 676Caesar Salad 1,508 $5.50 $0.41 7.5% $5.09 $7,676

House Salad 2,041 $5.50 $0.48 8.7% $5.02 $10,246

Averages $5.50 $0.41 7.5% $5.09

If you would have chosen the ‘House Salad’, you would have reviewed the menu item driving the most dollars to cover fixed overhead costs and profit and possibly to cover fixed overhead costs and profit and possibly removing it from the menu.

Dog/Star Calculation


Menu Item Qty Sold

Menu Price

Unit Cost

Cost % UnitProfit

Total Profit $s

GM MM Rank

Ch d S l d 1 664 $5 50 $0 43 7 8% $5 07 $8 437 L H Pl h ?


Chopped Salad 1,664 $5.50 $0.43 7.8% $5.07 $8,437 L H Plowhorse?

Wedge of Iceberg 1,183 $5.50 $0.33 6.0% $5.17 $6,116 H H Star?

Caesar Salad 1,508 $5.50 $0.41 7.5% $5.09 $7,676 H H Star?

House Salad 2,041 $5.50 $0.48 8.7% $5.02 $10,246 L H Plowhorse?

Averages $5.50 $0.41 7.5% $5.09

MM = (1/4) * .7 = 17.5%; GM = $32,474 / 6,396 = $5.08Flaw: Gross margin rank for dog/star calculation is based on unit level only, not extended contribution based on unit level only, not extended contribution margin dollars.

Dog/Star Graph

35.0%House Salad

25.0%

30.0%

dex

%7

.5% StarPlowhorse

Chopped Salad

Caesar Salad

15.0%

20.0%

arit

y I

n.7

= 1

7

17.5% Wedge Salad

5.0%

10.0%

Pop

ula

(¼)

*

.08

Dog Puzzle

0.0%

$5.00 $5.02 $5.04 $5.06 $5.08 $5.10 $5.12 $5.14 $5.16 $5.18

P

$5

Menu Item Unit Gross Margin $s$32,475 / 6,396 = $5.08

Stellar / Cellar Graphex

%

Stellar - The Bank• Sacred Items• Most Profitable Items

The Engineer• Reengineering of Menu Items

• Labor Process Improvements

ty I

nd

e p• Alternative ingredients• Menu placement

• Price increase possibility

pu

lari

t

The Push or Sell• FOH Suggestive Selling

The Cellar• New menu item opportunity

Po • FOH Contests

• Review price with value proposition; price too high?• Quality or flavor issue

• Exception: Unique menu item

Menu Item Total Profit $s

Stellar / Cellar Graph

35.0%

House Salad

25.0%

30.0%

dex

%0

%

25.0%Chopped Salad

Caesar SaladThe

StellarThe Engineer

15.0%

20.0%

arit

y I

n =

25

.0

Wedge Salad

Stellar

10.0%

Pop

ula

(¼)

19

The Cellar The Push

0.0%

5.0%

$2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 $11,000

P

$8

,11

Menu Item Total Profit $s$32,475 / 4 = $8,119


Which menu item should be removed?

Menu Item Qty Sold

Menu Price

Unit Cost


Profit $s


Chopped Salad 1,664 $5.50 $0.43 7.8% $5.07 $8,437

Wedge of Iceberg 1,183 $5.50 $0.33 6.0% $5.17 $6,116

Caesar Salad 1 508 $5 50 $0 41 7 5% $5 09 $7 676Caesar Salad 1,508 $5.50 $0.41 7.5% $5.09 $7,676

House Salad 2,041 $5.50 $0.48 8.7% $5.02 $10,246

Averages $5.50 $0.41 7.5% $5.09

The proper item to target to be reviewed is the ‘Wedge of Iceberg’of Iceberg .

What are my options?

• Review the menu placement

• Reengineer an existing menu itemg g

• Review process

• Alternative ingredientste at e g ed e ts

• Price increase

• Remove the item and create a new itemRemove the item and create a new item

Engineering a New Menu Item

Menu Item Qty Sold

Menu Price

Unit Cost


Total Profit $s

Wedge of Iceberg 1,183 $5.50 $0.33 6.0% $5.17 $6,116

New Menu Item - $TBD $TBD > $5.17

When engineering the new menu item, attempt to create the item that will increase the average create the item that will increase the average gross margin on the item being removed. In this case - $5.17/menu item.

Menu Placement

Menu Item Qty Sold

Menu Price

Unit Cost


Total Profit $s

SALADS

House Salad 2,041 $5.50 $0.48 8.7% $5.02 $10,246

Chopped Salad 1,664 $5.50 $0.43 7.8% $5.07 $8,437

Field Greens NEW $5 75 $0 43 7 5% $5 32Field Greens NEW $5.75 $0.43 7.5% $5.32

Caesar Salad 1,508 $5.50 $0.41 7.5% $5.09 $7,676

Averages $5.56 $0.44 7.9% $5.12

When reading the menu, customers read from top to bottom of the category they are looking at. Place the menu items that drive the most contribution margin to the top. The two top menu items are my highest “The Bank” category items.

Menu Placement & Eye Gaze

Source: Bowen & Morris, 1995; Hug & Warfel, 1991; Kelson, 1994; Scanlon,1998; Main, 1994; Miller, 1992; Panitz, 2000; National Restaurant Association, 2007;Kotschevar, 2008; Pavesic, D.V., 2011

Menu Placement & Eye Gaze

Source: Livingston, 1978

Front of House (FOH) Sales

• If the menu layout is structured • If the menu layout is structured with the most profitable items on top, it should not be a secret!p,

• FOH personnel can play an active roll in suggesting to the gg gcustomers items that drive profit!

Where do I start?

Step 1: Purchased Items Step 1: Purchased Items

Step 2: Batch Recipes Ingredient level only

Step 3: Serving Recipes

Step 4: Time Standards

Step 5: Labor and Overhead Rates Step 5: Labor and Overhead Rates

Step 6: Performance Benchmarking

Systems

• MBE (Manage By Excel)( g y )

• Systems & Software (do your Systems & Software (do your research!)• Features (i.e.

recipes, production, ordering,

• invoicing, menu engineering, etc.)

• Service

• Cost

• Your overall plan (short and long term)

Our Systems

Cost Control

ACCURATE RECIPE

Audit to Improve ffi i iRECIPE

COSTINGEfficiencies

MENU ENGINEERING

Benchmarking (Actual v.

Theoretical)

JIT Production &

Ordering(Dynamic

P )Pars)

hThe

Top 10 Top 10

kTakeaways

The Top 10 Takeaways

Takeaway #1Takeaway #1

Get the competitive edge!p g

The restaurant industry is hi hl titi d th highly competitive and the current economic factors f

compound that.



The business failure rate has fhistorically been very large. Use both your culinary skills Use both your culinary skills

and data to keep from becoming a statistic.



Recipe costing is vitally p g yimportant to the success of

the operations Recipe the operations. Recipe costing can be a science.

Everything can be

accounted for accounted for.



Your menu is too

important to guess at! G i i t d h!Guessing is not good enough!



Writing a recipe for execution g p fis very different than for

costing Execution is for the costing. Execution is for the line personnel. Costing is

for the management.

You need bothYou need both.



“You cannot place percents in p pyour pockets!”. Shift the

focus from cost percents to focus from cost percents to gross margin dollars per plate and contribution

margin dollars.margin dollars.



Make decisions not only based yon the passion and emotion of the menu item but also of the menu item – but also

empirical data. Be methodical.



The menu layout and yplacement of menu items does matter Place higher does matter. Place higher contribution margin items on top in descending order.



This is your call to action!y

Start the process. If you do t h d t ti not have adequate time or

skills, get some professional , g p fassistance!



To ensure success –

The bottom line is

know your costs!

Plan for success!Plan for success!

Be proactive, not reactive!p ,

Reference Books

The Book of Yields: Accuracy in Food Costing & Purchasing

Francis T. Lynch

John Wiley & Sons

ISBN 13: 978-0-471-74590-7ISBN 13: 978 0 471 74590 7

ISBN 10: 0-471-745909-1

Ch f’ B k f F l Yi ld & SiChef’s Book of Formulas, Yields & Sizes

Arno Schmidt

John Wiley & Sons

ISBN 10: 0-471-22716-1

Note: Neither references is truly comprehensive. You need to practice the f y p pcosting methods discussed in this presentation.

Articles Booklet

• “Obtaining Accurate Recipe Costs”Obtaining Accurate Recipe Costs

• “Improve Your Menu Engineering”

• “The Case For Theoretical Food Costs”• The Case For Theoretical Food Costs

• “The Advantages of Just-In-Time”

• “Robust Supply Chain Management”• Robust Supply Chain Management

• “Line Checks That Create Efficiency”

“Traits of Effective Cost Management”• Traits of Effective Cost Management

http://www.ReturnOnIngredients.com

Other Speaking Events

2012ACF S d k Ch 01/09 i Mil OH• ACF Sandusky Chapter, 01/09 in Milan, OH

• National Assn. for the Specialty Food Trade 01/12 in San Francisco, CA

• Southern California Gas Co., Foodservice Equipment Ctr., 01/19 in Downey, CA

• ACF Cincinnati Chapter, 01/23 in Cincinnati, OH

• North American Pizza & Ice Cream Show, 01/29 – 01/30 in Columbus, OH

• Delaware Area Career Center, 02/10, in Delaware, OH

• International Restaurant & Foodservice Show, 03/03 - 03/04 in New York, NY

• Columbus Culinary Institute, 03/14, in Columbus, OH

• Western Illinois University, 03/20 in Macomb, IL

• Economic Community & Development Institute, 3/27 in Columbus, OH

• Platt College, 04/17 in Tulsa, OK

• Oklahoma Restaurant Association, 04/17 in Tulsa, OKO , 0 / , O

• San Diego Mesa Community College, 04/24, in San Diego, CA

• California Restaurant Association, 04/25, in San Diego, CA

• Economic Community & Development Institute, 04/27, in Columbus, OH

• Southwestern Foodservice Expo 06/24 in Dallas TX• Southwestern Foodservice Expo, 06/24 in Dallas, TX

• Western Foodservice & Hospitality Expo – 08/12 – 08/14 in Anaheim, CA

• Florida Restaurant & Lodging Show – 09/23 – 09/25 in Orlando, FL

Culinary Schools

• This program is offered at no cost to culinary d h i li h l b d and hospitality schools programs based on

availability and budget.• San Diego Mesa Community College (San Diego, CA)

• Lexington College (Chicago, IL)

• Roosevelt University (Chicago, IL)

• Western Illinois University (Macomb, IL)

• Lake Michigan College (Benton Harbor, MI)Lake Michigan College (Benton Harbor, MI)

• Central Michigan University (Mt. Pleasant, MI)

• Guilford Technical Community College (Jamestown, NC)

• Midwest Culinary Institute (Cincinnati, OH)

C l b C li I tit t (C l b OH)• Columbus Culinary Institute (Columbus, OH)

• Owens Community College (Toledo, OH)

• Platt College (Tulsa, OK)

• Culinary Institute of Charleston (Charleston, SC)y f

Please email me at [email protected]

Or call me directly at Cell 614.558.2239

Questions & Answers

Mark Kelnhofer President & CEOMark Kelnhofer, President & CEO

Return On Ingredients

P O Box 2387P.O. Box 2387

Westerville, Ohio 43086-2387

614 423 4410614.423.4410

Fax 614.340.7946

C ll 614 558 2239Cell 614.558.2239

[email protected]

http://www.ReturnOnIngredients.com

accurate recipe costs 3 27 ecdi

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