Savings Consistency

“We are continually faced by great opportunities brilliantly disguised as insoluble problems.” Lee Iacocca, American Industrialist.

The above quote by Lee Iacocca is extremely relevant in today’s marketplace. The economy is throwing many challenges at us, and if we field them correctly we can make a significant impact on our success and profitability today and in the future. I don’t want to beat a dead horse, but people are still spending money – you still go out to dinner right? We are all still shopping, eating, driving, and buying….we are just using a different criteria than we have used for the past 10 years. It used to be that all you had to do was unlock the doors and customers came inside. Today, however, that isn’t the case anymore. We have to raise our games and bring things to a different level to succeed in this marketplace. You can do it! You all are too smart to let this opportunity slip through your fingers. Today’s business model will not provide you with the same success that you have enjoyed in the past. We are all being forced to change. Continuing to do things the way we have always done them will more often than not lead to a slow bleed out rather than continued sustainable success.

How can you stop the bleeding and right the ship? There are a number of things that you can do as an operator to position yourself for success. Controlling labor, product consistency, lowering your inventory dollars and maintaining food safety are 4 easy ways to improve and insure your profitability. Over the next couple of articles, I am going to explore each of these areas and how they can help you bring more money to your bottom line – I say bottom line because that is what we all got into business for – improving our profitability and making more for our bank accounts….we didn’t go into business to save money or to spend less, but to MAKE MORE MONEY TODAY AND IN THE FUTURE!

When sales dip and food, electric and gas bills increase we often find that the best place to look for savings is in labor costs. As it is, your food costs represent about 35% of your expenses and your labor is usually a little bit more than that number. You have to have food to sell, but how much staff do you need to keep things humming the way you would like them? That is a tough question – I have found some ways to minimize your labor costs AND improve your product consistency. Moving up the value chain from commodity items to a value added product. I know many of you are screaming – that costs more! You are right, when you look at the invoice, it DOES cost more. Don’t stop evaluating it at that level though, because as you walk through the pros and cons you will see that by using precut or pre-portioned items you will position your self for growing and sustainable success.

We all know that product consistency is one of the things that propel chains to great success. The burger from McDonalds tastes the same today as it did a year ago and will a year from now. Not everyone may like a McDonald’s hamburger, but they have sold how many billion of them? I bet we all wish we could sell just 10% of that number. They are on to something and it seems to be working. How does that translate to you? McDonalds doesn’t have someone chopping lettuce, onions, and pickles in their kitchens, they buy them all pre cut. As McDonalds has moved into fresh salads and other items, they have brought the same model along with them – they are buying pre cut salad mixes rather than paying someone or two or three to stand in the back and clean and chop lettuce. I know some of you are raising and waving the price flag again, and I can’t blame you – it is hard to wrap your head around spending more equating to making more, but it does. McDonald’s salads are less expensive than yours, but they seem to maintain profitability while buying a more expensive product and selling it for less. They wouldn’t be the giant they are today if they continued to dabble in losing ventures.

As operators, we have to take a broader view of the operation and evaluate the true costs of keeping help on staff when comparing it the values of using a pre cut item. Consistency can not be underestimated. Customers want to know what they are going to get from you each time they come into your restaurant. They want their salads, their steaks and their veggies to look and taste the same each time they visit. That is creating a positive perceived value which will serve to line your pockets even in the worst economic times. The public has proven again and again that they don’t have to get the best products (McDonald’s burgers again) in order for them to buy, buy and buy. They will trade quality for perceived consistent value just about everyday of the week. (by no means am I insinuating that buying pre cut items is going to sacrifice your quality – I am only trying to emphasize the value of consistency) Consequently when you save money by buying commodity meats, veggies and fruits and cut them yourself, you risk losing your repeat business because today’s steak looks different than last week’s or today’s salad was somehow different than yesterday’s. Only a small percentage of the consumers will say anything, more often than not, they just stop spending with you and move on to the place down the street. (How many of you have had a pizza delivered that wasn’t quite up to snuff and you didn’t call to complain – you called someone else next time you wanted pizza? It happens)

Aside from consistency, the other value that buying and using pre cut and pre portioned products brings to you is lowering your labor costs. Minimum wage has increased, workman’s comp insurance isn’t getting any cheaper and hiring good, quality people isn’t getting any easier. By transitioning into more pre cut items, you will eventually be able to trim a person or two from your labor pool. The savings generated from one or two less people on your payroll is significant. This doesn’t even bring in to account the costs associated with an employee cutting themselves or having to miss work days because of an accident in the kitchen. Nobody intends for or expects things like that to happen which is why they are called accidents. The hidden costs of issues like this can quickly get out of hand if you have someone who wants to milk the system or has less than perfect integrity.

As an operator you are challenged with many things that make running a sustainably profitable business difficult. One of the ways that you can help position yourself for long term success is by controlling both your labor and product consistency by using pre cut and pre portioned products. The chains are using them, maybe you should be too!

I would love to hear from you regarding things that you have found are helping you survive and flourish in today’s marketplace. Drop me a line at dj.tryba@gfs.com.

Thanks as always for reading!