Chapter 7: Restaurant Operations

Chapter 7 Restaurant Operations Front of the House Operations Restaurant Forecasting Types of Restaurant Service Suggestive Selling Restaurant Systems Back of the House Operations Food Production Kitchen Layout Production Cost Control Trends

Front of the House Includes anyone with guest contact from the hostess to the bus person Curbside appeal: Keeping the restaurant looking attractive and welcoming

Figure 7-1 Restaurant Organizational Chart

Front of the House The hostess, host, or greeter is responsible for greeting the guests and the rotation of arriving guests among sections or stations Servers introduce themselves and offer a variety of beverages and/or specials, and invite guests to select from the menu This is known as suggestive selling

Restaurant Forecasting Formulating a budget that projects sales and costs for a year on a weekly and monthly basis Forecasting restaurant sales has 2 components: Guest counts or covers and the average guest check Guest counts or covers: The number of guests patronizing the restaurant over a given time period Average guest check: Calculated by dividing total sales by the number of guests

Types of Restaurant Service American Service: Food is placed onto plates in the kitchen, carried into the dining room, and served to guests Restaurants in the United States, Canada, and many other parts of the world all use American service

Suggestive Selling Potent weapon in the effort to increase food and beverage sales Many restaurateurs cannot think of a better, more effective, and easier way to boost profit margins The objective here is to turn servers into sellers On a hot day, for example, servers can suggest frozen margaritas or daiquiris before going on to describe the drink specials

Front-of-the-House Restaurant Systems Point-of-sale (POS) systems: Used to track food and beverage charges and other retail charges that may occur at a hotel or restaurant Kitchen Display Systems: Printers in the kitchen are replaced with video monitors and presents orders to kitchen associates along with information on how long orders are taking to be prepared Guest Services Solutions: Applications that are designed to help a restaurateur develop a dining relationship with guests Applications include a frequent-diner management program, delivery management with caller ID interface, and guest accounts receivable to manage home accounts and gift certificate management

Back-of-the-House Restaurant Systems Includes inventory control, food costing, labor management, and financial reporting features Wireless POS Systems: Allows the servers to use a handheld personal digital assistant to send orders to the kitchen Labor Management: Includes a human resources module to track hiring, employee personal information, vacation, I-9 status, security privileges, tax status, availability, and any other information pertinent to employees working at a restaurant

Back-of-the-House Restaurant Systems Financial Reporting: Posts data into a relational database located on the central server The restaurant manager uses these data for reporting and decision making, profit and loss reports, budget variances, end-of-day reports, and other financial reports are generated Personal Digital Assistants: Help hospitality businesses stay effective and efficient by improving time management and helping with faster service

Back of the House Purchasing Receiving Storing and issuing Food production Stewarding Budgeting Accounting and control

Food Production Based on expected volume of business The sales from the previous year gives a good indication of the expected volume and a breakdown of the number of sales for each menu item The kitchen manager checks the head line cook’s order, which will bring the prep area up to the par stock for prepared items Prep work is done prior to service times

Kitchen Layout The cooking line is the most important part The size of the kitchen and its equipment are designed according to the sales forecast for the restaurant and the menu The kitchen is also set up according to what the customers prefer and order most frequently

Kitchen/Food Production Staffing and Scheduling: Crucial for the successful running of a kitchen Training and Development: Implementing a comprehensive training program is vital in the kitchen, due to a high turnover rate

Kitchen/Food Production Production Procedures: Relates directly to the recipes on the menu and amount of product on hand to produce the menu Production sheets: Count the product on hand (par levels). Determine production level. Determine actual sales. Key to consistency and quality of food

Kitchen/Food Production Management involvement and follow-up: Management should know first-hand what is going on in the back of the house As management spends more time in the kitchen, more knowledge is gained, more confidence is acquired, and more respect is earned

Employee Recognition An extremely important aspect of back-of-the-house management Recognizing employees for their efforts creates a positive work environment that motivates the staff to excel and to ultimately produce consistently better-quality food for the guests

Purchasing Restaurant operators set up purchasing systems that determine the following: Use of standards (product specs) System of control for theft and loss Par stock and reorder points Who will do the purchasing? Who will handle receiving, storage, and issuing?

Figure 7-3 Food Cost Control Process

Purchasing Product specification: Established standards for each product Par Stock: The stock level of a product that must be on hand at all times Purchase order: An order to purchase a certain quantity of an item at a specific price—comes as a result of the product specification

Receiving, Storing, and Issuing The purpose of receiving is to ensure the quantity, quality, and price are exactly as ordered Items should only be issued from the stores on an authorized requisition, signed by the appropriate person No inventory is kept in the production area and there is no access to the stores

The First In–First Out System All items that enter the stores should have a date stamp and be rotated using the first in–first out (FIFO) system Placing the most recent purchases in rotation behind previous purchases

Budgeting Fixed costs are constant regardless of the volume of business Fixed costs are rent/lease payments, interest, and depreciation Variable costs fluctuate with the volume of business Variable costs include controllable expenses such as payroll, benefits, direct operating expense, music and entertainment, marketing and promotion, energy and utility, administrative, and repairs and maintenance

Restaurant Accounting Uniform system of accounts for restaurants outlines a standard classification and presentation of operating results A balance sheet reflects how the assets and liabilities relate to the owner’s equity at a particular moment in time Once a sales forecast has been completed, the costs of servicing those sales are budgeted on an income statement (see next slide)

SAMPLE INCOME STATEMENT I. Sales A. Food B. Beverage C. Other Total Sales II. Cost of Sales C. Others Total Cost of Sales III. Gross Profit A. Other Income Total Income IV. Controllable Expenses A. Salaries & Wages B. Operating Expenses, etc. Total Controllable Expenses Rent, Interest, Depreciation, etc. V. Net Income Before Taxes A. Income Taxes Net Income SAMPLE INCOME STATEMENT

Restaurant Accounting Operating ratios are industry norms that are applicable to each segment of the industry Food cost percentage (cost/sales × 100 = food cost percentage) Contribution margin (difference between the cost of the item and sale price) Labor cost percentage (salaries and wages of employees, employee benefits, and their training) Prime cost (combined food and labor costs) Beverage cost percentage (calculated like the food cost percentage)

Lease and Controllable Expenses Lease Costs should not be more than 5-8% of sales Most leases are triple net—the lessee must pay for all alterations, insurance, utilities, and possible commercial fees (e.g., landscaping or parking upkeep) Controllable Expenses: All the expenses over which management and ownership have control Salaries and wages (payroll) and related benefits; direct operating expenses such as music and entertainment; marketing, including sales, advertising, public relations, and promotions; heat, light, and power; administrative and general expenses; repairs and maintenance

Restaurant Manager Job Analysis The National Restaurant Association (NRA) has formulated an analysis of the foodservice manager’s job by functional areas and tasks—this follows a natural sequence of functional areas from human resources to sanitation and safety (see text)

Trends More flavorful food Increased take-out meals Increased food safety and sanitation Guests becoming more sophisticated More food court restaurants Steak houses becoming more popular Segments splitting into tiers Twin and multi-restaurant locations Quick-service restaurants in convenience stores Difficulty in finding good employees

The End