1. Chapter 7: Restaurant Operations

2. 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

3. 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

4. Figure 7-1 Restaurant Organizational Chart

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

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

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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?

20. Figure 7-3 Food Cost Control Process

21. 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

22. 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

23. 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

24. 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

25. 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)

26. 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

27. 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)

28. 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

29. 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)

30. 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

31. The End