Monday, August 27, 2012

4Q Consulting | Restaurant Consulting NYC | Rising Commodity Prices

Rising Commodity Prices….

Are your restaurants and/or catering businesses ready for the rising price of commodities this fall/winter season? Do you have a plan in place to off-set price increases of raw ingredients due to this year’s drought? As an operator, now is the time to plan for the next three to four quarters in order to ride out these increases. Menu planning & innovation, purchasing programs and proper execution are crucial in this economic environment.

From Nation’s Restaurant News on August 23, 2012

The U.S. Department of Agriculture’s Aug. 21 update said:
“Serious agricultural drought effects persist east of the Rockies, despite cooler weather and recent showers.” For the week ended Aug. 19, the USDA reported that 51 percent of U.S. corn and 37 percent of soybeans were rated in very poor to poor condition.

Jeff Powell, president and chief executive of the 15-unit Razzoo’s Cajun CafĂ©, said he expects his Addison, Texas-based chain
“will be negatively impacted by the drought and other pressures on grain supply.”
“Corn particularly is a baseline driver of economics in the supply chain,” Powell said. “A shortage of corn caused by drought or other dilution of supply by other uses (ethanol, etc.) obviously negatively impacts the dynamic. Corn is a necessary feed and source of oil, and when in shortage the impact on beef, pork and poultry prices is immediate.”

John T. Barone, president and commodities analyst for Market Vision Inc., wrote earlier this month that higher wheat prices for bread, pizza crust, pasta, flour tortillas and bakery products
“are obvious.”
“The ‘sneaky’ price increase will come from the big bump in corn and soy meal prices," Barone said. "That’s because they are the primary feed inputs for poultry, dairy cows, pork — and this year, cattle, because grazing pastures have also been toasted by the drought.”

The USDA is projecting a 5-7% increase in corn, wheat, soybean, beef, pork and chicken commodity prices above their current levels. What is deceiving is that, in the short term, we could possibly see beef and pork prices drop as more cattle are sent to slaughter early, due to the lack of feed. Operators need to watch out for rising prices towards the end of Q3 2012 and moving forward into 2013. Planning ahead now, is key to being able to ride out the wave of these price increases for the next few quarters.

Here’s how you, as the operator, can get ahead of rising commodity prices:

· Menu Planning and Innovation

o Introduce New Menu items – you can often increase menu prices by introducing a new item to your menu. This tends to be less noticeable to your guests then just increasing the prices of existing menu items.

o Seasonal/ Daily Menus - changing your menu more frequently gives you flexibility to react to the market.

o Food Costs - Do you actually know what your menu items cost you? When was the last time you did a costing exercise for your menu? Do you know what your portion sizes are? It might be time to do this exercise again!

o Dessert Program – do you have a dessert program in place to actively sell desserts? House made desserts tend to have a larger profit margin and can help t off-set increasing food costs?

o Beverage Program – Can you further off-set an erosion of your food profit margins by increasing your bar sales? Consider specialty and season drinks.

o Purchasing Programs – do you have a systematic method for ordering food? Or is your chef doing his/her food orders last minute before the order board closes?

o Distributors - Are you shopping your distributors for the best prices? Have you diversified? Or do you only have one broad-line distributor? Time to shop around again if you have not in a while.

o Purchase Sizes - Can you bulk buy some of your groceries to gain efficiencies of scale? This can allow you some breathing room to purchase your center- of-the-plate items in smaller quantities.

o Proper Execution – now that you have done some work making menu innovations, costing your menus and ensuring that you have proper sourcing, you MUST train your staff to execute properly!

o Ensure that these changes have been communicated to all employees and spend time to do some hands-on training.

Let us show you how the 4Q Consulting Approach can work for you!

4Q Consulting, LLC leverages in-depth expertise in all aspects of restaurant consulting and hospitality operations; we create client-specific solutions that drive measurable business improvement.

244 5th Avenue | Suite 1430 | New York, NY 10001 | 212-340-1137 | Mobile 347-834-4557 | |

Monday, August 20, 2012

When Good Restaurants are Bad... How to Avoid Making Matters Worse

Last night my family and I went out to one of the best restaurants in a resort town. This restaurant is only two years old, very hip, with a creative, locally-sourced organic menu. The Chef/Owner is well known in the culinary world and has many accolades under his belt. We were a party of nine with a 6:30pm reservation.

We were greeted with a smile by our server, who was obviously happy and peppy.

It was a promising start to the evening!   And that is where it ended...

We knew we were in trouble when the pre-appetizer nibbles we ordered for the table took 45 minutes to arrive at our table. Our first course arrived at 7:30pm in fits and starts; the food runner made several trips with two plates each, auctioning off our food. We waited with huge gaps of time between dishes arriving, making it awkward for those with food in front of them. Interesting, considering everyone at the table had a cold appetizer! A few of our salads were over dressed; making the gorgeous locally sourced lettuces wilt before hitting the table.

We had a rocky start, but still held out hope that we were in good hands.

When our entrees finally arrived at almost 8pm, we were delighted with beautiful plate presentations. However, again not all of our dishes arrived at the same time, leaving diners waiting with hot food in front of them for others to be served. Then we started to eat. Out of the nine dishes we had at our table, four were inedible due to gross over salting. Two more of the dishes were at that borderline place of being too salty. Now, as a former restaurant Executive Chef, I am a fan of properly salting food – which is often more salt than a home chef uses. At this point we needed to say something. When we asked our server for the manager, this is where the fun began.

Once the manager came to our table to ask “what was wrong”, I knew we were in deeper trouble. When we explained that we sent back two of the dishes as inedible and he might want to discuss this with the chef, so as to prevent this from happening to other diners, the manager got his back up. When we then aired all of our other concerns, such as the length of time in between courses, the manager threw his chef and kitchen staff under the bus. The manager made the mistake of telling us that the kitchen was under staffed and could not keep up – reminding us that it was a Wednesday, not a Saturday. He then asked us what he could do to make us happy, to which we had no response. He then offered to buy us dessert. Again we said nothing; in our minds it was too little, too late - we were never going to go back. We asked for the check, and discussed going to the local ice cream parlor.

In the end, our entire meal was complimentary, which was not our intention because it was too late to recover from this ordeal.

As we walked out, we noted numerous other tables where diners were impatiently waiting for food. The potential for more upset guests and the need to comp more checks was in the air!

Here is how you, as a Restaurateur, can avoid this situation:

Train your staff to handle problems: The Role of the Server – our server knew we were waiting a long time for our food, because she told us “the kitchen was slammed and backed up”. Your server staff should never tell a customer that the kitchen is backed up; the customer does not care. You should train your staff to NEVER air a restaurants dysfunction to guests. It only makes guests more agitated that they are not in good hands. Remember, people go out to eat to get away from the stresses of their lives and enjoy themselves. Telling guests that the kitchen is not functioning well causes stress for your dining guests. 

Communication: The Role of the Manager - The Server should have notified the Manager sooner – most guests do not complain until they are at their breaking point or past the point of no return. Similarly, guests also do not seek out the manager until it is too late. Our Server should have involved the manager in our situation sooner, rather than our having to seek him out. This allows the server and the manager to proactively try to appease their guests. We could have been offered more bread and a complimentary bottle of wine (which we were not) to appease us and draw our attention away from the long wait time. 

Take responsibility: The Customer Doesn’t Need To Know – Once the manager did come to our table, he threw the kitchen under the bus. This is a big no-no. This leaves the guests with no confidence at all. If the manager clearly has no confidence in the kitchen, why should we? The fact that we were told that they only had a 4 man line instead of a 6 man line because it was a Wednesday, is of no concern to the guest. The food should be the same regardless of what day of the week it is; your guests’ money is the same every day of the week. 

Go head first into the fire: Don’t Let a Tough Situation Get Out of Control – the manager on the floor knows the restaurant is having a bad night. This is the time to proactively talk to all of your guests; never run and hide. Addressing the elephant in the room will help you to retain customers. Everyone is going to have a bad service at some point, it is how you handle it that defines your professionalism. 

> Know your Market and Be Prepared: Be Smart About Your Business - In a resort town, in the last three weeks of August, every night should be as busy as Saturday night; if not, you have another issue on your hands. By 4:30pm the previous afternoon, when the reservation book started to fill up for a Wednesday, that was the time to call in more staff for both the kitchen and the dining room. A busy night should not have been a surprise. However, if caught off guard, do you have a backup plan? Do you have staff on call? Is the Staff Cross Trained? Could the manager have reconfigured the floor once in trouble? 

Don’t let this happen to you! You end up losing both customers and money in the process. 

About Us:
4Q Consulting, LLC leverages in-depth expertise in all aspects of restaurant consulting and hospitality operations; we create client-specific solutions that drive measurable business improvement.  Let us show you how the 4Q Consulting Approach can work for you!

244 5th Avenue | Suite 1430 | New York, NY 10001 | 212-340-1137 | Mobile 347-834-4557 |