Steps to Improving Food Costs

Steps to Improving Food Costs

3 Steps to Improving Food Costs This ebook, designed by LP Innovations, discusses 3 steps to improving your food costs. As loss prevention professionals working with restaurants and food service clients, we take the approach that the majority of losses can be controlled. This book will introduce through some of our strategies of controlling costs within your operations. Proven through our experience working with food industry clients, our objective is to present you with; 3 Specific loss prevention concepts that will help you improve your overall food costs The ability to implement these concepts into your locations How to solicit your employees to help improve food costs and make loss prevention part of their daily routine LP Innovations, Inc. 3 Steps to Improving Food Costs July 2011 2

Food Costs: The Opportunity to improve Food Costs can be broken down into two different categories; Base Food Costs and Opportunity Costs Base Food Costs is simply the amount of dollars spent on food items divided by the total sales dollars. This includes all food items that make up your menu items. Opportunity Costs are parts of your food costs outside of your menu items. They include; Waste (Raw and Complete) Condiments & Supplies Employee Meals & Comp Meals Coupons & Discounts Theft and Unexplained Loss 3

The 3 Steps Opportunity Costs are the most controllable within your environment. With the right program elements, process development and program execution you can have a greater impact on reducing your overall food costs by focusing on reducing your opportunity costs. The 3 Steps to Improving Your Opportunity Food Costs are; 1. Proper Policies & Procedures 2. Employee Awareness 3. Compliance Checks & Audits 4

Step 1: Policies & Procedures You can improve your operations and opportunity costs by first having specific policies, procedures and guidelines in place to educate your staff on how to control these costs. Policies & procedures should be; Written Updated and revised when business changes occur Signed by all employees at least once annually to be understood Maintained in a binder broken down by areas and can be easily referenced when needed Key Restaurant Loss Prevention policies & procedures should include; A Code of Conduct regarding theft, workplace violence, etc Safety Procedures including worker safety, food safety and incidents (robbery) that may affect employee and customer safety Front End Operations (waste control, food safety a& handling) Back End Operations (cash control, bookkeeping, employment relations) 5

Policies & Procedures for Opportunity Cost Improvement The following are some policies and procedures that should be included in your business practices. Waste Control Proper Food Handling Order Accuracy Condiment Ordering & Fulfillment Paper Goods Control Inventory Taking Coupons & Discounts Point of Sale Transaction Handling Coupon Usage Procedures Coupon & Discount Codes and Updates Handling Issues with Customers Reconciling Coupons & Discounts Employee & Comp Meals Employee Meal Policies (Written) Comp Meal Policies (Written) Handling Register Transactions Record & Analyze Direct Part of Food Costs Theft & Unexplained Loss Written Consequences to Theft Theft Reporting Procedures (Tip Line) How to handle theft situation Recording & Analyzing Loss Employee Theft Does Happen! 6

Step 2: Employee Awareness It takes a team to run a restaurant. That team consists of everyone on your staff, kitchen included, and only through them can you work to improve costs. The keys to greater employee awareness and education include; Reading and understanding written documentation Reviewing information multiple times Understanding what is being asked of them (their role) Knowing What is in it for them and How does it affect them The Keys to an Effective Awareness Programs include; Consistency provide regular and multiple touches to make it part of their daily routine. Visibility put awareness materials where they can see it regularly. Make them Part of the Team make your awareness personal, let them know how increased costs affect the business and them and let them help you solve issues. 7

Employee Awareness How can you increase awareness to improve your food costs and reduce opportunity costs? Posters in high traffic employee areas Newsletters or short articles on key topics (from the web or written specifically for your team) POS or Order Entry Stickers with key awareness sayings New Hire Orientation Guides or Employee Awareness Packets 8

It Takes A Team To Be Successful Reducing costs takes a team effort. Here are some steps on how to turn employees into team players! Speak to them not at them Focus on making them part of the solution, not part of the problem Keep awareness materials easy to read, short and engaging to their level Use meetings or one on one discussions to measure retention and drive home awareness Include Everyone! For more information on Employee Awareness; watch; Presentation Video: Creating Effective Awareness 9

Step 3: Compliance Checks & Audits Measurement and review are necessary to ensure that your initiative to reduce costs is working. You can have written policies and several types of awareness, but without measuring compliance you will be uncertain as to where you stand with controlling your costs. The need for verification, validation and audits; Compliance should be measured and analyzed Checks and audits should be documented and maintained for reference Use the results for training and improvement first, discipline second Always provide an action plan with a follow up date validate the follow up! A good audit program includes; Varying the audit timing but keep them regular and consistent Allowing for self-auditing in between corporate or management audits Surprise audits or un-announced audits Focusing on the areas that can impact costs operational audits are different than loss prevention audits 10

Check Please? That is Compliance Check and Audits A good audit program provides a good understanding of where each location and your company is with regards to policies, procedures and awareness against increasing food costs. What should you expect from a good audit program? IMPROVEMENT In operational efficiencies In your policy compliance at all levels In your food costs If you do not see improvement, then you need to re-think your audit strategy, your questions, or the accuracy of your audit taking. Learn more about audit strategies 11

Bring It All Together Let s recap these 3 loss prevention concepts that you can use as steps toward improving your food costs, specifically those Opportunity Costs. 1. Have written policies provided to all employees, accessible for review and signed off for acknowledgement 2. Implement regular awareness using multiple media sources that fit your operations, environment and employee base 3. Execute consistent compliance audits focusing on those areas to improve food costs and reduce loss To help you with these three areas, the following page provides several online resources to plan, develop, execute and analyze your program. Thank you for reading our ebook. 12

Resources Presentation Video: Creating Effective Awareness Operational Audits v. Loss Prevention Audits: What type is best for you? Check and Double Check: The Benefits of a non-bias Audit Real Prevention Requires Real Help (Employee Awareness) Check and Balance: 5 questions you need to answer to develop an effective audit tool Got Key Loss Prevention Policies? Contact Information LP Innovations, Inc. solutions@lpinnovations.com www.lpinnovations.com Restaurant Loss Prevention Solutions Restaurant Loss Prevention Best Practice Blog Ray Esposito Executive Vice President resposito@lpinnovations.com David Johnston Director, Business Development djohnston@lpinnovations.com LP Innovations, Inc. 3 Steps to Improving Food Costs July 2011 13

About LP Innovations About LP Innovations LP Innovations, Inc. is the leader in providing retailers with nationwide loss prevention solutions focused on earnings improvement. Since 1998, our expert team has partnered with retailers of all verticals to dramatically reduce their expenses, losses and increase their overall profitability. Our established methods, nationwide presence and uncompromising service is demonstrated through our trusted solutions and proven results. Learn more about our restaurant solutions Interested in learning more about outsourcing in the food service industry? Download our free presentation, presented by Hooter of America and LP Innovations at a food service industry conference. Click on the presentation slide to gain access to the presentation. 14