How to Use a Waste Sheet to Increase Profit Margins

By David Scott Peters

www.therestaurantexpert.com

When food costs rise, profit margins sink and restaurant owners must take action. Last week, I outlined one of two simple tools you can use to lower your food costs, the key item reportThis week, I’m covering the waste sheet.

The waste sheet tracks waste in the kitchen.

When an ingredient or item is double ordered, over cooked, spoils or just can’t be used any longer for any reason, it MUST be recorded on the waste sheet. Use a new form each day.

To set up your form, create the following columns:

  1. Time
  2. Item/Description
  3. Amt/Qty/Wt
  4. Reason for Waste
  5. Employee Initials

Referring to the waste sheet, write in the time the product was wasted in the Time column. Write a description of the item wasted in the Item/Description column, such as an order of chicken wings or milk. Write in the amount, quantity or weight of what was wasted in the Amt/Qty/Wt column, such as 12, 1 pound or 3 gallons.

The next step, which is probably the most important, is to write in the reason for the waste. This will be huge to help identify operational problems that can be corrected with tracking. For example, if the list shows a three gallon loss of milk and the reach-in cooler is out of temp., it’s a worthy investment to fix the cooler. Or maybe it’s Sally the new server that double orders product, and needs more training. The waste sheet provides actionable solutions.

To finish the form, the employee writing in the waste will mark their initials.

This form needs to be used right away. As soon as it is wasted, write it in. I know what you are saying to yourself, “Right! On a Friday night when we are kicking out 300 covers, I’m going to stop everything so we can write that down.”

While I wish the answer to that question was yes, I know the reality of running a restaurant is never an ideal world. So here’s what you do… just place each of the items in a clear Lexan tray when the waste happens and then at the end of the rush, go through and record each item wasted.

To make sure the waste sheet is effective, your kitchen manager or chef will value out each item wasted and initial that they did so. This figure will be very important when comparing actual and ideal food cost at the end of the period.

It’s that easy, and can be put into place in the next five minutes. And next week, I will show you one last trick – how to use the key item report and the waste sheet together. See you then!

David Scott Peters TheRestaurantExpert (1)David Scott Peters is a restaurant expert, speaker, coach and trainer for independent restaurant owners. He is the developer of SMART Systems Pro, an online restaurant management software program helping the independent restaurant owner remain competitive and profitable in an industry boxed in by the big chain restaurants. He is best known as the SMART Systems guy who can walk into any restaurant and find $10,000 in undiscovered cash before he hits the back door… Guaranteed! Learn more at www.therestaurantexpert.com/rdspos.

Don’t Let Poor Cash Handling Hurt Your Success – Part 2

By David Scott Peters

www.therestaurantexpert.com

In my last post I addressed some samples of classic cash handling errors we see in restaurants all the time. As a reminder, it is your responsibility to make sure ALL of your money makes it into the bank on a daily basis. You must eliminate poor cash handling procedures, eliminate the majority of ways your cash can be stolen and avoid costly fines through proper systems.

Believe it or not, I have systems for cash controls! Follow these procedures and take your success — along with your cash — to the bank.

ACCOUNTING PROCEDURES

Server Checkout

  1. Make sure all checks are closed.
  2. Count servers cash, run tape (if needed), date, +/-$, server’s name.
  3. Cash must match cash due.
  4. Match credit card slips report with server report. If they do not match, look at each credit card slip against the POS receipts to find the problem.
  5. Staple credit card slips to server report. Put server reports and credit card slips in two separate piles.

Helpful hints:

  • Money should be turned in faced.
  • Credit card slips in descending order.
  • Change should be less than one dollar.
  • You should receive larger bills, not $35 in ones.
  • Servers will always be even or over. If they give you a quarter and they were only required to give 24 cents, you do not give change, you are not a bank. Send them to the bar if they want change.
  • If there are COMPS, look for coupons, signed slips or anything else to confirm them.

Bar Checkout

  1. Make sure all checks are closed.
  2. Count servers cash, run tape (if needed), date, +/-$, server’s name.
  3. Clear and continue tape.
  4. Cash must match cash due.
  5. Start a tape, adding all server reports (cash due), subtracting any paid outs and total.
  6. Clear and continue tape.
  7. Count drawer by compartments.
  8. Count the bar drawer back to $300.00.

When counting the last drawer for the day, purchase all of the loose change you can from the daily deposit bag. The goal is to finish the day with less than one dollar in loose change in the bank deposit.

Helpful hints:

  • Bartenders should face their money before they turn their drawer in.
  • Bartenders should bundle and wrap money:
  • pennies by 50 cents
  • nickels by $2.00
  • dimes by $5.00
  • quarters by $10.00
  • ones by $50.00 – 50 bills
  • fives by $100.00 – 20 bills
  • tens by $500.00 – 50 bills
  • twenties by $1000.00 – 50 bills

Counting the Bar Drawer Back to $300

  1. Look at tape with the drawer total.
  2. Take out change (If tape total is $689.52, take out 52 cents.) Place the change removed on the desk in front of the compartment.
  3. Re-run tape subtracting change you took out. If done correctly the change will equal an even dollar amount ($.00).
  4. Pull all the bills out of the drawer.
  5. Put in three stacks of ones ($150.00). Add 0 to 4 additional ones to have a drawer total to that point to have a 0 or 5 in the ones positions (i.e., change of $13.00, add three stacks and two ones ($152.00) to have a total of $165.00 in the drawer to that point) and add to tape.
  6. Put in $100.00 in fives and additional fives, to get to an even $300.00.
  7. Total tape and rip off.
  8. Date, time, initial and put in drawer.

Counting Deposit

  1. Try to have most of the change equal less than a dollar.
  2. Count $1s and $5s, make bundles.
  3. Count master, replacing bundles for loose money.
  4. Count deposit, change through $100s, run tape.
  5. Add checks.
  6. Re-total.

Master Bank

Master bank should equal $1,100.00

  • $400.00 in fives.
  • $350.00 in ones.
  • $30.00 in quarters.
  • $15.00 in dimes.
  • $4.00 in nickels.
  • $1.00 in pennies.

Run tape, initial and date.

The Master bank should be verified at least twice a day. It should always be verified before you count your daily deposit.

Deposit Slip

  • Fill out the deposit slip amounts, i.e., currency, coins, checks.
  • Fill out the number of checks in the appropriate box.
  • Fill in check numbers.
  • Date with the date of the deposit.
  • Put the deposit slip, tape and cash in a deposit bag. Zip and put it in the safe.

Deposits are taken to the bank the next day and change is purchased to balance the master bank to $1,100.00

NIGHTLY ACCOUNTING CLOSING PROCEDURES

  1. Do all employee, reverse happy hour or any other comps for servers and bar.
  2. Make sure all checks are closed.
  3. Run an open check/table report.
  4. Run a flash revenue report.
  5. Count out all servers and bar.
  6. Run a timekeeping report to verify all staff has punched out. Adjust times if needed.

OPENING ACCOUNTING PROCEDURES

Preparing Daily Envelope

  1. Keep transaction report with the confirmation number in an envelope along with credit card slips, (signed copies).
  2. Include paid outs, entire house report, cash out report, credit card
  3. Confirmation sheet – label with yesterday’s date and day of week
  4. File

It’s your choice

I know that it is ultimately your choice, it’s your cash and it’s your business. But if it were me, I would follow our suggested cash handling systems or your own standard trainable systems and make shortages a disciplinary issue that could ultimately cost people their job.

When you make it a responsibility to handle cash properly and it’s tied to their employment, you create a culture where counting money accurately is not just an expectation, it’s the rule.

And lastly, when you do all of these things and your bank deposit is more than $5 off, you know you have a problem and it could just be with a manager stealing or just not doing their job. Either way, you will have more control of your business and have money in the bank to pay your bills.

David Scott Peters TheRestaurantExpert (1)David Scott Peters is a restaurant expert, speaker, coach and trainer for independent restaurant owners. He is the developer of SMART Systems Pro, an online restaurant management software program helping the independent restaurant owner remain competitive and profitable in an industry boxed in by the big chain restaurants. He is best known as the SMART Systems guy who can walk into any restaurant and find $10,000 in undiscovered cash before he hits the back door… Guaranteed! Learn more at www.therestaurantexpert.com/rdspos.

 

Don’t let poor cash handling hurt your success – Part 1

By David Scott Peters

www.therestaurantexpert.com

Each opportunity my team has to consult with you in your restaurant helps to make us better coaches. One of the things we’ve learned is that no matter what the restaurant owner says we need to address first, we have to review cash handling procedures right away. Because if there are poor cash handling procedures in place, no other system we implement will matter.

I don’t care how efficient your restaurant is, if every penny of your sales isn’t deposited in the bank, there won’t be enough money to pay your bills. Cash controls must take top priority.

Here are some samples of classic cash handling errors we see in restaurants all the time:

  1. Change in a glass or a drawer. This is a practice used to simplify the nightly deposit. It is used two different ways. First, it’s a time saver to avoid counting loose change. Second, it is used to make the nightly deposit balance exactly to what the point of sales system says the cash balance should be.
  2. A week’s worth of unsecured checks in unlocked filing cabinet. We often see this when the general manager or the owner is the only one allowed to make a bank run, when there is not enough cash to deposit due to credit card purchases or because the owner or manager is just plain lazy.
  3. A bin with a year’s worth of used non-voided paper gift certificates. While management was doing the right thing making sure all of the gift certificates used were accounted for on a nightly basis, they failed to write the word void on them and then saved them in an unsecured clear bin. Any employee could have stolen a small amount on a daily basis and reused them to keep cash sales.
  4. Customer checks taped to the office wall. Many restaurants cater or hold banquets on premise. This means you will have customers leave a deposit check to guarantee the party will happen. This practice is meant to cover costs if they cancel. The challenge comes when the owner or manager doesn’t deposit the checks and tapes them to the wall, because you don’t know if payment is good. A dishonest employee could steal the checks or use the information to steal your customer’s identity and conduct check fraud.
  5. Credit card numbers recorded in a book. In July 2010 a new law was enacted that makes it illegal to retain customers’ credit card numbers in anything other than a secure online record keeping system that meets the law’s requirements. Failing to follow the law’s requirements can result in fines as much as $5,000 for each credit card number kept.
  6. Blank checks and forged checks to routinely pay for deliveries. It is a common practice that restaurant owners leave blank checks to pay for invoices, or they allow a key employee, who is not authorized to sign checks, to simply forge their signature to pay for invoices. This exposes you to a great deal of liability.

In my next post, I’ll give you some proper accounting procedures that will keep you from making some of these mistakes.

David Scott Peters TheRestaurantExpert (1)David Scott Peters is a restaurant expert, speaker, coach and trainer for independent restaurant owners. He is the developer of SMART Systems Pro, an online restaurant management software program helping the independent restaurant owner remain competitive and profitable in an industry boxed in by the big chain restaurants. He is best known as the SMART Systems guy who can walk into any restaurant and find $10,000 in undiscovered cash before he hits the back door… Guaranteed! Learn more at www.therestaurantexpert.com/rdspos.

 

Make Yourself a Priority

By David Scott Peters

www.therestaurantexpert.com

Independent restaurant owners tend to be the nicest, most generous people on the planet (even the grumpy ones). Think about it. They put others ahead of themselves all of the time. They will bend over backward to take care of guests’ needs. They will run all of their credit cards to the max in order to make payroll. They’ll even go for years losing money, while their guests tell them how to run their restaurants and their employees drive nicer cars than they do.

So stay with me and listen to what I have to say, even if it’s not the first time you’ve heard me say it.

“You Have a Responsibility to Run a Profitable Restaurant…”

Responsibility to your customers. You have a responsibility to run a profitable restaurant for your customers. Look, there is a reason they dine in your restaurant. You provide an obviously much needed service to your community and guests, otherwise you would not be in business. You must be profitable to stay open for them.

Responsibility to your employees. You have a responsibility to run a profitable restaurant for your employees. This is how they are gainfully employed. This is how they pay their bills, feed their families and live. (Yes, half of them may drink their paycheck away, but that’s another story.) You must be profitable to stay open for them.

Responsibility to yourself. You have a responsibility to run a profitable restaurant for you, your family and any investors you might have.

This third area of responsibility is where the lesson begins. A great majority of restaurant owners run their businesses as if they were a charity. Taking care of everyone else first and if there is anything left over that “would be great.”

The reality is you must make you the priority!

Think about it, without you, there is no restaurant for the customers. Without you, there is no restaurant that employs people to work. Without you, there is no restaurant. So you see, YOU are the priority. Without you everyone suffers.

What do you do with this revelation? How does it affect your life? Well that answer is easy to understand, but sometimes very difficult to execute.

First, you have to start making yourself and your family the priority. You need to create a budget, which ultimately shows you how much money you want to make. You need to put into place the systems you know will help you achieve your budget. And most importantly, you will need to manage your business to that budget, which often means making the tough call.

To get you started, here are the key areas where we focus when we start working with a new restaurant:

  • Cutting labor cost
  • Reducing food cost
  • Expecting more from management

This is where we start, but the list goes on and on. It’s a process and lots of tough calls have to be made. But when you change your mind set to “You have a responsibility to run a profitable restaurant,” you’ll never go back to the way it was. Instead, you WILL make money without sacrificing your independence.

Just remember YOU have to make YOU a priority. Without YOU, there is no restaurant. “You have a responsibility to run a profitable restaurant!”

David Scott Peters TheRestaurantExpert (1)David Scott Peters is a restaurant expert, speaker, coach and trainer for independent restaurant owners. He is the developer of SMART Systems Pro, an online restaurant management software program helping the independent restaurant owner remain competitive and profitable in an industry boxed in by the big chain restaurants. He is best known as the SMART Systems guy who can walk into any restaurant and find $10,000 in undiscovered cash before he hits the back door… Guaranteed! Learn more at www.therestaurantexpert.com/rdspos.

 

5 Things You Can Do Now to Cut Food Costs

By David Scott Peters

www.therestaurantexpert.com

I originally wrote this article in the fall 2008 when the economy was really starting to hit my members where it hurt. And many of my members, because they have put systems such as these in place, weathered the 2008 recession much better than they expected. It’s all about operating at the lowest cost possible to maximize every dollar that comes through the door – in good times and in bad times.

So here are five easy-to-implement systems that will help you weather any economic storm – from the economy to slow tourist traffic – and also help your business in the long run.

  1. Raise prices. If you’re feeling the pinch, you could have no choice. A mistake would be to start ordering lesser quality substitutions, such as catfish instead of grouper. People who eat in your restaurant on a regular basis have come to expect a certain level of quality. If you start offering lesser quality ingredients, it will be noticed, and you’ll pay the price in the long run. And you don’t have to raise prices by much to have an impact, as long as you’re implementing changes in other areas.
  2. Purchase smarter. This is a two-parter.
    • First, order a descending dollar report. You can get this from your vendor. It shows what you spent the most money on down to the least amount of money. This isn’t necessarily in volume, but in price per item. It’s not that I ordered 10 cases, it’s that I spent $1,000 — which could have been 1 case. Based on these figures, you can try to find like or better products at cheaper prices, which can have a huge impact on your business. You can take something you usually spend $3,000 a month on and get it down to $2500. Attack the next thing, say it’s $2,000 a month on down to $1500 and so on. Work your way down the report, cutting dollars off each item you order until you get to the bottom and can’t cut any more. You don’t want to sacrifice your quality, so it won’t work on every item, but this can be huge. I’ve had members cut their spending by 5, 7, even 10 percent.
    • Second, get a prime vendor agreement. Rather than order small amounts of product from a large number of food distributors, you’re better off to order most, if not all, of your product from one distributor. Yes, you might be getting a killer deal on cheese from one vendor, but in the meantime, you’re getting railed in your janitorial and paper items from another. Cherry picking won’t get you far these days. It’s no longer to your advantage to purchase this way. A prime vendor agreement will make a huge impact on your bottom line, cutting percentage points off your operations costs, guaranteed.
  3. Recipe costing cardsCreate a recipe costing card for every item on your menu – including your bar drinks. Include everything down to the single piece of lettuce. If you’re a quick service restaurant, you can include the cost of the to-go packaging. Making these cards and training everyone to them eliminates waste and over-portioning. Plus it provides a great training tool.
  4. Menu engineering. Sit down and take a long hard look at your menu. If you have them at your disposal, run a few reports through your POS system. Look at your item-by-item sales mix report and your key item report. Plot each item on a graph, with the number sold on the y axis and the profits made in dollars on the x axis. These will tell you what items are ordered most often and how much they cost you to make. Combine your recipe costing cards with your POS reports, and you’ll see the dogs on your menu. The dogs are the ones that don’t sell, or the ones that do sell, but cost you money to sell. You don’t want dogs. You want stars. You want popular, high-profit menu items. Get rid of the dogs, highlight the stars. Encourage people to purchase the higher priced items on your menu.
  5. Waste sheets. All causes for waste are avoidable and are a direct result of a lack of management and training. Waste includes a burned steak, food that spoiled because it was buried in the back of the walk-in and wasn’t rotated properly, and serving portions that are too large (this ties in to the importance of recipe costing cards). The waste sheet includes what the item was, that it was wasted, why it was wasted and how much that cost. Some people also like to put how much money it would have been worth if you sold it. Keep track of what gets wasted, and you’ll see a drop in waste. It’s an automatic drop in your food cost.

Lean, mean, fighting machine

Whether we’re in a recession or not, these things will impact your bottom line. If you’re already doing these things, I think there are probably places you can still trim. Go back and look at the areas where you can make a difference.

And just imagine. These five suggestions focus purely on cost of goods sold. That’s just one area within your restaurant. There are margins all over your restaurant where you can have an impact.

David Scott Peters TheRestaurantExpert (1)

David Scott Peters is a restaurant expert, speaker, coach and trainer for independent restaurant owners. He is the developer of SMART Systems Pro, an online restaurant management software program helping the independent restaurant owner remain competitive and profitable in an industry boxed in by the big chain restaurants. He is best known as the SMART Systems guy who can walk into any restaurant and find $10,000 in undiscovered cash before he hits the back door… Guaranteed! Learn more at www.TheRestaurantExpert.com.