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R i
Recipes C
Costs
t For
F YYour
Food & Beverage
Operations
SlideShare Presentation
Westerville, OH May 8, 2013
© 2013 Return On Ingredients LLC P.O. Box 2387 Westerville, Ohio 43086-2387 614.423.4410 Fax 614.340.7946
Request to have this presentation conducted live for your association, group or event at
info@ReturnOnIngredients.com
Mark Kelnhofer
• BA in Accounting and Business Administration in 1993
• Masters in Business Administration (MBA) in 2005
• Ohio Dominican University, Columbus, Ohio
• Manufacturing Cost (1993 – 2013)
• Plastics, Lighting, Tire Repair Kits, Buses, Restaurants
• Bravo/Brio Restaurant Group (2002 – 2010)
• Return On Ingredients (2009 – Present)
• Bravo/Brio Restaurant Group,
Group Eddie V’s
V s, Pistacia Vera,
Vera Bob Evans
Farms, Gordon’s Gourmet, Midwest Culinary Institute, Luce,
Crème de la Crepe, Cooper’s Hawk Winery, Zauber Brewing Co.,
Hospitality USA
4.2% = $ millions in savings
Return On Ingredients LLC P.O. Box 2387 Westerville, Ohio 43086‐2387 614.423.4410 Fax 614.340.7946
Return On Ingredients® and its logo are registered trademarks by Return On Ingredients LLC
Brio Tuscan Grille – Easton Town Center
Columbus, Ohio
Bravo! Cucina Italiana
Virginia Beach, VA
Bon Vie – Easton Town Center
C l
Columbus,
b Ohi
Ohio
Mark Kelnhofer
• Restaurants
• Casinos
• Hotel & Lodging
• Sports Arenas
• Hospitals
• Colleges and Universities
• Catering and Banquet Centers
• Theme Parks
• Horse Race Tracks
• ….and others!
Amtrak
Fox Business
News
08/02/2012
Restaurants vs. Manufacturing
RESTAURANTS MANUFACTURING
Ingredients Raw Materials
Restaurants vs. Manufacturing
RESTAURANTS MANUFACTURING
Prep Production Work In Process
Restaurants vs. Manufacturing
RESTAURANTS MANUFACTURING
Menu Item Finished Goods
Restaurants vs. Manufacturing
RESTAURANTS MANUFACTURING
BOH (chef)
( h f) / Di
Direct
t Labor
L b
FOH (bartender)
Restaurants vs. Manufacturing
RESTAURANTS MANUFACTURING
FOH (Waiter/Waitress) Indirect Labor
Restaurants vs. Manufacturing
RESTAURANTS MANUFACTURING
Recipe Bill of Material
Restaurants vs. Manufacturing
How do you
respond to
higher food
costs?
Commodity Research
The Dick Pope Institute for Tourism Studies, UCF Rosen College of Hospitality, Parsa/Green/Terry
Restaurant Failure Rate
The Dick Pope Institute for Tourism Studies, UCF Rosen College of Hospitality, Parsa/Green/Terry
Restaurant Failure Rate
Controls
“A
“According
d to the
h National
N l Restaurant
R Association
A (2009),
(2009) a
typical restaurant in America earns a net profit under 10%. That
means 90% off revenues are used to deferf the cost off doingg
business. Thus, managers that do not understand the importance
of cost controls are bound to fail in the restaurant business. Two
major
j costst in
i the
th restaurant
t t industry
i d t are foodf d costt andd labor
l b
cost. These two costs together are referred to as prime costs. For
a restaurant to succeed, the pprime costs are expected
p to be less
than 60% of revenues. It is a ‘rule of thumb’ and a good rule to
follow. Most restaurants that have failed often were found to have
prime costs exceeding 60% indicating greater potential to
failure.”
The Dick Pope Institute for Tourism Studies, UCF Rosen College of Hospitality, Parsa/Green/Terry
The Missing Link
Spanish,
S i h GGreen, etc.
t
Diced? Minced? In house?
Recipe Writing
P
Precooked?
k d?
Recipe Writing
Mi
Minced
d or cloves?
l ?
Recipe Writing
I di d or Kosher?
Iodized K h ?
Recipe Writing
5 6 6x6,
5x6, 6 6 Green,
G Heirloom,
H i l Ch
Cherry R
Roma?
?
Recipe Writing
Th yield
The i ld or end
d result
lt iis required
i d for
f costing!
ti !
Recipe Writing
Weights & Measures
• We p
purchased ‘Basil,, Fresh’ at
$8.50/# or $0.531/oz
BASIL PICKED
Ingredients Quantity UOM Cost Extended
Basil, Fresh 16.0 oz $0.531 $8.500
Yield 11.0 oz
P&D 31/40
/ SHRIMP THAWED
Ingredients Quantity UOM Cost Extended
P&D 31/40 16.0 Oz $0.344 $5.500
Shrimp, frozen
Yield 14.2 oz
• Th
The new it
item ‘P&D 31/40 ThThawed’d’
now has a correctly stated value of
$0 387/oz or $6
$0.387/oz $6.19/#
19/#
Batch Recipe Example #3
• We p
purchase ‘Lobster Bisque
q Soup’
p
by the bag/8# for $16.95 bag.
• Th
The new it
item ‘L
‘Lobster
b t BiBisque S
Soup
Yielded’ now has a correctly stated
value of $17.30/gallon
$17 30/gallon or $0
$0.136/oz
136/oz
Batch Recipe Example #4
• We p
purchase ‘Bananas’ for
$0.513/#.
BANANAS PEELED
Ingredients Quantity UOM Cost Extended
Bananas 16.0 Oz $0.032 $0.513
Yield 10.5 oz
• Th
The new it
item ‘B
‘Bananas P
Peeled’
l d’ now
has a correctly stated value of
$0 049/oz or $0.782/#
$0.049/oz $0 782/#
Packaging
• Packaging
g g is p part of the raw
material cost, similar to the
ingredients
• Packaging includes:
• Bottles, lids
• Boxes
• Labels
• Wraps
The Costing Problem
Ingredients
Prime Cost
Ingredients Labor
Total Cost
Ingredients Labor
Overhead
Total Cost Breakdown
Labor & Overhead Costs
• Stopwatch
p time motion study y
• Must be in a live environment
• Must be a controlled test
• Must be the personnel that will
actually
y execute the recipes
p
Batch Recipe Example
Prime Cost
• We p
purchased ‘Basil,, Fresh’ at
$8.50/# or $0.531/oz
BASIL PICKED
Ingredients Quantity UOM Cost Extended
Basil, Fresh 16.0 oz $0.531 $8.500
Labor 0.167 hr 15.66 $2.616
Total $11.116
Yi ld
Yield 11 0 oz
11.0
• Based on budgeted
g expenses
p and
direct labor hours (BOH) by location.
Overhead
Rate
Overhead Rates
Predetermined Overhead Rate
Source: chathamhillwinery/blogspot.com
Wine Glass Pour Costs
750ml bottle
Bottle cost $8.99
fl. oz. 25.3613
fl. oz. cost $0.354
Pour cost $2.127
Standard recipe pour = 6.0 fl. oz.
Item Description Qty UOM Unit Cost Extended
½ BBL
Keg cost $89.00
fl. oz. 1,984
fl. oz. cost $0.0449
Pour cost $0.718
Standard recipe pour = 16.0 fl. oz.
FOUR HORSEMEN
Item Description Qty UOM Unit Cost Extended
BLACK RUSSIAN
Item Description Qty UOM Unit Cost Extended
1-1/2
fl.
fl
oz.
Outsourced
$3.25/#
Make Buy
y Decisions
$1.00 Made
d In House
$0.80
$5.13/#
Outsourced
$3.25/#
Overhead
$3.33
Efficient Batch Designs
g
Batch #1 Batch #2
Yields: 28 oz Uses
24 oz of
Batch #1
Efficient Batch Designs
g
Automatically incurs 4
oz of waste each time
Batch #1 Batch #2
Yields: 28 oz Uses
24 oz of
Batch #1
Sales Mix & Execution
• Recipes
p are written differently
y for
execution than they are for
costing.
• Execution usually states what utensils
to utilize
• Costing involves weights and
measures
Execution vs. Costing
Execution Costing
BALSAMIC MARINADE
Ingredients Qty UOM Qty UOM
Olive Oil Blended 90/10 3.0 cups 24.0 oz
g
Balsamic Vinegar 1.0 cup
p 8.0 oz
Salt and Pepper Mix 0.25 cup 2.025 oz
Chopped Shallots 0.25 cup 1.20 oz
Chopped Parsley 0 25
0.25 cup 0 45
0.45 oz
Yield 38.0 oz
Menu Level Costing
Menu Level Costing
Prime Cost
Menu Level Costing
Total Cost
Where do I start?
• MBE ((Manage
g By
y Excel))
Takeaway #1
Get the competitive
p edge!
g
The restaurant industry is
hi hl competitive
highly titi andd th
the
current economic factors
f
compound that.
The Top 10 Takeaways
Takeaway #2
The business ffailure rate has
historically been very large.
Use both your culinary skills
and data to keep from
becoming a statistic.
The Top 10 Takeaways
Takeaway #3
Recipe
p costingg is vitally
y
important to the success of
the operations
operations. Recipe
costing can be a science.
Everything can be
accounted for.
for
The Top 10 Takeaways
Takeaway #4
Recipes
p should be written with
more accuracy and details.
In order to cost recipes
recipes, the
details are required!
The Top 10 Takeaways
Takeaway #5
When using g portion
p control
tools, capture the density.
Proper weights and measures
is critical to the accuracy of
the recipe and the cost.
The Top 10 Takeaways
Takeaway #6
When writing g a batch prep
p p
recipes, the yield or the end
result is required to
determine the cost as it
moves through the process.
The Top 10 Takeaways
Takeaway #7
Writingg a recipe
p for
f execution
is very different than for
costing Execution is for the
costing.
line personnel. Costing is
for the management.
You need both.
both
The Top 10 Takeaways
Takeaway #8
Beer,, wine and liquor
q recipes
p
should be accounted for.
Liquor recipes need to match
the POS system for costing
and depletion.
The Top 10 Takeaways
Takeaway #9
This is yyour call to action!
Start the process. If you do
nott h
have adequate
d t ti
time or
skills,, get
g some professional
p f
assistance!
The Top 10 Takeaways
Takeaway #10
To ensure success –
The bottom line is
know your costs!
Plan for success!
Be p
proactive,, not reactive!
Reference Books
Chef’s
Ch f’ BBook
k off Formulas,
F l Yi
Yields
ld & Si
Sizes
Arno Schmidt
John Wiley & Sons
ISBN 10: 0-471-22716-1
Audit to
ACCURATE Improve
RECIPE Efficiencies
ffi i i
COSTING
MENU Benchmarking
ENGINEERING (Actual v.
Theoretical)
JIT
Production &
Ordering
(Dynamic
P
Pars))
Results
• Quality
• Consistency
• Efficiency Improvements
• Discipline
• Cash
• Profits
• Waste
• Inventory Levels
• Costs
Articles Booklet
• “Obtaining
Obtaining Accurate Recipe Costs
Costs”
• “Improve Your Menu Engineering”
• “The
The Case For Theoretical Food Costs
Costs”
• “The Advantages of Just-In-Time”
• “Robust
Robust Supply Chain Management
Management”
• “Line Checks That Create Efficiency”
• Traits of Effective Cost Management”
“Traits Management
http://www.ReturnOnIngredients.com
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