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In hard times, control costs instead of hiding your inefficiencies by just pumping up volume

In good times operators focus solely on sales building and tend to overlook the industry’s endemic root problems and dependencies, like the cost of labor, yields, throughput and turnover.

As the old saying goes, “Volume can hide a multitude of sins.”

But now the foodservice industry is getting tougher than a woodpecker’s lips. So while the No. 1 way to improve costs is to increase sales, it’s just as wise to consider some fundamental effective strategies for reducing costs too.

Remember, all money is not created equal: $100 in sales is $100 less taxes and expenses; $100 in savings is $100. Here are some fiscal fundamentals to review and execute with your team in both tough times and boom times.

Teach everyone something new daily. Restaurants don’t go out of business because they run out of cash; they go out of business because they spent their money on the wrong things. Look closely at what you invest in. The more you spend on training, the less you’ll spend on advertising, and the more you spend on development the less you spend on turnover. It’s important to be good at hiring the right people, but it’s more important to be able to develop those people. Experience teaches only the teachable.

Value tenure over turnover as a measure. It’s better to know how long hourly crewmembers stay with you than how many left. What does “100-percent annual turnover” really mean? That everyone on the team left once in the last year? Or is that four positions turned over 25 times? Track average tenure, how long people stay with you by position, instead of just turnover. Then start new training or incentives several months before the average jumping-off date to see if you can’t extend their tenure and lower your hiring, training and replacement costs.

Pay attention to portioning. Someone once said, “You can learn a lot by hanging around the dirty end of a dish machine.” Audit your trash and note what customers aren’t eating. Then consider smaller ladles and new training.

Improve yields. Sharpen the blades, cutters, dicers and knives. Reassess recipes and discuss weekly how you can improve prep costs, portioning and energy bills with your managers, kitchen team or servers.

Try the bartering system. Smart bartering allows you to market and save your way through the downturn. Trade radio or TV airtime for your gift cards, so no money is exchanged. You also may realize additional tax benefits. If you barter, don’t forget to invest a like amount of dollars in both scheduling and training your managers and crew how to handle and better serve the expected additional business. Remember: “Great” marketing can kill a “bad” business.

Get your distributors involved. Your foodservice vendors are only as good as you are. Tap their insight, expertise, tools and resources relative to your labor, retention and training issues. If they offer you only competitive pricing but no tools to help you market and sell or better use the product, goods or services they provide for you, then find a better partner. None of us is as smart as all of us.

Hold “make-more-money, lose-less-money” meetings with your staff. Your hourly crew and managers sometimes can identify better ways to make more money or save more money than even the managers can. The problem is that most companies and managers never ask them to consider and contribute. Solicit their ideas and reward the best contributors with a 20-percent “commission” on the total amount of money their idea saves the company.

Manage your time and manage your schedule. “When we think of restaurant inventory,” says consultant Jim Laube, “we normally think of food, beverage, canned goods, frozen goods and paper goods, but our real inventory is time.”

So true. The reason many GMs fail to hit sales and cost targets is because they invest their time in—and on—the wrong things. Make certain that everyday you’re getting the “Big Rocks” in place first.

“Don’t get bogged down on Tuesday with Monday’s priorities,” says Joe Gattas, a multiunit manager with the Checkers-Rally’s brand. “Finish your day before starting the next one, or you’re always playing catch-up. That doesn’t mean you get everything done on your Monday list, but it does mean that you get the important things and the big things done, priority-wise.”

Measure steps as well as portions. Carefully assess how each position works and how each accomplishes the job. Are there ways to minimize slips, spills, hazards or task redundancies? Are there quicker, more efficient ways to organize equipment and workstations around people and tasks?

Reduce turnover 25 percent. Labor is not your biggest controllable cost, retention is. Here’s a quick tutorial: If your annual unit turnover is 125 percent and you have 60 employees on your team, that means you hire and train 75 new employees every year. Let’s presume that it conservatively costs you $500 to do so. That’s an annual recurring cost of $37,500. If your annual unit sales are $1 million and you make 10 cents on each dollar you’d have to generate $40,000 in sales—the first 145 days of each year—just to cover your turnover costs. So a 25-percent reduction in turnover is huge in what it saves you and also in what it doesn’t cost you.

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