Evolve Or Be Left Behind
Spoke to a friend today. He was in a very bad position. He was in the process of driving up the profitability of his family's business. The first question I asked was to give me a REAL breakdown of his food cost. I say REAL food cost because of a fundamental mistake that a lot of F&Bs make.
REAL food cost is the cost of materials going into the production of a given product. It shouldn't include wastage, pilferage and a kitchen not following your recipe card. Too many F&Bs define food cost by just looking at the raw materials they order across the different food they sell.
When you do it this way, you are unable to pick up pilferage, wastage at the prep and final product level and also because your kitchen or central kitchen's unwillingness to follow your recipe (which is a huge problem because your food consistency is impacted).
The problem he had was that in the past his family's business was very profitable and they didn't heed to much attention to all these important facets of running an F&B. Now, they are in the red, but even then, they seem reluctant to move forward and adopt the proper technologies because 'that's not how they run it in the past'. And it's a real shame because the adoption of the proper systems isn't an expensive project at all.
What many of such businesses don't know is that they have stagnated. The playing field had changed tremendously. Where in the past you just needed to have a good location, and with average food, the crowds would come in. Things have changed so much, consumers are spoilt by choices, we make decision based on social recommendations, we even have delivery options, etc.
In short, what worked in the past, what was a winning formula, might no longer be relevant.
What was sad that even though the company is in the red, they still think tracking food cost isn't important. I can't help by contrast this with some of my customers. Although they might be much more profitable, they run their business with huge disciplined. Looking at food cost religiously, scrutinising SOP for recipes and tracking wastage and pilferage on a weekly basis. They pay so much attention to details because they are preparing for their future growth. They understand the importance of building strong fundamentals to support accelerated growth in the future.
As a business, we really need to look within and keep improving. Relying on what worked 20 years ago really might not be the best strategy moving forward.