Tag Archives: Food industry

The Food Business Isn’t Just Food

It’s Foodie Friday and the topic today is business. I know: that’s pretty much the topic every day, but let me explain. I read an article on one of the restaurant sites I frequent that spurred a thought that goes beyond the restaurant business.

Photo by Helloquence

The piece was all about the financial statistics a good restaurateur needs to watch. I’m always surprised when a place with good food in a great location goes out of business but it seems to happen a lot. Sometimes it’s that the chef leaves and things slide downhill but more often than not it’s because the business part of the food business overtakes the food part of the food business.

One needs only to watch an episode or two of the show Restaurant Startup to see how a food business is not especially different from any other startup. I assume what I’m seeing on the show reflects the new restaurant world at large and today’s article confirms that belief. Many of the contestants have no clue about the first, and maybe the most important statistics any startup needs to grasp: Cost Of Goods Sold. In a restaurant, that’s food. In a service business, we usually call it cost of sales. In either case, it’s the cost of producing whatever it is you’re selling. You’d be surprised how many businesses don’t know this number.

That number is part of a bigger one called overhead, which includes rent, salaries, services such as accounting and legal, and things like keeping the bathroom clean (your restaurant has one; hopefully, so does your office). These numbers are critical because if you charge too little for what you provide you won’t be in business very long, and you can’t figure that out unless you know your monthly nut.

Once you have the Gross Profit (or Gross Income) number, you can subtract your expenses to get Net Income or Net Profit. Divide that by your sales and suddenly you have a profit margin. That’s something you can use to benchmark your results against other businesses of the same type. In the restaurant business, it’s generally not very big, which is all the more reason why a complete grasp of the numbers is critical. There isn’t a lot of room for error.

I spend a lot of time with my clients on their numbers. It’s not just so that they can present themselves well to potential investors either. Like your web traffic or any other piece of data, they can illuminate a lot and help you make critical decisions. Ignore them at your own peril.

By the way, I’m writing this as a sort of thank you to my late brother who was my CPA and who beat accounting into me many years ago. He passed 5 years ago next week and I miss his guidance and the clicking of his calculator every day.

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Filed under food, Helpful Hints, Consulting

No Waffling Here

It’s Foodie Friday and this week I’d like to have us reflect on that great Southern institution The Waffle House. It seems that one trips over a Waffle House every few miles here in the South and there’s a reason for that. It is a beloved place and not just among the stereotypical audience one might suppose. Watch this clip from his Parts Unknown show in which Anthony Bourdain discovers the wonders of the place and you’ll see how even chefs respect it. As the clip hints, there are few better places for one to land having been a little overserved and possessing an appetite.

Photo courtesy Nick Gray

What can any of us learn from this? A few things, I think. First, consistency. You can say you don’t like the food but you can be sure that whenever or at whichever Waffle House you order it from you’ll get the identical dish. It is consistent beyond belief, including how each dish is plated. That’s hard for a single restaurant to do all the time. To have over 2,000 places doing it is pretty unbelievable.

It is efficient. There is a code for servers and cooks involving placement of jelly packs, butter, and other condiments on the plate that allows cooks to work on many orders simultaneously without messing anything up (check out the photo).

It is clean. One might think that a place open 24 hours a day would begin to get a little worse for wear. Not a Waffle House. They are constantly sweeping and cleaning. I think we’ve all experienced something “off” at less-upscale restaurants. Dirty silverware, food residue on a plate or a grimy floor. Not here. I get that your business might not be serving food, but a sense of order reflected by attention to detail is a trait your customers want, something the constant cleaning provides in this case.

It is transparent. Because the kitchen is open, you can see the wonder of each order being made. It instills a feeling of confidence since the kitchen has nothing to hide. The eggs are fresh (I’m told the chain uses 2% of all the food service eggs in the country), not powdered and the other ingredients are clearly fresh as well.

It is personal. Because every plate is cooked to order, it is made exactly the way the customer wants it.

It isn’t vanilla. What I mean by that is that it has its own style and even its own language. Where else can you go and order something smothered, chunked, covered, diced, and several other ways as one can with Waffle House hash browns?

Finally, it is reliable. It’s always open, so much so that there is an unofficial “FEMA test.” If the local Waffle House is closed, a location is undergoing some sort of disaster which may require FEMA intervention.

Each one of the aforementioned qualities is one our own businesses should possess.  Ideally, they have them all. Does yours?

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Filed under food, Consulting, Thinking Aloud

What Restaurateurs And Founders Share

It’s Foodie Friday, and this week an article on a restaurant trade site caught my eye. It’s all about the things restaurant owners wished they’d known when they decided to open a place. Having spent a lot of time working with startups, what I find interesting is that many of their statements are not unique to the restaurant business. In fact, I’m willing to bet that you will nod your head in agreement with these if you’ve even started a business or worked with one in its early stages. You can read the entire piece by clicking through here.

Photo by Bank Phrom

First and foremost, the time involved. One owner said she wished she’d known “That I was going to spend the first couple months basically living in the store and two years married to the business. 86 my social life!” I’m often amused at the founders who still have side gigs, especially if those gigs are not consulting positions that are very flexible. One startup with which I’m working has two founders who don’t seem to be able to focus enough time on their company, and as a result, their progress is very slow. What should have taken them several months has taken them a couple of years. In part it’s a financial decision – the gigs help fund the startup – but I sometimes feel as if they don’t really get that you need to be married to the business, as this owner says.

Another owner wishes he’d known “To have enough money reserved to be able to wait to open the doors to the public.” There is something to be said for throwing a lot of tests out there and iterating, but I’m a believer in making sure you’re putting your best foot forward. That doesn’t mean every beta has to be perfect but it does mean, to paraphrase the words of the old Paul Masson commercial, not selling any product before its time. The world is too cluttered and I’m not sure any business gets multiple chances after a bad customer experience (think about how many apps you’ve deleted recently or a restaurant at which your first meal was your last).

Then there is the point never underestimate the value of private dining. As the owner put it, people wanted a place where it was quiet and personal. I think that makes it as much about the experience as it does the product. Personalization is key!

Finally, I love another owner’s point: “To build your squad. We always knew that having good people was important, but I’m not sure we realized how important.” As any business grows, the founders can only do so much and your success is in the hands of the people you’ve brought in and trained. Your job as a manager is to help your team to do their jobs, but it’s also to be sure that every person is carrying their load. Nothing will bring a business down faster than a weak link in the chain that causes resentment among the rest of the team. Hire well, don’t be afraid to admit you’ve made a mistake with a hire if you have, and do everything in your power to retain great talent.

Yes, the food service business is different in many ways (you probably don’t have the health department visiting nor do you deal with many cuts and burns), but as the piece demonstrates, every startup faces many of the same challenges, don’t they?

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Filed under food, Consulting, Thinking Aloud

Offer Fewer Fries

This Foodie Friday, I want us to think about less being more. Specifically, it’s the balance between quality and quantity. I’m of the opinion that when it comes to food, high-quality ingredients expertly prepared are more satisfying than a large portion of bland, low-quality food.

Photo by Stephanie McCabe

For example, think about a bread basket that arrives at your table. Rich, dense bread slathered in high-quality butter is not something you’d eat much of. Compare that with a bunch of Wonder Bread and store-brand butter that you might have at home. The latter is tasteless and not satisfying and I’ll bet you eat more of it.

McDonald’s proved this point in 1990 when they stopped frying their fries in beef tallow. It was a knee-jerk reaction to people believing that trans fats were better than natural fats (turned out to be totally wrong). The fries never tasted the same and, more importantly for our discussion today, were not as filling. I’m convinced that the reason we have supersized portions is that the current fries are so unfulfilling. It’s probably why we have an obesity problem as well. I suspect there were cost-savings too, but are those savings worth ruining the reputation of your signature product?

Look at Europe. France and Italy, two fantastic food cultures, don’t serve you big portions and yet it’s hard to walk away from a meal in either place still hungry. The dishes are rich and tasty. High fat? Sure. Caloric? Yes, but you don’t eat as much. For the restaurant, this can mean lower food costs (smaller portions) which might be taken as higher margins or passed along to customers. You can’t really eat a huge portion of fries cooked in duck fat, believe me.

This is a principle which I believe any business can use. Consumers don’t want (or need) tons of low-quality products. Sure, they might be duped into thinking of them as great values (“Look at that portion!”), but over time your customers realize that they’re not really satisfied.

Example: think of Word or Excel. They are extremely complex products and yet most users take advantage of a tiny amount of that complexity. Why not offer a simpler product to the masses that cost less and save the complex version for those people who really need it (and charge them accordingly?). You can find articles dating back over a decade complaining about Word’s complexity and yet it wasn’t made simpler.

Less can be a lot more. Think about offering fewer, but much better, fries. People can be satisfied with less as long as it’s top quality at an affordable price. I’d rather be sated and healthy than hungry and sick. You?

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Filed under food, Huh?

Does Your Business Serve Pu-Pu Platters?

This Foodie Friday, I’m inspired by the memory of a long-closed (by the Health Department as it turns out) restaurant called South Seas. It served very large “exotic” drinks – Zombies, Scorpion Bowls, the full range of tiki bar delights – and the first pu-pu platter I’d ever encountered.

My high school friends and I would often meet up at South Seas to gather in front of a glowing pu-pu platter. The center was a grill, fueled by Sterno I think, on which we could cook something from the mound of delights surrounding it. Of course, everything had been fried and I was never quite sure why one would want to further cook an egg roll, but it was very foreign and wonderful. Of course, since they would serve both the food and the drinks to anyone (the drinking age was 18 but our 18th birthdays were a few years away – sorry Mom), I might be misrecalling how good the food was, but I really loved it.

It’s the pu-pu platter that triggered the business thought. While most of us had after-school or weekend jobs of some sort, none of us really had a ton of disposable income for food. The Pu-pu platter solved that problem by being a cost-effective alternative to having to order several different plates. We could graze as we saw fit without having to commit to one dish. As I think about it now, many other types of cuisine offer their version of a pu-pu plater: the mixed antipasto (hot or cold) most Italian places serve, the popularity of tapas places  (you’re sort of constructing your own pu-pu platter as your order many different little plates), heck, even the canape platters they pass around a cocktail parties are pu-pu platters in my mind. And I think there’s something your business can take away from that.

The pu-pu platter or antipasto plate lets the customer sample multiple facets of your kitchen. It lets them understand the quality and variety of what you offer without their having to make a major commitment. That’s not a bad idea for any business. Free consultations and low- or no-cost trial periods are one way to deliver this. Offering a little bit of everything, much like a country store does, might be another. I hasten to add that anything you do offer needs to be of the same high-quality as your main product or service offerings.

When I see a pu-pu platter on a menu these days, I’m still tempted to order one so I can have a little taste of everything. Keeping a pu-pu platter mindset might just be a way to grow your business, don’t you think?

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Filed under food, Growing up, Consulting

You’re Bacon Me Crazy

This Foodie Friday, I come to you with a perfect example of how businesses often get things wrong. I hear you wondering how anything involving bacon can go wrong, but stick with me here and I think you’ll understand my distress.

English: Uncooked pork belly bacon strips disp...

(Photo credit: Wikipedia)

It was widely reported this week that scientists in China have created 12 healthy pigs with 24% less body fat. If you care to read all about it, the results were published Monday in the Proceedings of the National Academy of Sciences. I didn’t bother to read it because it makes me both sad and angry. From my perspective, most pork we get in this country is already too lean. Fat is flavor, and most of the pork we get has very little. The exception is bacon.

I use bacon the way many cooks do. Sure, I bake it and eat it as part of a full breakfast (put a little Old Bay on those bad boys before you bake them – a revelation!). Rendered down, it yields lovely fat in which to saute your aromatics and get any recipe off to a great start. Wrapped around a lean cut of meat, it prevents that cut from drying out. And who doesn’t love to toss some lardons into salads, omelets, pastas, grilled vegetables, or potatoes? Lean bacon defeats the entire purpose of the cut!

OK, most of the above was a little tongue in cheek, but there is a real point to be made here. When we try to “improve” a product we just might end up destroying it. Lean bacon is a solution in search of a problem, and that is the kiss of death to any offering most of the time. Putting aside the issues many people have with genetically engineered food (this was achieved using CRISPR), there are already many lean alternatives to bacon. OK, it might be a stretch to call them “bacon” but they exist.

None of us can afford to waste time figuring out a problem for something we’ve produced. The process works the other way around. Listen for problems that your intended customer base is having and then find a solution. Much of the time, successful entrepreneurs had the problem themselves, found a solution, and then helped others with the same problem. The camera phone, for example, came about when a new father wanted to send a photo from the delivery room (true story).

As you’re moving along in your business, ask yourself if you’re solving peoples’ problems or if you’re trying to find a use for your solution. Hopefully the former!

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Filed under food, Consulting, Huh?

They Don’t Make It Like That Anymore

This Foodie Friday I am going to run the risk of sounding like the grumpy old man I’m slowly becoming. Rather than admonishing you all to get off my lawn, I want to share the sentiment I had a week or so ago as I fired up my smoker. My smoker, or as it’s lovingly known, “The Beast”, was made by the New Braunfels Smoker Company at least 20 years ago, How do I know that? Well, that’s today’s food and business thought.

The Beast is made of heavy steel that’s quite thick and it weighs well over 100 pounds even without my usual load of meats inside. As I was cleaning up the old Rancho Deluxe to get ready for its sale, the smoker was one of the very few things that I was adamant about saving for the move. Why was that, especially when I also gave away or junked a Caja China and two other grills? In a sentence:

Because they don’t make them like that anymore.

The New Braunfels Smoker Company was sold to Char-Broil 20 years ago. Almost immediately, the quality of the products went downhill, and this was especially noticeable on the gauge of the steel. The steel was thinner and didn’t hold heat as well. When a rust spot developed, it was difficult to sand and paint it without almost going through the area that has rusted. The products were similar in design and name, but that was about all that was the same. The bbq forums, home to serious meat smoking aficionados like me, were deluged with negative comments and, more importantly to the business, better alternatives to what had been a superior line of smokers.

This is something from which any business can learn. We’re always under pressure to improve our margins. Some folks look to cheaper materials, other to cheaper, less-skilled labor, and still others to cutting customer service. Sometimes we just skimp on quality control. While margins might improve, there is a strong chance that revenues will decline as the customer base figures out that “you’re not making it like that anymore.” As an Apple user, I recently switched to a Chromebook because my Mac OS isn’t as smooth and there are glitches that were never an issue before. For you cooks out there, Pyrex changed their formula and “new” Pyrex is not as good. Recent Craftsman tools, once the industry standard, are now made in China and aren’t nearly as good. I can go on and I’m sure you can as well.

If you’re successful, resist the temptation to cut corners. People notice (so does your staff). Don’t be part of a conversation that claims you don’t make it like that anymore.

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Filed under Consulting, food, Huh?