|
Restaurants Trade Articles
Software and Hardware
Sales and Marketing
Customer Service
Staffing & Employment
Billing and Accounts Receivable
Vendor Relations and Purchasing
Restaurants Insurance
Restaurants Communication
Software & Hardware
At one time or another, many folks have thought about
owning a restaurant. Whether dreaming of opening a tiny
country kitchen or establishing a white tablecloth bistro, a
number of entrepreneurs apparently like the idea of cashing
in on culinary creations.
Currently there are more than 925,000 restaurant locations
nationwide, making it clear that the food service industry is
on fire.
According to the National Restaurant Association,
restaurants accounted for 47.5% of annual food sales in 2006
alone, generating approximately $511 billion. They employ
12.5 million people, making the industry the largest employer
outside of government. The industry as a whole raked in
approximately $1.4 billion on a typical day this year,
proving theres more feast than famine in the restaurant
world.
Like every business owner, restaurateurs must ultimately make
everything work to the bottom line. Without a solid
management infrastructure, the eatery most likely will go up
in smoke. Technology has played an important role in helping
those in the industry stay organized.
In the past decade, software companies have released new
programs and hardware designed to help restaurants become
more automated. From point-of-sales (POS) systems and
table-management software to wireless headsets and silent
pagers, technology has become fundamental to the restaurant
industry. In turn, the latest wave in state-of-the-art
devices has changed the nature of even the smallest of mom
and pop operations. In many cases, IT trends have translated
to increased revenue as well as better customer service.
Most restaurants today use a centrally located,
computerized point of sales POS system. These
devices, which essentially look like a touch-screen, allow
the server to place an order efficiently without ever leaving
the dining room floor. POS systems often include features
that update the restaurants accounting software with
line-item sales info from that particular day.
The waiters and waitresses of yesteryear relied on a
flimsy paper pad and pen to record orders. Once they finished
writing up the customers selections, they usually had to type
up the info into a printing system. They would then pass it
onto the cooks. By the time this whole process took place,
five or so minutes already passed.
Realizing the importance of time management, a number of
restaurants now use Wireless Handheld Order Processing
Systems to deliver meals to patrons more quickly.
Wait staff members carry these PDA-like devices, entering the
order right at the table. The system then breaks down the
order and transmits the info via frequency waves to touch
screens at the appropriate food and drink stations. When each
food prep area finishes their part of the order, they press a
complete button on their stations touch screen. When the
entire order is ready, it appears on the server screen of the
handheld processing system.
Pay-At-Table Devices are revolutionizing the
way some restaurants close a tab. As where customers once
stood in line to pay, or waited for the waitress to track
down their check, this wireless technology now let patrons
settle their bills quickly and efficiently. The wait staff
accesses the tables entire ticket with a click of a button on
the portable device.
Whether the patron uses credit, debit or cash, the
pay-at-table terminal processes the information and prints
out a receipt in front of the customer. Nonetheless,
pay-at-table devices do much more than merely cut back on the
amount of time it takes for a transaction. Since patrons
using credit or debit enter the information themselves and
never hand over their cards, these terminals greatly reduce
the chance of identity theft.
Diners Eat Up Cyber Ordering
According to the National Restaurant Association, 31% of
restaurant consumers used the Internet to view a menu in
2006. Realizing even Web surfers get hungry, a number of
restaurateurs now strive to flag down this Internet traffic.
Many do so through Online Ordering Systems.
This software is designed to let customers view a restaurants
menu and place an order via the Internet. The food order is
then sent to the establishment as a fax or as a message to a
specific computer touch-screen.
Many of the latest online ordering systems are easy to
setup and maintain, often significantly boosting a
restaurants profitable takeout business.
These ordering systems usually record reservations over
the Internet as well. Aside from helping to eliminate double
bookings, online reservation systems offer a number of
benefits. For one, they let customers book a table when the
restaurants not open, securing that patrons business rather
than having them seek out an open establishment.
Many online reservation features automatically generate
conformation and reminder emails to the guests. Some even
allow customers to cancel a reservation or change the party
number via the Web.
Hunger for Technology
Full service restaurants spend approximately 28% of their
revenue on food costs, and limited-service operations spend
about 32%. With such a large portion of income going toward
edible supplies, its vital that restaurateurs properly
oversee their perishables.
Inventory Control Software is designed to
help track supplies and reduce duplicate purchases, over
buying and food waste. Although these programs dont eliminate
the need to take a weekly inventory, they can help control
and curb losses. Most inventory software includes features
that track vendor invoices and keeps a history of each
transaction.
Some IT companies even sell Food Cost
Software that recalculates the price of menu items
and recipes based on cost increases of vendor ingredients.
This software also conducts detailed expense reporting for
supplies and services.
Back to top
Sales & Marketing
[top]
Methods for promoting a restaurant are as varied as the types
of restaurants there are to promote. In any case, the main
marketing objective is to attract new and returning
customers.
Getting the Word Out
When marketing a restaurant, paid advertising obviously
represents an effective tool. However, earned publicity also
works to build an eaterys name. Through press coverage and
positive food reviews, a restaurant most likely will enhance
its credibility and community standing.
One way to gain such media coverage is through community
service. Many restaurants hold charity drives, donating a
portion of their earnings to a local cause. Others contribute
food to fundraisers, provide prepared meals to shelters and
food banks, encourage employees to partake in volunteer work
and sponsor special events in the parking lot of the
restaurant. Some of the most successful publicity campaigns
take place over an extended period of time for maximum
exposure. Sponsorship also presents a popular marketing
technique used by restaurants. Many brand their services by
providing promotional items like t-shirts, bumper stickers
and other give-aways.
A Taste of the Business
Customers love to know what goes on beyond those large,
swinging doors that lead to the kitchen. Offering a behind
the scenes look not only educates the public, but just might
boost business sales as well. Restaurant Tours
are a popular way to draw curious diners.
Everything that occurs in a restaurant represents a
potential walkthrough opportunity. From how decorators go
about floral arrangements to food preparation, the
intricacies of the operation can be used to sell the
services.
The Daily Special
Sometimes something as simple as redesigning a menu can
attract new customers. For this reason, there are a number of
print and design companies devoted solely to menu creation.
Studies show a good menu redesign can improve sales an
average of 2% to 10%. Graphic firms specializing in
restaurant menus usually offer a wide variety of looks, paper
styles and binders. These companies use placement strategies,
pictures and written descriptions to direct customers to
order specific items.
Convenient Cuisine Equals Sales
As the time for home meal preparation continues to shrink,
the restaurant industry has seen an upsurge in the purchase
of or Takeout. A wide-ranging to-go menu helps
attract time-pressed customers while freeing up dining room
space and boosting the bottom line. In fact, some 44% of
restaurant operators anticipate takeout orders will represent
the largest portion of their 2006 sales, according to the
National Restaurant Association.
Today, most restaurants treat takeout as an integral part
of the operation rather than an afterthought. Many chains
have even added a drive-through window where customers pick
up orders on the fly. In other instances, restaurants are
making room near the entrance of the building for convenient
parking, often designated as the takeout spot.
Welcome Back
Traditionally,Frequent Diner Programs have been
used as a marketing tool to stir up repeat business. While
they might be a bit dated, they still work today.
Some restaurants issue designated cards for customers to
record points, while other establishments merely use the
patrons credit card to track the number of visits. Either
way, these incentive programs build customer loyalty and keep
folks coming back with friends.
A Virtual Feast
Dining Web Sites have come a long way in the
past few years. Design companies present an array of packages
aimed at making the restaurant site experience more
interactive for the visitor. Some techniques include online
comment cards, e-mail clubs, sections where consumers enter
their personal food preferences, etc. A share of the latest
restaurant Web sites also post calendars of promotional
events, online gift certificate and card purchase options,
employment applications and so forth.
Location is everything in the food business. However,
getting folks to find that particular place is not always
easy. Now instead of the customer calling for directions,
certain sites link to navigational Web sources like
MapQuest.
As many entrepreneurs will attest, strong
business-to-client relations represent the best form of free
marketing available. For this reason, a number of
restaurateurs are including personal stories on their Web
sites about their venture into the industry.
As an added perk for the visitor, many post links to other
businesses in the hospitality and entertainment industry,
like local movie theaters and hotels. Some restaurants even
work with other local attractions to create online package
deals such as dinner and a movie.
Along with entertainment value, todays restaurant sites
also provide important logistics.
They allow potential patrons to view the dcor of the
restaurant, the price range and hours of operation.
Back to top
Customer Service
Selling great food represents only one part of the equation
for prosperity in the restaurant market.
Above all, its a service industry. Quality service -- in
many instances -- is what tends to set apart one eatery from
the next. Simply put, the best cuisine in the world wont
necessarily lead to returning customers if the service lacks.
Only 14% of clients leave a business because of the product.
On the other hand, 68% leave because of poor treatment by
employees, according to Customer Focus Incorporated - a
market research firm.
Customer Service Consultants provide
training and strategic planning to make sure employees share
the same goal to satisfy patrons. A number of service
insiders teach that good customer relations dont merely take
place tableside. Many times they actually start long before
the patron ever arrives. When a customer calls for
reservations, consultants focus on making sure the phone is
answered promptly and courteously. These HR specialists work
to help the eatery enact a system of checks to minimize
mistakes and lost reservations. According to leading
hospitality polls, customers rank personalized service top on
their list of what makes an outstanding restaurant.
When the customer does arrive, consultants recommend the
staff welcome him or her by name. Ms. Smith, your table is
ready goes a long way in creating a memorable impression and
hopefully a repeat patron.
Attention to detail is the key. Customers want value for
the dollars spent, and service is a value-added item.
Low-service quality companies average 1% ROS and lose 2%
market share each year, according to Customer Focus Inc. In
turn, high-service quality companies average 12% ROS and grow
6% each year.
A share of service consultants break down customer
relations into three categories: courtesy, attentiveness and
timeliness. While many restaurants feel they provide this,
consultants help to truly gage quality. Customer Focus Inc.
reports 80% of businesses believe they deliver a superior
client experience, while only 8% of their clients agree.
For this reason, consultants tailor programs to clear up
any disconnect between business and clientele.
Some of the simplest changes to enact involve server
awareness. Most consultants teach restaurant staff to
anticipate their customers needs such as refilling water
glasses and removing empty plates without being asked. Going
beyond good to great is a matter of degree and studying the
patron carefully. If a server notes that the customer is left
handed, a discreet change in cutlery placement tells that
patron the server is paying attention.
Consultants also develop systems to help restaurants to
better bond with their clientele. One common method is a
birthday program that serves up a free dessert and card to
repeat customers on their big day. Other establishments offer
frequent dining bargains, which record points each time a
customer visits. The patron receives a free meal after so
many points.
Many Customer Service Training Firms offer
DVD packages outlining techniques of the trade and tips for
improved courtesy. These companies also tend to hold onsite
workshops and online courses for restaurants with larger
staffs.
Online Resources
For the restaurateur who might not have the time or money to
recruit a customer relations trainer, the Internet hosts a
variety of Web sites designed to help eateries improve
services. Some post weekly tips for wait and bar staff that
provide valuable insight on time management and organization.
Other sites include online forums where industry
professionals can exchange ideas and pointers. More
importantly, these Web sites allow restaurant employees to
learn from each others experiences. Many provide news
articles about new methods for dealing with customers, the
latest industry issues, and trends.
Back to top
Staffing and Employment Issues
Statistics clearly show that theres no shortage in restaurant
industry employees - nor will there be one any time soon. The
National Restaurant Association predicts the industry will
add approximately 1.9 million jobs by the year 2016. This
increase in employment will top off the total number of
people in the industry at around 14.4 million. Though
impressive, this growth trend does not represent new ground
for the restaurant world. Roughly 4 out of ten adults have
worked in the industry at one point in their lives. Even
more, 27% of adults got their first job experience in the
food service field.
When dealing with staff members, theres never one true
method. However, industry insiders feel posing the right
questions to a prospect can increase the chance of hiring a
reliable employee.
Key Questions for Interviewers
A written job description saves time and aids in determining
if the applicant is qualified. It also outlines the businesss
expectations up front, helping avoid first-day surprises for
the new staff member.
Many employment specialists recommend the interviewer not
only identify the job requirements, but also ask the
applicant if they have any personal responsibilities that
would conflict with those demands. The interviewer should
always thoroughly explain the job description. They should
find out if the applicant would be able to perform the
essential functions with or without assistance.
Before the interview concludes, employment specialists
suggest restaurateurs make the applicant show proof of
eligibility to work in the U.S. and to complete the I-9 form.
In addition, employers should ask if the applicant has ever
been convicted of a criminal offense other than a minor
traffic violation. This is particularly important if the
available job requires handling money. If he or she answers
yes, ask for a full explanation. Finally, ask if the
applicant has reliable transportation to get to work.
Hiring the right person can help deter internal theft,
which amounts to approximately $218 per employee annually.
Internal theft can take many forms, including employees
giving free food to friends, taking home restaurant items and
stealing other employees' tips.
Safety First
Folks from all walks of life make up the restaurant industry.
According to the National Restaurant Association, roughly 55%
of employees are female, 54% of staff members are under 30
years of age and 78% live in a household with two or more
wage earners.
Properly training and motivating these individuals is
essential to every restaurants success.
Safety training covers everything from food preparation to
alcohol distribution. Even the simplest of food safety
concepts like portioning, hand washing, glove usage,
equipment-cleaning techniques, thermometer usage, and
determining correct food temperatures must be covered. The
Center for Disease Control estimates approximately 76 million
cases of food-borne disease occur each year in the U.S. Of
this number, roughly 325,000 people are hospitalized and
5,000 die - all the more reason food safety training
represents a top-priority at most restaurants.
When selecting a commercial program for training chefs and
prep cooks, restaurant management should study all the
options. There are many programs for crew level training and
manager certification that are well worth the cost. Whether
using a manual or actual teacher, food safety training tends
to cover several basic areas: Illness bacteria, potentially
hazardous foods, contamination, temperature control,
preparation, presentation, spoilage, preservation, personal
hygiene, delivery, storage, cleaning, sanitizing, and
pests.
Employing Effective Training
Each area of a restaurants operation requires specific
training needs. All employees can benefit from having a
professional trainer who is prepared and knows the
subject.
Nonetheless, should management decide to handle the task
themselves, specialists suggest several approaches.
First, schedule sessions for slow times so that there are
fewer distractions and pressures.
Second, use few words, but clearly explain in detail what
is expected to accomplish the job. Develop a creative
approach and involve the employee, providing examples and
demonstrations as necessary. For instance, show dishwashers
how to stack glasses and explain the importance of that
method. Break information into small pieces and take frequent
breaks. Supervise new employees through the practice period,
but give them room. Most of all, catch them doing things
right and give plenty of positive reinforcement. Praise
often.
Trainers recommend management uses frequent evaluations to
guide employee conduct and motivate positive actions. Set
expectations early on and give them the performance review
form so they know what is expected of them. The employee
handbook should list performance standards so theyll know
exactly how they will be evaluated and what it takes to be
successful. Give frequent feedback.
Team Effort vs. Termination
Regular employee incentives are great motivators. Some
establishments boost morale by selecting an employee of the
month, offering small prizes like movie tickets. Other
restaurants get staff more involved through employee
suggestion boxes. This not only helps employees feel like and
important a part of the operation, it can also provide
valuable marketing ideas.
However, sometimes the best training and motivation wont
prevent the termination of an employee. When this happens,
specialists tell owners not to react, but enact. Remembering
that all terminations should be viewed as a potential for
liability, and even a possible lawsuit, employee policies
should be clearly defined from the beginning. This will help
prevent misunderstandings should a termination occur.
Make sure the employee handbook has an employment-at-will
statement that notes the worker can terminate employment at
any time or be terminated at any time. Management should
carefully document evaluations and performance reviews to
show that the employee understood the job expectations and
failed to meet them. Take the time to follow procedures that
are both legal and humane, and that protect the morale of the
remaining workers.
Cleaning Up
As much change as the restaurant industry has experienced
through the years, there still is more on the horizon. Trends
in public eating habits, nutrition guidelines, and government
regulations will ultimately define the businesss future. With
every consumer dollar spent, an additional $2.34 in sales is
generated for allied industries, making one thing perfectly
clear -- The industry will continue to feed the economy.
Back to top
Customer Service
[top]
Selling great food represents only one part of the equation
for prosperity in the restaurant market.
Above all, its a service industry. Quality service -- in
many instances -- is what tends to set apart one eatery from
the next. Simply put, the best cuisine in the world wont
necessarily lead to returning customers if the service lacks.
Only 14% of clients leave a business because of the product.
On the other hand, 68% leave because of poor treatment by
employees, according to Customer Focus Incorporated - a
market research firm.
Customer Service Consultants provide
training and strategic planning to make sure employees share
the same goal to satisfy patrons. A number of service
insiders teach that good customer relations dont merely take
place tableside. Many times they actually start long before
the patron ever arrives. When a customer calls for
reservations, consultants focus on making sure the phone is
answered promptly and courteously. These HR specialists work
to help the eatery enact a system of checks to minimize
mistakes and lost reservations. According to leading
hospitality polls, customers rank personalized service top on
their list of what makes an outstanding restaurant.
When the customer does arrive, consultants recommend the
staff welcome him or her by name. Ms. Smith, your table is
ready goes a long way in creating a memorable impression and
hopefully a repeat patron.
Attention to detail is the key. Customers want value for
the dollars spent, and service is a value-added item.
Low-service quality companies average 1% ROS and lose 2%
market share each year, according to Customer Focus Inc. In
turn, high-service quality companies average 12% ROS and grow
6% each year.
A share of service consultants break down customer
relations into three categories: courtesy, attentiveness and
timeliness. While many restaurants feel they provide this,
consultants help to truly gage quality. Customer Focus Inc.
reports 80% of businesses believe they deliver a superior
client experience, while only 8% of their clients agree.
For this reason, consultants tailor programs to clear up
any disconnect between business and clientele.
Some of the simplest changes to enact involve server
awareness. Most consultants teach restaurant staff to
anticipate their customers needs such as refilling water
glasses and removing empty plates without being asked. Going
beyond good to great is a matter of degree and studying the
patron carefully. If a server notes that the customer is left
handed, a discreet change in cutlery placement tells that
patron the server is paying attention.
Consultants also develop systems to help restaurants to
better bond with their clientele. One common method is a
birthday program that serves up a free dessert and card to
repeat customers on their big day. Other establishments offer
frequent dining bargains, which record points each time a
customer visits. The patron receives a free meal after so
many points.
Many Customer Service Training Firms offer
DVD packages outlining techniques of the trade and tips for
improved courtesy. These companies also tend to hold onsite
workshops and online courses for restaurants with larger
staffs.
Online Resources
For the restaurateur who might not have the time or money to
recruit a customer relations trainer, the Internet hosts a
variety of Web sites designed to help eateries improve
services. Some post weekly tips for wait and bar staff that
provide valuable insight on time management and organization.
Other sites include online forums where industry
professionals can exchange ideas and pointers. More
importantly, these Web sites allow restaurant employees to
learn from each others experiences. Many provide news
articles about new methods for dealing with customers, the
latest industry issues, and trends.
Back to top
Staffing & Employment
[top]
Statistics clearly show that theres no shortage in restaurant
industry employees - nor will there be one any time soon. The
National Restaurant Association predicts the industry will
add approximately 1.9 million jobs by the year 2016. This
increase in employment will top off the total number of
people in the industry at around 14.4 million. Though
impressive, this growth trend does not represent new ground
for the restaurant world. Roughly 4 out of ten adults have
worked in the industry at one point in their lives. Even
more, 27% of adults got their first job experience in the
food service field.
When dealing with staff members, theres never one true
method. However, industry insiders feel posing the right
questions to a prospect can increase the chance of hiring a
reliable employee.
Key Questions for Interviewers
A written job description saves time and aids in determining
if the applicant is qualified. It also outlines the businesss
expectations up front, helping avoid first-day surprises for
the new staff member.
Many employment specialists recommend the interviewer not
only identify the job requirements, but also ask the
applicant if they have any personal responsibilities that
would conflict with those demands. The interviewer should
always thoroughly explain the job description. They should
find out if the applicant would be able to perform the
essential functions with or without assistance.
Before the interview concludes, employment specialists
suggest restaurateurs make the applicant show proof of
eligibility to work in the U.S. and to complete the I-9 form.
In addition, employers should ask if the applicant has ever
been convicted of a criminal offense other than a minor
traffic violation. This is particularly important if the
available job requires handling money. If he or she answers
yes, ask for a full explanation. Finally, ask if the
applicant has reliable transportation to get to work.
Hiring the right person can help deter internal theft,
which amounts to approximately $218 per employee annually.
Internal theft can take many forms, including employees
giving free food to friends, taking home restaurant items and
stealing other employees' tips.
Safety First
Folks from all walks of life make up the restaurant industry.
According to the National Restaurant Association, roughly 55%
of employees are female, 54% of staff members are under 30
years of age and 78% live in a household with two or more
wage earners.
Properly training and motivating these individuals is
essential to every restaurants success.
Safety training covers everything from food preparation to
alcohol distribution. Even the simplest of food safety
concepts like portioning, hand washing, glove usage,
equipment-cleaning techniques, thermometer usage, and
determining correct food temperatures must be covered. The
Center for Disease Control estimates approximately 76 million
cases of food-borne disease occur each year in the U.S. Of
this number, roughly 325,000 people are hospitalized and
5,000 die - all the more reason food safety training
represents a top-priority at most restaurants.
When selecting a commercial program for training chefs and
prep cooks, restaurant management should study all the
options. There are many programs for crew level training and
manager certification that are well worth the cost. Whether
using a manual or actual teacher, food safety training tends
to cover several basic areas: Illness bacteria, potentially
hazardous foods, contamination, temperature control,
preparation, presentation, spoilage, preservation, personal
hygiene, delivery, storage, cleaning, sanitizing, and
pests.
Employing Effective Training
Each area of a restaurants operation requires specific
training needs. All employees can benefit from having a
professional trainer who is prepared and knows the
subject.
Nonetheless, should management decide to handle the task
themselves, specialists suggest several approaches.
First, schedule sessions for slow times so that there are
fewer distractions and pressures.
Second, use few words, but clearly explain in detail what
is expected to accomplish the job. Develop a creative
approach and involve the employee, providing examples and
demonstrations as necessary. For instance, show dishwashers
how to stack glasses and explain the importance of that
method. Break information into small pieces and take frequent
breaks. Supervise new employees through the practice period,
but give them room. Most of all, catch them doing things
right and give plenty of positive reinforcement. Praise
often.
Trainers recommend management uses frequent evaluations to
guide employee conduct and motivate positive actions. Set
expectations early on and give them the performance review
form so they know what is expected of them. The employee
handbook should list performance standards so theyll know
exactly how they will be evaluated and what it takes to be
successful. Give frequent feedback.
Team Effort vs. Termination
Regular employee incentives are great motivators. Some
establishments boost morale by selecting an employee of the
month, offering small prizes like movie tickets. Other
restaurants get staff more involved through employee
suggestion boxes. This not only helps employees feel like and
important a part of the operation, it can also provide
valuable marketing ideas.
However, sometimes the best training and motivation wont
prevent the termination of an employee. When this happens,
specialists tell owners not to react, but enact. Remembering
that all terminations should be viewed as a potential for
liability, and even a possible lawsuit, employee policies
should be clearly defined from the beginning. This will help
prevent misunderstandings should a termination occur.
Make sure the employee handbook has an employment-at-will
statement that notes the worker can terminate employment at
any time or be terminated at any time. Management should
carefully document evaluations and performance reviews to
show that the employee understood the job expectations and
failed to meet them. Take the time to follow procedures that
are both legal and humane, and that protect the morale of the
remaining workers.
Cleaning Up
As much change as the restaurant industry has experienced
through the years, there still is more on the horizon. Trends
in public eating habits, nutrition guidelines, and government
regulations will ultimately define the businesss future. With
every consumer dollar spent, an additional $2.34 in sales is
generated for allied industries, making one thing perfectly
clear -- The industry will continue to feed the economy.
Back to top
Billing & Accounts
Receivable [top]
Eateries should make big bucks in 2007, yet owners may
continue to struggle for their piece of the pie. The National
Restaurant Association predicts the American restaurant
industry will rake in a whopping $537 billion this year, up
at least 5 percent from 2006 revenues.
But, while the boom bodes well for the nation's 935,000
restaurant and food service outlets, the irony is that
cash-flow issues continue to plague the business. Even
successful restaurateurs, it seems, are operating under
badly-timed billing systems, with their accounts-receivable
columns out of sync with accounts payable.
On the upside, analysts offer some solid solutions. A
generous measure of sound cash-flow management, they maintain
- along with the right invoicing and accounting software -
can allow business owners to collect the money owed them in
time to keep operations humming.
Cash flow - or fizzle?
Economists define cash flow as the movement of
money into and out of a business. This ongoing cycle can
propel a restaurant from solvency to failure, or vice
versa.
In fact, most analysts agree that a rudimentary
misunderstanding of cash-flow principles ranks right along
with inaccurate menu pricing, employee retention headaches
and faulty accounting systems as a major issue.
Restaurateurs, they say, are missing the boat. While billing
practices may vary from restaurant to restaurant, basic
cash-flow rules apply to every eatery in business
today:
Assessment. Conducting a cash flow
analysis a thorough evaluation of an establishment's
cash inflow and outflow - is the foundation for good
management. The process includes a hard look at accounts
receivable and accounts payable, among other financial
components, to identify discrepancies and shortfalls. After
an in-depth analysis, for example, an eatery owner may
discover that December is his biggest revenue month, yet most
of the bills come due in November.
Timing. By planning ahead, a restaurant owner can
distribute incoming revenues so that money is there when it's
time to pay the bills.
An example: Three parties are on the December schedule of
a mid-size restaurant/catering establishment, but a huge
insurance payment is slated for November. By collecting
deposits prior to the December events, the proprietor can
shift the cash inflow to cover monies due.
By the same token, asking for extra time on
vendors' accounts payable likewise can allow strapped
owners to rework their cash flow patterns. Most restaurant
supply establishments are open to flexible financial
arrangements - as long as they know they'll get their
money.
Inventory. A number of experts suggest that too
much income sits on shelves in the form of overstock, rather
than going to cover the bills. According to one source, a
standard full-service restaurant should keep only about seven
days of inventory, a few less for fast food or quick-service
operations.
Posting. Studies show that a fair number of
restaurateurs post all or most of cash inflow incorrectly,
thus giving them a skewed picture of what actually is clear
profit. The most universal errors are the recording of all
daily credit and cash receipts as income, no adjustments for
discounts or free meals and accepting gift certificates as a
credit rather than debit. Posting insurance down payments and
installments in the month paid, rather than prepaying the
account to spread monies more equitably over a 12-month
period, likewise is a pitfall.
Software means dollars and 'sense'
Although some industry experts recommend professional
assistance in keeping the books balanced, software producers
are churning out all manner of programs designed to help
small- and independent-restaurant owners manage their own
finances. A number of these handle particular task sets, such
as inventory, scheduling or accounting. Others bundle
financial components within fully-integrated systems that do
everything but kiss the customer goodbye. The following
products are a sampling of what's on the market.
- Operations and management spreadsheets.
Primarily available in an Excel format, these spreadsheets
organize financial information on a daily, weekly or
monthly basis; forecast trends; assist with budgeting and
analysis; predict weekly cash-flows; track accounts payable
and receivable; generate invoices and reports, and much
more. Prices start at under $100.
- POS (point-of-sale) integrated systems. In
addition to menu, scheduling and service-related
capabilities, these applications typically unify customer
ordering and payment with collection, tracking and
reporting of financial data, applicable in single
restaurants or across large chains. Many feature DSL/cable
credit card processing, and single step payment or split
check processing. Depending on the level of sophistication,
software in this category can run upwards of $2,000.
Accounting packages. Available as individual
programs or as "extras" in POS systems, functions typically
include accounts receivable, purchase and sales tracking;
invoicing; inventory control and food item costing. Prices
vary widely, with some beginning under $90.
Finally, a word of caution: Whether planning to purchase a
state-of-the-art system that controls every business
function, or a single product to perform billing and accounts
receivable chores, new software should be compatible with
existing programs. As support goes, it's better to invest a
few extra dollars to insure training and backup, as opposed
to flying solo - especially when problems arise.
Back to top
Vendor Relations &
Purchasing [top]
The food service industry consists of a lengthy menu of
product suppliers. For restaurateurs, selecting the wrong
vendor often correlates into a recipe for disaster. Before
contracting with a food distributor, industry insiders
recommend that owners follow a few basic steps. Doing so
could mean the difference between cooking up sales and
putting out fires.
Savory vendor tips
Faced with a number of food distributor options,
restaurateurs should explore all the best strategies to keep
their fridges full.
Order Together Many smaller to medium sized
eateries might consider teaming up with other nearby
restaurants to form a coop of sorts. Since distributors
generally price product by bulk, it's often cheaper to buy in
large amounts. Provided they use all of the food delivered,
restaurants get more for their buck when they purchase in
mass quantities. With a handful of dining establishments
placing one large order on a single ticket, the price
certainly looks to go down for all involved.
Look at Capabilities Restaurants wanting more from
a distributor often turn to an established national food
vendor. These operations generally own facilities throughout
numerous states, allowing them to handle a larger capacity of
customers. In short, no order is too demanding. While small,
independent distributors might offer cheaper prices due to
the scope of their delivery area, they do not always provide
the bonus services found at larger operations. For instance,
some national vendors give their clients routine market
reports and trend studies, outlining top-selling items around
the industry for that time period. In other cases, these
large-scale distributors provide menu and recipe services,
helping their customers coordinate meal options based on the
products they order. Even more important, national
distributors tend to hold promotions on a regular basis. For
instance, free delivery when purchasing more than $100 in
food.
Check Distributor's Track Record The cheapest, most
dependable vendor means nothing if that company sells
inferior, unsafe products. No matter the type of food
distributor, restaurateurs should always research the
vendor's credentials and regulatory practices. Industry
specialists tell eatery owners to make sure their distributor
receives supplies from licensed, established sources. It's
important to find out if the workers handling the products
are trained in food safety.
In addition, restaurateurs should contact the appropriate
health department officials to see if the distributor
possesses any code violations. Restaurant owners can learn a
lot about an operation simply by talking to others about
their experience with that particular vendor. Some food
safety experts even recommend visiting the distributor's
warehouse(s) from time to time. If this however presents a
problem, restaurateurs should at least know the vendor's
quality assurance procedure. Paying attention to details such
as the condition of delivery trucks, packaging and product
presentation also might help reveal the vendor's safety
practices.
Purchasing Prospects
Like their hungry clientele, restaurants run on food. Each
week or so, dining establishments must place food orders to
vendors. The buying process is not an exact science, however.
Eatery owners, managers and chefs must time purchases on an
as-needed basis. There's no guarantee they will be able to
use the ingredients before the product spoils, though. To
help lessen the risk of waste, software companies offer
programs that track inventory as well as alert employees of
expiration dates, low stock and needed products. Still, not
all restaurateurs have the time, nor desire, to train staff
members how to run a software application.
Other purchasing possibilities include working with local
vendors. According to the National Restaurant Association, a
growing number of dining establishments are relying on
locally-produced food items. This ensures freshness, cuts
back on the time it takes to get products from vendor to
restaurant and often reduces delivery fees. Moreover, it
allows the restaurant owner and vendor to form a more
personal business relationship since they're within driving
distance of the other. Some industry pundits feel eatery
owners should always negotiate with the vendor - particularly
if they are a repeat, loyal customer. The logic is that the
food loses value when it's stockpiled and aging in a
distributor's facility. Restaurateurs remember: The vendor
also is running against the clock in terms of selling and
product expiration dates.
In certain instances, eatery owners opt to hire a
restaurant consultant to help with purchasing specifications.
These cuisine craftsmen not only help restaurants purchase
the right items for their operation, but show them how to
incorporate the products into a menu that sells. In addition,
consultants usually aid in meal pricing, setting up food
delivery systems and portion control. Establishing efficient
methods helps owners get the most out of their inventory.
Back to top
Restaurant Insurance [top]
Business risk takes on a new
meaning in the restaurant industry. Staff must work with knives, fire, hot
frying oil - and that's just the cooks. In the dining room, slick floors from
spilled drinks present the potential for slips and falls, while food allergies,
piping-hot liquids, theft and grease fires pose just a few more dangers. Acquiring
a good insurance policy makes sound sense for anyone operating a dining
establishment. Though the menu of coverage types is vast, a quality agent can
outline what plan best accommodates a business owner's situation.
- Employment Practices Liability Insurance (EPLI): This
type of policy - which is carried by many restaurants - covers liabilities
that stem from the employment relationship. EPLI tends to protect the
business, its directors, managers and officers against claims brought by
staff members. Still, many policies can be expanded to safeguard against
claims brought by third parties, such as patrons and vendors. Most
policies even have optional coverage for employees, including temps,
seasonal staff and part-time personnel. Acts that might be covered under
EPLI include:
-
Sexual Harassment
-
Discrimination
-
Workplace Harassment
-
Failure to Hire
-
Wrongful Discharge, Evaluation, Promotion, Discipline
-
Negligent Hiring
-
Employment Related Personal Injury (libel or slander)
-
Workplace Tort
EPLI usually covers:
-
Defense cost for covered claims
-
Punitive or exemplary damages
-
Liquidated damages pursuant to the Age Discrimination in Employment Act or
the Equal Pay Act
- Commercial General Liability Insurance Geared Toward Restaurants:
General liability policies cover third-party claims of bodily injury
and property damage that occur on the insured's premises, as a result of
operation, products or completed operations. The policy provider typically
will pay for legal defense cost and/or settlement. Many insurers have
tailored restaurant specific policies to be added on to a general
liability plan. These include:
-
Assault & Battery: This option covers third party liability claims that stem
from any assault or battery on the restaurant grounds. Coverage includes
violent acts between patron to patron or employee to patron.
-
Liquor Liability: This option covers lawsuits/claims of bodily
injury or property damage resulting from patrons who consumed alcohol at the
insured's restaurant. These policies cover related instances that take place on
and off the eatery's property.
-
Hired/Non-Owned Vehicle Liability: This option provides excess
liability coverage for hired - a.k.a. rented - vehicles and those that are not
owned by the restaurant, but used for business purposes. For example, an
employee using their truck to pick up ingredients on the way to work.
-
Errors and Omissions: This coverage really applies to eateries
that cater or provide planned menus for special events. Errors and Omissions
policies protect the restaurateur in claims that the establishment failed to
perform according to contract or expectation.
- Commercial Property Insurance: Most restaurants
already have some type of property insurance. These plans pay for losses
to the establishment, associated structures and contents. Risk covered
generally include fire, storm, and theft (other factors may be named on
the policy). Again, insurance companies have looked beyond the obvious and
now offer extended coverages.
-
Equipment Breakdown: The kitchen of a restaurant serves as the
heart of the business. If once of the intricate pieces of machinery stops
working, profits can quickly flat line. Therefore, insurers offer coverage for
just this scenario. Usually an Equipment Breakdown policy covers losses caused
by a malfunctioning piece of machinery. This might include a loss of food
supplies do to a refrigerator not containing the proper temperature.
-
Food Spoilage: This option covers losses related to food spoilage
caused by a power outage, often including brownouts and blackouts.
-
Money & Securities: This option covers money and securities
taken by theft or holdup. The coverage applies to cash stolen on and off the
restaurant's premise.
Many insurance providers will package a number of these and
other coverages together and market them as "Restaurant Insurance." The key to
creating the right policy is considering all factors before purchasing a plan.
Is the restaurant located in a safe place? Will delivery services be offered?
What demographic will the restaurant target? What type of cuisine will be sold?
These and other questions offer great insight on what insurance package serves
the greatest purpose.
[top]⇑
Restaurant Communication [top]
Running a restaurant definitely comes with a generous side
dish of business hurdles. A highly-competitive market, constantly diminishing
inventory (by sale or spoilage) and routine changes in consumer taste represent
just a few morsels owners might find hard to digest. Still, it's an industry
founded on recipes, and some restaurateurs feel they have discovered the key
ingredient to an efficient operation. It all starts with good communications.
A steady increase in wireless and Internet-based innovations
has dramatically changed the face of the restaurant industry. Waitresses are
swapping out pens and notepads for electronic ordering devices that speed up
the process and ensure fewer errors. Managers no longer need to fill out
inventory paperwork or place phone calls to the vendor when ordering supplies.
Instead, a few clicks of a keyboard - whether attached to a desktop computer or
wireless device - gets the purchasing job done. These mark only a few of the
changes heating up the food service industry.
Digital Order In!
At many eating establishments, a hostess seats the patrons.
After a few minutes, the waitress brings the customers a glass of water - leaves
for a bit -comes back for the drink order - leaves for a bit longer - then takes
the food order. While all good things come with time, this kind of service, not
to mention lack of communication between the staff and consumer, usually leads
to a poor business reputation. Fortunately, there is an extensive selection of virtual
options for restaurateurs wanting to improve communications in every facet of
service.
- E-Menu
There are quite a few
variations on this innovation. The standard models let patrons select their
plates from a notebook-sized screen. With the devices usually placed right at
the table, the customer gets to manually add and remove food options - for instance,
building a salad. Once the patron wraps up their order, they send it off to the
kitchen with a click. The cooks then print out the ticket or view it via a
monitor. Most E-Menu systems even allow the patron to make changes to the order
in real-time after it's been sent to the cooks. Pictures of available food
options, complete nutritional breakdowns and other interactive features tell a
consumer everything they need to know when picking a meal. Some models even
show the consumer what the price of the meal will be once tax and gratuity is
added. -Certain restaurants have E-menus programmed for Internet access and games.
More importantly, these systems keep the production flow running smooth by
reducing mistakes that often occur with double data entry. In this case, wait
staff must transcribe an order on a traditional notepad and then enter it into
a computer. Other benefits include the ability for managers to change the
digital menu on the fly. Should a product run out, staff can "86" the item with
a few clicks. Should the chef decide to change the daily special or highlight a
specific dish, basic E-Menu software allows real-time updates.
- Handheld Digital Notepads
The title says it all. Using the
same concept as wireless devices like the PDA, Handheld Digital Notepads let
wait staff capture an order and send it directly to the kitchen without ever
slowing a beat. Most Handheld Digital Notepads use a pen-like pointer. The waiter
-uses the pointer to write-up or select a platter while taking the patron's
order. Once finished, wireless transmissions send the order to the kitchen,
where a ticket is printed. Some of these devices even have the capabilities to
ring-up a check and take credit cards right at the table.
- Inventory Purchasing Solutions Mean Improved Vendor
Communications
Many restaurateurs kickoff the
work week with a few hours spent fumbling through refrigerators and pantries.
During this time, they take count of needed products and track expiration
dates, checking off inventory orders as they go. The whole song and dance is
usually closed out with a purchase call to one or more food vendors. No wonder
orders often come to the backdoor with extra items or products missing
altogether. To minimize culinary confusion, more and more restaurant owners are
turning to inventory tracking/purchasing applications. These
computer programs - in part - are designed to clear the lines of communication
between the dining establishment and food distributor. Most suites contain
functions that allow managers to enter and track vendor invoices for everything
purchased. This not only makes reorders simpler by showing how quickly certain
amounts of product moved, but also helps owners keep a close eye on price
trends.
On the other side of the food
chain, many vendors now offer electronic inventory ordering via
the Web. Through these systems, restaurant management can view order/delivery
status, customize order templates, change orders and more. The restaurant
usually forms an account with the food distributor, interfacing all inventory
data. The system then uses a combination of sales
history, current inventory, sales projections, and special events to help the
owner calculate and generate the appropriate order amount. Once the eatery
manager approves a delivery, all of the information gets entered into the
restaurant's account for future tracking.
- Self-Service Food Ordering Kiosks
The future of restaurant-customer
communiqu- is taking a digital turn. Most people tend to associate touch-screen
kiosks with fast food and possibly the airport ticket counter. However, new technological
advances have these devices popping up at even some of the more sophisticated
restaurants. Self-Service Food Ordering Kiosks let the patron order and
pay for their meal in one stop. They then head to the dining room to wait for
the upcoming food. For the restaurant, these devices reduce complaints about
botched orders, present an ideal way to up-sell and cross-sell, and keep all
service stations on the same page.
[top]⇑
|