Myth 1
BUYING LARGER QUANTITIES TO GET VOLUME DISCOUNTS SAVES MONEY.
Not after you account for the extra waste, theft, bigger portion sizes and carelessness that results when more product is purchased than is needed.
Myth 2
PAYING HIGHER HOURLY WAGES INCREASES LABOR COSTS.
A trend of increasing average hourly wages is usually a sign of better employee retention and lower turnover. Reducing employee turnover results in less training, less hiring, better productivity, improved customer satisfaction and lower overall labor costs.
Myth 3
IT IS BETTER TO HAVE CASH OVERAGES THAN SHORTAGES.
Although neither are great news, cash overages are often an indication of one of an operator’s worst nightmares, UNRECORDED SALES.
Myth 4
KEEPING FOOD COSTS LOW MEANS LARGER PROFIT MARGINS.
Many of the most profitable restaurants in the country have high food costs, some as high as 450% – 50%. The issue is not how high or low food costs are, but, rather how many gross profit dollars your menu items are generating. That’s why menu items should be promoted based on their gross profit contribution (dollars) rather than having a low food cost (percentage).
Myth 5
ONLY THE CHEF OR THE MANAGER ON DUTY SHOULD CHECK IN DELIVERIES.
The chef and the manager on duty are usually the two people in the operation with the least time to always do a complete, thorough job of checking in deliveries. Many companies use an hourly employee who is trained to be a dedicated receiving clerk during certain hours of the day. An hourly employee generally has the uninterrupted time to devote the attention necessary to do a good job checking in each and every delivery.
Myth 6
PROFIT & LOSS STATEMENTS SHOULD BE PREPARED AND REVIEWED MONTHLY.
It is of limited value to compare a monthly P&L to a previous month. There may be a different number of total days or a different number of weekend days that will invalidate any meaningful sales comparison. Many restaurants do over 50% of their sales on two days of the week, Fridays and Saturdays. Many restaurant operators prepare their P&L’s on a 4 week, 28 day cycle so that each P&L reflects the same number of days and the same number (4) of each day of the week
Myth 7
THE MOST IMPORTANT PART OF PRICING THE MENU IS DETERMINING EACH ITEMS FOOD COST.
Costing out each item is very important, particularly to determine the gross profit contribution of each item. However, determining what the customers will pay is the most important consideration. While not an exact science, shopping the local competition plus an evaluation of your customers’ income levels and spending habits, should provide valuable information to use as a framework for pricing decisions.
Myth 8
THE BEST ACCOUNTANT IN THE RESTAURANT IS THE BOOKKEEPER.
It’s usually one of the bartenders. Their accounting skills are honed through years of experience keeping track of liquor usage and unrecorded drink sales with elaborate counting schemes using glasses, stir sticks, toothpicks, pennies, and even olives.
Myth 9
USING GARBAGE CANS IN THE KITCHEN IS A GOOD WAY TO DISPOSE OF TRIM AND WASTE.
Garbage cans often become “a black hole” for excessive food waste, trim and preparation mistakes. Food that could and should have gone on the plate. Smart operators use clear plastic food boxes to deposit kitchen scraps and trim. Managers inspect the contents of each box at the end of each shift.
Myth 10
PAYING OVERTIME IS A SIGN OF POOR MANAGEMENT OR POOR SCHEDULING.
Not necessarily. Overtime may also be a sign that a well-conceived, tight schedule was prepared, and the restaurant was busier than expected. The absence of any overtime can be indicative of padded schedules and having more employees than are needed. Occasionally paying overtime can also be an excellent incentive and reward for deserving employees, particularly kitchen personnel.
