Greetings!
You’ve heard the expression “Don’t sweat the small stuff,” but in this issue of our newsletter we’re asking you to do just exactly that. Small stuff, like the phone bill and the contract to restock your first aid kit, can add up to thousands of dollars a year in unnecessary costs, money that could instead be funneled to your bottom line. Sweating these little under-the-radar expenses—a process known as gap management—is the subject of Mark Ladisky’s post this month, and we think you’ll learn some valuable lessons from it. Identifying these hidden costs and negotiating alternatives is an exercise every operator should undertake as often as possible.
To your success,
Dean and Danny
Gap Management = Buried Treasure
Mark Ladisky, Senior Operations Associate
If I were to ask you your brand’s annual sales, you could probably rattle them off without a pause; the same goes for food and labor costs. But if I asked you the last time someone reviewed your communications expenses, or the fees associated with your website hosting, you probably wouldn’t answer so quickly. In fact, while you diligently bid out your food purchases to save $300 a month, there are untold riches lying undiscovered in your accounts payable and your detailed P&L.
The devil is in the details when it comes to seemingly minor expenses paid in a routine fashion every month, while you spend hours pacing over the cost of cheese. To back up a bit, I will start with the obvious and remind everyone that the bottom line doesn’t lie. Profit is profit, and nothing can change that. However, what happens in the middle of the P&L, specifically with expenses of less than 3%, is something of a blind spot for most operators.
According to Bill Taves, Synergy Restaurant Consultants’ finance and accounting guru, the three areas most overlooked when it comes to the gap between the actual profit a company is making and the potential profit they could earn are:
1. Communication costs. These are often considered necessary evils and paid without a second glance, but has anyone reviewed the service packages since you opened three more stores? Maybe you have long distance packages you don’t need or, worse, you may have staff using the unlocked long distance to rack up your bill calling Santa Claus.
2. Overtime. While it’s tempting to discuss overtime in a colorful way, such as “Overtime is paying premium dollars for tired people,” there is some truth to that. Overtime can be a huge contributor to your payroll expenses and in almost every instance is completely preventable. Yes, there are some occasions where overtime is unpreventable (call outs), but if you routinely see five hours of OT per associate per week and you have 30 staff on payroll, that is 150 OT hours, which costs as much as 225 hours at regular rate. You could hire two more full-time associates and gain 75 hours of productivity, or save $750 a week in payroll simply by reviewing a forecast and actual labor plan.
3. Fixed Price Contracts. Contracts often include a range of services that you routinely pay for and rarely review. These may cover hood cleaning services, trash pick-up, credit card processing fees, first aid kit restocking, knife sharpening, and a never-ending list of other services that are under the radar as individual expenses due to their small percentage of cost. Typically these service providers aren’t calling you to let you know how much leverage you have to renegotiate your pricing since you added more units or increased volume—so pick up the phone and shop it around.
Someone once advised in a productivity book that everyone should earn $100 per hour as often as possible. What that means is that we should spend one hour to find a way to save $100 either per day or per week or however often, but find a way to save that amount with a one-hour investment. If you were to assign your team that project, you might be surprised what they discover.
Take your daily or weekly linen service, for example. They come on-site however often, and routinely take the old and drop the new cloths, aprons, mats and the like. Every so often, your friendly linen company will likely attach some sort of recovery fee to your bill for lost or damaged pieces. That dollar amount may change from time to time or be a static number, but either way you are likely paying too much. While you’re at it, spot-check deliveries of linens at the unit level and validate quantities every so often.
How to properly negotiate a service contract is a subject better left to its own post, so we won’t go into that right now, but suffice to say if you purchase something often enough, you have leverage. How much you have exactly will depend on your purchase levels and your ability to exploit it during negotiations.
Other expenses are on your P&L but could be reduced just through the simple act of taking some initiative. For example, I know it’s convenient to have that first aid kit restocked automatically, but typically those services charge a ‘trip fee’ or ‘service charge’ in addition to the cost of the products stocked. They also have been known to add on ‘inspection fees’ of a couple of dollars here and there. These miscellaneous fees can add as much as 20% to a bill, and should be reviewed at the very least.
Regardless if you are in search of the most humble or most aggressive of profit margins, gap management needs to be on your radar.
As part of a basic operations review, Synergy will often discuss observed opportunities for savings with our clients, but a thorough review of this area is usually recommended. We’re happy to discuss Gap Management opportunities as part of our routine operations assessment or as a specific scope of work, so contact us today to find where your missing P&L treasures are buried.
One Item Wonders
By Joan Lang
Anyone who’s been paying attention at all recently knows how successful The Meatball Shop has been, packing in customers, inspiring countless press reports and flattery (read: imitators), and allowing for the opening of a second location in the uber-hip Williamsburg section of Brooklyn, across the river from the original.
We’ve been here before, of course, with the single-item specialists like Cinnabon and Auntie Anne’s pretzels, to say nothing of pizza, ice cream and fro yo shops. This is a little different, however, in the sense that the new breed of one-item-wonder concepts springing up goes beyond treats and other impulse purchases. And many of them, like The Meatball Shop, are helmed by serious chefs (TMS co-founder Daniel Holzman is CIA-trained, and he and partner Mike Chernow are equally serious about the quality of the ingredients they use). Not surprisingly, too, many of them are located in urban areas and/or near colleges that have the critical mass to support them.
Macaroni and Cheese
Not the first of the mac-and-cheese specialists, by any means, L.A.’s Mac&Cheeza serves a build-your-own version of the iconic comfort food, available in four different sizes with such mix-and-match toppings as collard greens, olives, jalapenos, BBQ Chicken and Chorizo. Meanwhile, Macbar in Manhattan has 12 different formulations, from The Classic, with elbows and American and cheddar cheeses to Mac Quack, made with duck confit, Fontina, caramelized onion, and fines herbes.
Grilled Cheese Sandwiches
Chedds, a grand old survivor in Austin, TX, from 2003, does gourmet grilled cheese. The house proposes more than two dozen combinations (e.g., the “Ultimate” with Gouda and Havarti on multigrain, or the Fish and Peppers with tuna, chipotle cheddar, banana peppers, jalapeno, mayo and relish on rye), or patrons can customize from a list of more than 30 cheeses, eight meats, a dozen veggies, condiments, dressings, and eight kinds of bread.
Rice Balls
Arancini Bros. in Bushwick, NY, specializes in the orange-shaped Sicilian rice balls as a cornerstone to a rotating menu that includes versions made with salmon, broccoli raab and sausage, and a la carbonara. Did they “borrow” the idea from a place with the same name in London? Does it matter?
Lobster Rolls
Three guesses what Maine lobsterman Luke Holden wanted to specialize in when he opened his first restaurant? There are also shrimp, crab and combo rolls, and crab claws, along with chowders. The first one caused a sensation in New York City, and now there are six, including a truck.
Savory Pies
Capitalizing on the Aussie love of pasties, sausage rolls and other savory hand pies, Pacific Pie Co. touts local and humanely raised meats and seasonal produce—this is Portland, OR, after all. Fillings like Beef & Stout, Thai Green Chicken Curry, Spinach, Feta & Tomato and more, plus dessert pies like Shaker Lemon, make this a real, er, upper crust experience.
Word to the wise, however: The New York outpost of Pop-Tarts World, which hawked such menu items as Pop-Tarts Sushi and peanut butter Pop-Tart sandwiches, is no longer in business. After all, how many Pop-Tarts can one person eat?
To find out if you hot new restaurant can work in the real world, contact Synergy.
Bread: The Staff of Life—and Menus
By Joan Lang
Read on for ideas that take day-old bread beyond the realm of croutons, crumbs and bread pudding:
Crostini and Bruschetta
Throw away the crackers: These grilled or toasted platforms are well-suited to a variety of toppings, and are uber-hot on menus of all kinds.
- The smaller crostini can be used with various composed toppings; served with dips, dunks, fondue, pates, soft cheeses and other spreads; added to a signature bread basket; or used as a garnish for cheese plates, soups, salads and more.
- Generally bigger in size, bruschetta are a well-loved peasant food throughout the Mediterranean (including Greece, where they’re called Dako and are often made with twice-baked rusks, and Spain, where bread is rubbed with olive oil, tomato and sometimes garlic oil to create Pa Amb Tomàquet). Offering a bruschetta or Crostini Trio of the day represents a great way to utilize seasonal ingredients and leftovers.
It goes without saying that you should feel free to experiment with all kinds of different breads: baguette, ciabatta, whole wheat…. And even a base seasoning as simple as olive oil and garlic adds a different dimension.
Panzanella and Other Bread Salads
Leave it to thrifty cooks to re-purpose stale bread in a way that has really caught on as a salad, starter and side dish that goes beyond traditional ethnic menus. In fact, it’s no coincidence that Tuscan bread is made without salt, so that it dries out perfectly, and it is the Tuscans, after all, that are associated with panzanella (bread salad) and bread-enriched soups like Ribollita (see below). The Italians aren’t the only ones who make bread salads with trendy currency, however: Fattoush is a Middle Eastern bread salad made with pita.
Although the better known bread salads depend upon perfect ripe tomatoes for their lusciousness, they’re actually a perfect vehicle all kinds of seasonal ingredients, like winter squash and grapes, or roasted vegetables. More substantial additions, such as cheese or grilled tuna, allow them to be menued as a main course.
Bread Soups
While the Italians are most associated with the idea of using leftover bread to add body and substance to soups (Ribollita, literally “reboiled,” traditionally recycles yesterday’s minestrone as well), bread is used to thicken or add heft to soups all over the world, from the floating cheese raft that makes onion soup en croute in France, to Spanish garlic soup, a simple, egg-enriched soup served over toasted day-old bread.
Take inspiration from the global language of bread soups, which also include the Italian Papa Al Pomodoro (tomato bread soup) and Crema di Zucca Fontina (a creamy squash soup from the Valle d’Aosta which utilizes stale rye bread), Polish Zupa Chlebowa (thick with kielbasa and pumpernickel), and German bread dumpling soup.
Specialty French Toast
As breakfast and brunch become more important sources of profit for operators, so does the popularity of signature morning foods. And given that most people still want something fairly traditional for the first meal of the day, it comes as no surprise that chefs would be riffing on ever-popular French toast. Some thoughts:
- Stuff it, placing a filling between two slices of bread and moving on from there. The filling itself can be sweet (fresh strawberries and chocolate drizzle) or savory (ham and Gruyere—which come to think of it sounds like the traditional Croque Monsieur).
- No longer just a repository for old bread, this indulgent morning specialty can be made with all kinds of different breadstuffs: challah, brioche, croissants, cinnamon raisin bread, There’s a reason folks call it Pain Perdu (“lost bread’), meaning that you can use practically any sort of bread that would be otherwise lost to the dumpster
So here’s a toast to bread and all its myriad uses—and contact Synergy if you want more ideas for your menu.
Tip of the Month
If we had only one food blog to read, it would be Serious Eats. Though it’s aimed at consumers and foodies, there’s lots to learn from this extensive, well-edited site, from recipes and food trends to information about wine and spirits, food science, travel, media, and more. It’s also the portal for two great microsites: A Burger Today and Slice, a paean to the world of pizza.