Thursday, January 8, 2009

The Critical Path (Sherpa & His Hot Dog Mountain)

Richard opened the class with "In the News," in which the class will bring in food-related bits from the media and chew them over. Since none of us were prepared, Richard expounded on bits that caught his eye -- much of it from the dining section of Wednesday's NY Times. Squirrel in British cuisine, City Wine's concept of a wine bar that partners with a winery (to allow customers to 'make' their own wine and store casks in the basement), crushing drop in private parties for the big Meatpacking district restaurants, Bruni's review of a restaurant. Richard is open in his dislike for what many food blogs call "the Bruni," because he feels Bruni's critiques are a bit over-the-top. From a restaurant trade magazine, an article about corporate chains looking to incorporate rice as a central starch in new dishes because it's cheap.

The one article that caught my ear was about a hot dog vendor who recently won a bid on a location in front of the Metropolitan museum. He is going to pay $360 grand a year for the right to sell hot dogs on the northern end. That means he needs to generate about $1000 a day just to pay for the license. With a $2 hot dog, we guess his average sale will be $3. On a 10 hour day, he'll need to make 657 sales a day 7 days a week to cover that nut. That's 66 sales an hour. More than 1 sale per minute. A cart can't possible hold that much inventory, so someone has to be hired to restock multiple times a day. And perhaps another person to cover some shifts on the cart. To just break even. And let's not mention the other hot dog cart a few feet away who is sharing the corner because it's run by a veteran, who by law does not need to have a license!

The bulk of the day was dedicated to reviewing 'the Critical Path,' the framework that will be explored over the next six months. Here are the bare bones of it:
  • Market Research: all about the needs and wants of the client. Who there are, how they communicate.
  • Mission & Concept: Goals and key elements. What your business is going to do and how it's going to do it.
  • Site Selection: Many variables are determined by the where. Rent, size of location, traffic patterns, competition -- all will determine whats served and for how much.
  • Revenue Projections: Sales = # of seats x turns x average check (turn means how many times the tables are turned over for new customers over the length of a time period.) This can be worked out with a mix of assumptions and observations of similar places.
Financial Analysis: This is made up of a number of critical statements
  • Capital Budget: start up costs. Research & Development, construction, equipment.
  • Working Capital: salaries, inventories, money to cover expenses until break-even.
  • Investment: Capital Budget + Working Capital. What you gotta get to get going! Hi there, rich person! Want to take a risk?
  • Income Statement: a.k.a. Profit & Loss statement. Sales - costs = profit(or loss). Costs from actual material, labor, operating expenses (napkins, flowers), fixed & occupancy (insurance, rent, etc.)
  • Break Even Analysis: at what level of sales does profit and loss equal each other? Higher the break even point, the higher the risk to the investor. The hot dog vendor in front of the Met has a ridiculously high break-even point.
  • Cash Flow Statement: the timing of when the money comes in and when it goes out. The profit and loss statement is about what was gained or lost in a specific amount of time, while the cash flow statement is just about the money -- you can buy enough eggplant for three months, and the P&L will reflect that, but the cash flow will just say you just spent a lot of eggplant money in one day. A cash flow statement is, at it's simplest, the most recent accounting of your checkbook.
  • Balance Sheets: Assets - Liability = Owner Equity. Everything the biz is worth - everything owed & all the debt = everything you actually own. Like the P&L, but a comprehensive look at the whole thing. The other statements kind of dwell in the past or project the future, this is the one that says where you are right now.
  • R.O.I.: Return on Investment = Profit / investment. If you make $50G profit in one year, and Mr. Investor gave you $500 grand, 50/500,000 = .1 or 10% R.O.I. It'll take Mr Investor 10 years to recoup before seeing a profit on his money. A while ago that was considered low. Today, people may be happy with that.
All these numbers can be fudged, especially early on when it's based on projections and assumptions. The best numbers are accurate, truthful, and salable to investors.

The second half of the class was dedicated to the mission statement. The statements gotta say:
  • what you are
  • how well you do what you do
  • who your clients are
  • where you and your clients are
  • which needs of your client your meeting
  • do it in one or two sentences.
Oy! It is from the mission statement that the next step develops from: the concept is directed by the mission to determine 1) design & decor, 2) service and 3) food & beverage product.

So the class broke into four groups. We each threw out a concept, chose one for the group then attempted to write a mission statement through brain storming. I was sitting with Jazzman, Lenin-pisser, Chicagoette and Pastry. Both Chicagoette and Jazzman mumbled something about a family-style casual restaurant of indeterminate cuisine, Pastry mumbled something about a bakery of no specific style, and Lenin-Pisser spoke of a Georgian wine bar with live jazz and small plates. I announced my pizza concept which I sketched out last night, but I dismissed it as not being a restaurant and not ideal for this exercise. So we went with Lenin-Pisser.

What: a wine bar with live jazz that serves wine from the Georgian region of the once Soviet Union and small plates of fusion Georgian food. How well: very well! We were a bit stumped on this one. Who: younger couples, adventurous singletons, expats, jazz fans, evening crowd. Where: someplace urban with a good 24 hour residential/commercial mix. Like the Village or he L.E.S. Needs being met: Georgian food outside of the Brooklyn enclave. Limited non-tourist jazz option on the Lower East Side.

By committee, this is the sentence we produced. English is Lenin-Pisser's third language.

Georgian Wine & Jazz introduces an elegant mix of Georgian small plates, fine Georgian wines and live jazz to adventurers in the Lower East Side.

Richard tore it apart, but kindly with good humor -- I remember cringing whenever Chef Al would give criticism, it was always so harsh. Anyway, where to begin? The names doesn't say 'what' exactly. Perhaps adding 'Lounge' or 'Cafe' will be more descriptive. Adventurers on the Lower East Side do NOT look for elegance, they look for excitement, fun. What kind of jazz? Really loud in-your-face stuff that's the center of attention, or quiet background stuff good for conversation? IS this more of a bar where the food is secondary and in service of the wine, or do people come here to eat, with focused wine-drinking just at the bar? Just because the LES doesn't have a Georgian wine-jazz bar doesn't necessarily mean it needs one. Is this concept appealing to the customers on the LES or to you? Georgian theme and jazz seem to be eclectic -- it doesn't seem to make sense together, but the vision of the proprietor seems to make it make sense. This doesn't seem to be eclectic, it just doesn't make sense.

I guess a mission statement made by an uninterested committee in 5 minutes will never be that great, but it's the process. For Monday, we all have to deliver 4 to 8 sentences. One to two sentences each on a mission statement and the three factors of a concept.

Wednesday, January 7, 2009

Introduction to Culinary Management (Ritz ain't just crackers!)

Hi! Welcome back! Today, I started the culinary management program at the same school where I completed the culinary arts program. I found this blog a crucial element in helping me absorb the massive amount of information and experiences during that time, and hope to pull it off again.

I externed at a very well-regarded pizzeria in Brooklyn to finish my culinary degree, and continued on as an employee for while afterwards. (You can read about it, as well as my continuing adventures in home cooking and eating at Learning to Feed.) The time I spent slamming dough, baking desserts, and finishing pizzas for a paying clientele brought home the point that food ain't just about the food. It's about where the food is served. And how.

The management program will focus on that other stuff, in addition to the food. It's all related and intertwined. But enough blather, let's get to the meat of the matter: me blogging about my experience!

Class started with an introduction from the Director of Student Affairs, going over rules and regulations, the bureaucracy of being in school, blah blah blah. We're introduced to Richard V., our instructor for the entire length of the course -- in culinary, we were taught in succession by 5 different chefs, but in management it's all about Richard. He's a very well-coiffed man with neatly trimmed Frank Zapppa-like facial hair. My wife and I actually took a multi-week wine course with him, where I found him to be extremely well-spoken, enthusiastic and engaging, so hopefully I lucked out....hopefully it wasn't just the alcohol.

We started with a reading of Ruth Reichl's New York Times Review of Aquamarine under the topic of, "What's Wrong Here?" It's a restaurant with a hoity toity name directly on the Hudson River, which would invite expectations of a river view, a romantic quiet dining, seafood, and upscale surroundings. In reality there were very few windows onto the Hudson, a big bar and loud live music, a menu made up of very little seafood and plastic chairs. After all of that, it didn't help that the food was inconsistent and not very original or special. Suffice to say, that restaurant isn't with us anymore. Somewhere along the line, the concept became unfocused.

Richard introduced us to the theory of the client, the mission statement, and the overall concept of the restaurant. The client dictates what your business should be, as you can't have a business without them. When you figure out who your client is, you need to ask, "What is the client not getting?" and go from there. The mission statement is the statement of intent that kind of defines what your going to do, and the overall concept involves the key elements that will satisfy the client.

As laid out in Reichl's review, there are three elements to a concept for a restaurant: design & decor, service, and food & beverage. It is very rare that you can succeed with one and totally ignore the other two. Going to a restaurant is not just about food, but all the bells and whistles that convinces you to pay $28.95 for a piece of meat you can cook at home for $4.85 and a little homemade stock. The concept is the thread that ties it all together. The concept of Aquamarine seemed to suggest upscale seafood with a relaxing grand river view, but between the walled-off view, the noise, and the jumbled menu, the concept lost its cohesiveness.

Tomorrow, we've been asked to come in with the idea of a concept. The jist of the course is to end with a fully developed business plan based on this concept. I have a kernel of an idea, so I guess thats the kernel of my trade secret! Let me just's about pizza. Strangely enough, for those of you who've been reading me a while.

We got a handful of books, including this year's Zagats guides. Tonight I read the first few chapters of "Management by Menu", basically a text that covers all aspects of managing a food business from the idea that all angles are reflected in the menu. Concept, costs, everything is there in the menu. The first 50 pages of the book is the history of food service, from one-celled amoebas absorbing nutrients through cell walls to the modern fastfood concept like Wendy's and McDonald's...I guess the more things change, the more they stay the same, he he.

Interesting factoid: In the brief history of culinaria we were taught in the cooking program, a central figure was Georges August Escoffier, who invented the brigade system of organizing kitchen workers in 1800s France, catapulting the cuisine to head of the class. What was not mentioned was the front of house man who was perhaps equally important in making Escoffier's restaurants legendary -- Cesar Ritz, from whose name the notion of 'ritzy' comes from.

We had a little game of introducing the person next to you to the class. I introduced Roundhead, who was also in my culinary class. Roundhead (who I shall now nickname Jazzman) was a fellow student in culinary, a young, quiet and competant cook. Hes a NYC native of Dominican heritage, so he grew up bilingual, a distinct advantage in the restaurant world.

There is about 26 of us. There are two Russians, one who proudly said he peed on a statue of Lenin when the Soviet Union dissolved. There is a Slovak who looks like Ricky Martin, an older British woman who once dressed as Bugs Bunny for a job, a woman whose been working at a restaurant for 17 years and wants to expand. One kid, a young looking Robert DeNiro type with pointy eyebrows and a mole just-so, spoke of his family's Italian restaurant in Long Island, and how he has aspirations of opening a national pizza chain. There's another guy who looks like Big Pussy from the Sopranos. Maybe half the class is very young, under 25, most in my age range with a few with a few more years of experience under their belts.

Class will be Mon, Wed and Thursday mornings, so this blog will updated three times a week. It'll be fully tagged out for easy referencing to the left. Thanks again for joining me, I welcome your secret snooping or your blatant comments!