In the News / Labor Cost / Misc. Expenses / Benefits o' Booze

During today's In the News segment, I defended pizza: in the $25 and under section of the NY Times dining section, they reviewed Roberta's of Bushwick. They said it was good pizza, but despite that they offered some good interesting dishes. Hrumph!

A good portion of the class was dedicated to labor cost. Based on how busy a dinner shift was, we scheduled servers, bussers, hosts and bartenders, taking into account how much they were paid, expected number of covers and average check. I don't like exercises like this because the feedback you get from it can be guesstimated from just vibing the business of a room. In the resto biz, when things are slow, it's acceptable to send extra staff home, and it's also normal to call up people who are on informal call. Filling us students with formulas and numbers...I don't know, there needs to be a balance, an expectation that we will learn when things really need to be calculated, written and statistically analyzed, and when things can just be winged.

Up to this point, we studied cost control in terms of food and in terms of labor. Today we looked at "other expenses". While a restaurant only has one primary source of income, there are plenty of sources of expenses aside from labor and food.

• Operating expenses (linen, uniforms, china & glass, kitchen utensils, cleaning, decoration)
• Music and entertainment (live or mechanical, ASCAP, booking agents, meals to musicians)
• Marketing (mail, phone, internet, comped food, ads, signs, copies, public relations, agents)
• Administrative (data processing, office supplies, postage, cash over or under, bank fees)
• Facility maintenance (fixtures, equipment, air conditioning, refrigeration, electrical, floors and carpets)
• Occupancy (rent or mortgage, equipment lease, real estate tax, insurance, depreciation, licenses)

This is a very annotated list. If I was working up my business plan, I'd be tearing my short hairs right now...

To control costs like this, there are two key ways to categorize them. The first way is by fixed, variable or mixed. Ask this question: If no one comes to the restaurant one night, will the expense cost less? If people come, will the expense cost more?

Whether people come in or not, rent and salaries will remain the same -- fixed. If no one comes in, I can send lower level salaried people home and the food can be served tomorrow -- variable. If no one comes in, I still have to pay for air conditioning and side towels, but if people come in, I'll have to crank up the air and use more side towels -- mixed.

The other way to categorize costs is by controllable or uncontrollable. Hourly wages are controllable -- if the biz starts to go south, I can cut people's pay or lay people off to adjust in the short term. Rent for a restaurant is usually determined by a multi-year lease -- if the biz is tanking, it could be years to a lease renegotiation, therefore it is uncontrollable.

The last part of the class was more talk of our friend alcohol, which is leading to Monday's discussion on liability issues. Alcohol has beneficial qualities. The wine industry had to sue the FDA to go public with scientifically proven evidence that alcohol can be a positive influence, but still the government insists that bars post signs warning pregnant women away from booze, despite the fact that all the studies from the 80s that claimed alcohol hurts fetuses have all been disproven. It's been shown that moderate alcohol consumption through out pregnancy does NOT hurt babies, and it's been shown that alcohol abuse in the 2nd and 3rd trimesters also does not hurt unborn children. Only alcohol abuse in the 1st trimester, a time when many women don't know they are pregnant, has been shown to cause all sorts of developmental issues.

There's the whole French paradox thing, where despite eating much more animal fats than the U.S., the consumption of red wine keeps down cholesterol. In fact, in recent years the French have had an anti-alcohol (oh, excuse me, anti drunk driving) move that has directly lead to a spike in heart disease. Alcohol thins blood, letting less stuff clump up -- the same rason docs recommend an aspirin a day, only this is so much more tasty and pleasurable. Moderate (2 glasses or less for the averaged size person) on a daily basis has health benefits, but 14 glasses one day a week would lead to all the alcohol problems reviewed yesterday.

Labor / Trends / Alcohol Physiology

Class started with an odds n' ends. Jennilee was at a Mexican restaurant where an old-school piercing fire alarm went off for a solid half hour. She was one f the few people in the establishment, and no one ever came over to explain what was happening, the staff just sat around dumbly, neither moving or calming. What basically had a negative outcome could have been spun positive by just a little human touch, or perhaps a free drink. I told the tale of the miserable meal I had with B at Kelly & Ping in Soho (who the hell fills a shumai with tuna fish and doesn't warn the customer?) Liz and her boyfriend ordered food from Dominos, and had a good time following along on the site as they informed her that her pizza was being prepped, in the oven, packaging for delivery, on the way, etc. Richard suspects it's all a bit of bullshittery, but ya never know.

We crunched numbers on labor costs. Spinning for the # of guests served, labor hours used, average wage and average guest check amount, all sorts of statistics were spun out: labor dollar per guest served, guest served per labor hour, labor cost percentage, etc. A restaurant can be broken down into parts, whether it's simply back of house and front of house or by station, and a sales per labor hour can be calculated for each person. If one part is over or understaffed for whatever reason, these stats will tease it out.

We had a guest speaker from an ad agency who specialized in restaurants and food retail, and was pretty underwhelming. A one-dimensional PowerPoint listed trends this year, some a little interesting, some self-evident, some totally inane. Maybe part of it was the speaker, a lower level rep who was stepping in for someone who got badly bitten by a pit bull. But part of it was their list of current trends: Food as pop culture (with a pic of Rachel Ray in a bikini top licking a fudgy wooden spoon while gazing at the camera with wide dumb cow eyes) is a gimme, as is the local-seasonal-green-community angle. But "blind dining", the trendlette to eat a meal while in the dark or blindfolded? Do I need to pay an ad agency to tell me that comfort food, cheap food and international street food are trendy?

Even more egregious were the tips for guerrilla marketing. First, if I'm going to pay an ad agency, aren't I committing right there to mainstream traditional marketing? Isn't the point of guerrilla marketing so I DON'T have to pay an ad agency? The list of tactics kind of reached this conclusion for me: website, social networking, reach out to food blogs, etc -- all stuff that can be done free or on the cheap.

The only trends that caught my ear was tea -- as an ingredient. People tend to think of tea as 'healthy', and the flavor profiles of different teas could be kinda cool, Another was 'micro-size'. Portions have always been either too huge, or back in the 80s ridiculously small. Reducing portion size to reflect a healthier way of eating AND reduce prices (while maintaining a good food cost percent) kind of turns me on. But for these two cool trends, the agency person spouted silliness like "underground dining", informal food clubs and hosted dinners where instead of being with friends, you pay strangers to enter their homes and eat their food. I think people are doing that to totally escape the reach of douche bag trend marketers....

Class concluded with a look at the physiological effects of alcohol....or more precisely, alcohol abuse. A drink of booze is not such a bad thing. Drinking too much will destroy you. As is the modus operandi of most fear-mongering absolutists (hello, MADD!), what is defined as 'abuse' is never really made clear, but the results of abuse abundantly so.

From a drink, a small amount of alcohol can be absorbed in the mouth. So even if you taste and spit, you can theoretically get drunk, Down the throat, alcohol is toxic to the lining of the esophagus, and abuse will increase the chances of cancer here. In the heart, abuse will raise blood pressure and increase heart size due to increased fat. Most alcohol is metabolized in the liver, where abuse will turn it into foie gras -- fatty and enlarged, a.k.a. cirrhosis. Twenty percent of alcohol enters the bloodstream through the stomach, where too much will tear up stomach walls and have all sorts of pleasant symptoms. Most alcohol enters the blood through the small intestine, which is why a vodka enema is so dangerous. Inflammation, pain, bleeding, I need not write more.

And the kicker to this is what the U.S.A. now defines as abuse: the legal definition of alcohol intoxication. A blood alcohol level of .08% makes it illegal to drive. That's one drink for a petite woman, 2 drinks for the majority of the population within one hour. If that is 'abuse', then we are a world of abusers. Who says prohibition can't happen again?