Thursday, June 4, 2009

In the News / Student Concept Presenations

We began with in the news. After seeing a few documentaries about prohibition, it was pretty funny to see an article in the New York Times about the recent trend in new bars to be stylized after Prohibition-era speak-easies. The problem? Since the supply was illegal the quality of the booze was low and a lot of drinks had to be mixed with strong, sweet stuff to mask the flavor. I think this new trend should involve poor-quality bathtub gin, a total lack of licensing, and incorporate other illegal activities -- drugs, prostitution, and dancing without a cabaret license! Now THAT would be authentic.

Time Out New York had a pretty typical spread hyping a handful of new pizzerias in NYC, but more interesting was the recent article in Newsweek, which questioned the viability of all these new trendy pizzerias -- what about the old school slice joints that are getting squeezed out? I think the argument is specious -- the old school places have never had it so good, and the new places are riding their coattails. At some point the new places will shake out, but the places that have been around for years and years will survive.

The Times had a pretty ridiculous opinion piece about the U.K. judiciary that just ruled that Pringles are, for tax purposes, potato chips, unlike what Proctor & Gamble were calling them, "savory snacks," to get out of paying millions of pounds in VAT taxes.

Most of the day was dedicated to Jenni, Guytano, and Niko giving presentations on their concept menus. Both Jenni and Guytano's concepts were expansions to the restaurants where they are currently working. Jenni's restaurant owners are opening up a cafe and gelato shop, where they will roast their own beans and make their own ice creams, out in the North Fork of Long Island. Guytano's pizzeria is opening an attached wine bar with a small trattoria-style menu, out in Long Island. Niko gave a long and rambling talk about a Georgian wine & jazz bar, but with his thickly accented low monotone, he literally made me fall asleep.

Class concluded with a short P&L statement, working out the variance and variance percentages between years by costs and profits.

No class Monday, talk to ya Wednesday!

Wednesday, June 3, 2009

P and L Statements / Concept Presentation / Bar Design

Today began with a passioned discussion over why people go to bars. There are different kinds of customers. Though some people fit more than one description, they are broken down thusly:
  • Diners at restaurants which have drinks
  • Drop-in customers on their way elsewhere
  • Meet-and-go customers
  • Entertainment seekers looking for relaxation or stimulation
  • Sports fans
  • Regular patrons of a neighborhood establishment
"Meet-and-go customers" was perhaps the corniest euphemism for people looking to get laid; the textbook description is kinda hilarious, so here ya go:
Meet-and-go customers. These individuals are looking for a relationship connection, whether a date for the evening or a longer-term plan. They go to singles-bars or "meet bars" that are attractive to others like themselves. They stay long enough to meet someone whom they would like to spend the evening with, and the tow may or may not move on to a place where the food and/or the entertainment is more suitable for leisurely conversation and an evening together. Today most singles bars include dancing and very-late-night hours.
Yeah, another place where the food and/or entertainment is more mah pants!!

Anyway, as with any restaurant, the needs and wants of a bar's customers determine the concept, which breaks down into three fundamentals that reinforce each other: Design & Decor, Service, and Food & Beverage. Each group of bar customers, as listed above, has its own needs that must be catered to in these three areas.

There are certain standards that all bar customers expect in the U.S. Number one is a large variety of alcohol. Unless you desire something esoteric, chances are a typically stocked bar will offer you hundreds, if not thousands, of combinations and concoctions. The other main expectation among customers is that the quality of the drink matches the quality of the establishment. For example, one who orders a gin and tonic at a local dive bar can expect well gin and tonic out of a soda gun. From a 4-star restaurant bar? An expensive brand gin and house-made tonic with a juniper berry garnish.

We looked at the space requirements of a properly designed bar. Between the back bar, the space for people inside, the front bar, the rails, the space in front and behind a stool, the total space for ONE bar customer is 28 square feet (2 feet wide by 14 feet deep). That's a hell of a lot of space to dedicate to one seat. We also looked at layouts: How one places the bar in relation to the seating, dance floor, and restaurant will influence flow and either work with or fight against the concept (and the kind of customer that's being served). An airport bar will be long and skinny with an open front so that people can get in and out quickly to make their plane. A pick-up joint will have a central bar where people can congregate in 360 degrees and check each other out from all angles.

Mid-class, Maria and I gave presentations on our concept. Maria's idea centered around a very straight-ahead tavern with an extensive American bar menu. I used a PowerPoint presentation to give some details of a neighborhood pizzeria and pasta shop, about 30 seats, maybe in Brooklyn, named after my mom's maiden name (with my mom's image as a young hipster all over it -- see enclosed).

The last part of the class was an exercise in reading and understanding a profit & loss statement. It looks like a big scary sheet of numbers flying out in all directions, but when looked at part by part, it's actually quite simple. First part is the money you take in, broken down by food and bev, then added up. The second part is what you spent just on food and bev, and the third part is what you spent on everything else. The money you made on food and bev after paying for the food and bev is the contribution margin, and that margin should cover all expenses AND give a profit to the owner. And man, the expenses just go on and on. By analyzing cost percents (cost of an item divided by total sales) across different years, one can figure out what's efficient and what's slacking. Really, there are multiple ways to read the numbers, all true but all suggest different actions to be taken. Accounting, it's a hell of a game.

Monday, June 1, 2009

Monitoring Various Costs / Responsible Alcohol Service

Class started with a brief odds n' ends. I described the odd experience on Saturday of being in Coney Island at 10:30 in the morning meeting friends coming off a half marathon, and finding mobs and mobs of healthy runners lined up to buy hot dogs at Nathan's. Health freaks! Dave described a restaurant where he was there with a few people for dessert, it was empty, 1 of the four deserts they ordered was out, were charged for it anyway AND all the prices on the bill were higher than on the menu. Richard described a time when the bill for a glass of wine was higher than the menu price, and when called on it, the waiter returned to say that the menu was wrong and the bill correct. To which Richard replied, well, I'm going to pay the advertised price. Which is also the legally binding price. Liz was in Las Vegas over the weekend and was surprised how empty every single restaurant was, even the big names. Overbuilt, over hyped, overextended, goodbye to the last gilded age of over consumption.

Anyway, we continued talking about the other expenses of a restaurant, outside of food and labor. There is rent. There are three ways to pay.
  • Fixed: simple, the same every month, just like residential rent. Whether the business is crap or your raking it in hand over fist, it's the same.
  • Variable: The landlord gets a percentage of gross income. This in effect makes the landlord a partner, where its in his interest to generate customers for you. Mall and hotel situations see this. Makes most sense in a seasonal operation, like in a summer community.
  • Mixed: Fixed fee with a variable percentage on top. Most common. As with variable, has to be an element of trust between both parties.
We spent some time on a few examples, showing how the Cost % ratio can be applied to anything in a restaurant. Cost % = Cost /Sales, so Linen Cost % = Linen Cost / Sales or Linen Cost per guest = Linen Cost / # of Customers. By comparing these number from day to day, month to month, an idea of how efficiently they're being used can emerge.

Class finished with a discussion of alcohol. Until prohibition, the law's attitude was from the medieval period. If you were an able-bodied adult, you were responsible for your own actions. If you went to a bar and got drunk, then went out and killed someone with your car, you and you alone were responsible for the harm your caused. Since prohibition, there are what are called "dram shop laws", which assign different percentages of responsibility to 3rd parties who provided alcohol to the 1st party who harmed the 2nd party.

The big no-no with 100% liability is selling alcohol to a minor, which in the U.S. is anyone under the age of 21. It's odd to regard someone who is 20 years old, who can vote, be drafted and die in the military, drive, have sex with whoever, run for elected office, work for a living, sign legally binding contracts, BUT can't drink alcohol.

Another big no-no is causing a person to become intoxicated by providing alcohol. In the U.S., the legal definition of intoxicated is .08% blood alcohol, which is 1 drink per hour for a small person and 2 drinks per hour for a medium sized person. Most bars and booze-serving establishments pretty much break this law regularly. Related to this, it is illegal to provide alcohol to someone who is already intoxicated.

We saw part two of the video about prohibition, and what a cluster-f@ck all that was. Like marijuana today, drinking alcohol became so commonplace under the ban that it eroded respect for the rule of law. Three groups were helped: criminals got a market to themselves, corrupt police and politicians buddied up to the criminals for a huge payday, and...women were now drinking in social establishments alongside men, drinking, smoking, dancing and generally getting jiggy with it like never before. Basically, everything the Prudes wanted to happen, the opposite happened. Within 4 years of the laws going into effect, city and state-level authorities gave up and handed over the responsibility and HUGE cost of enforcing prohibition to the Feds. The Feds, understaffed, underpaid and overwhelmed, became even more corrupt than the smaller bureaucracies, with Herbert Hoover's (who was a drinker himself) cabinet notorious for being totally on the take. As the criminals got sharper and more organized, it's leadership amassed so much wealth they were able to spread around their cash enough to enter the legit world. Bronfman brought Seagram's from a bootlegging operation to a multinational conglomeration, and a man named Joseph Kennedy was known as a Prohibition-era alcohol middle man who never quite got tagged for it, though his clan certainly benefited from the dirty money.