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.

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.

Odds n' Ends / Production Cost Control / Guest Speaker

Back from the weekend, we shared some odds n' ends. Some Japanese fellows got a machine to detect flavor, and determined that humans taste like...bacon. Someone popped a snake head into a dish at TGIFridays in hopes of landing a big ol' lawsuit. I told a story from my weekend, how L fired the hostess between lunch and dinner services, forcing me to step in to help, wearing a kilt, wet shoes, and a t-shirt a few sizes too small. It was an experience.

We got into cost control in food production. Turning the "as purchased" portion into an "edible portion" is an ordeal with a lot of opportunity for waste. If the minimum-wage prep cook is not monitored, for instance, he may cut an onion and toss out too much usable trim. It's not unusual for head chefs to pick around the garbage to inspect what is being thrown out.

Overcooking is another problem -- cook a piece of meat too long and it shrinks. Over the course of a year, one can lose 100s of pounds of meat And of course there is over serving: a bartender free-pours too big a glass, steak that's not weighed could go too big or small.

Inventory control: Without proper rotation, a lot can be wasted. "Carry over," the restaurant term for left-overs, is a big potential source of loss if not managed correctly.

The choice to make or buy something is tricky. Ice cream can be purchased, but the ingredients are relatively cheap. However, a proper batch freezer, electricity to run it, and the talent to run it are not. It's a balance that his to be determined from case to case.

Of course there are the twin buggaboos of pilferage and stealing: stealing is cut-and-dried taking stuff out of the store, either booze or cash or sides o' beef; pilfering is more casual, such as the hungry prep cook popping a few cucumbers into his mouth while getting the salad station together. Then there are the employee meals -- are they expensive to make or made with food that would go to waste otherwise?

This list killed me, as I see how the restaurant I'm at now is just being so wasteful, preventing us from getting on the goodfoot financially.

At 10pm, we had a guest lecturer, Anne Saxelby of Saxelby Cheese, a cool little cheese counter on the Lower East Side. She sounded really interesting, pretty much inventing herself as a cheese monger, but I was overtired and fell asleep.

Recipe Costing / Hiring

In today's odds n' ends, I reported on the machinations of the restaurant where I've been working as manager/kitchen captain/prep cook/expediter/inventory clerk, and also sought advice from Richard about how to quell some of the issues we're having -- in particular: where to look for a point-of-sale system, as our register is seriously out of date and inefficient. I also spoke of the Bohemian Beer Garden I visited yesterday, on the first super warm day of the year -- we got there, hungry, at 3:30 but the kitchen was closed until 4. We ordered soon thereafter and it took 45 minutes to get our food; when we got it, it was cold, dry and not very good.

Chicago Liz got laid off from the Mexican restaurant where she was a line cook -- it seems her boss was trying to cut expenses and cut back everyone's hours, but then she line-listed the restaurant's policies and habits, and how it's literally wasting money left and right. Kyle took her anti-NYC boyfriend to Masa, where he had a hard time ordering, but once he got the food, he fell in love with it and couldn't stop raving.

We then saw another episode of "Opening Soon," about a couple of ex-professional hockey players opening a steak house in Ontario. Neither of them cook nor have ever opened or run a restaurant; they also believe ketchup is the best sauce for a steak. Very odd. They pay a contractor to build out their space for an opening date in 6 weeks. Not surprisingly, the contractor takes 6 months and goes way over-budget, and who the heck pays a contractor in full in advance? After designing the place, they get a chef almost as an afterthought -- they hire the first person who answers their classified ad. The show glosses over a lot of details, but according to the rules of the show, the place must go on to be successful. (It doesn't show any of the growing pains that I've been witnessing firsthand.)

The next part of the class was dedicated to cost control and the concept of recipe costing. It's not too tricky, in an ideal world. You have a recipe; you know the quantities, price, and serving size of your ingredients; and you work out the cost of each dish. Divide that by what you sell it for (cost/sales) and blammo, you have your food cost percent.

We finished class with our last talk about hiring and selecting employees. Testing: today it is popular in many industries to give psychological tests to determine whether a candidate is trustworthy or not, with questions ranging from "Is it OK to steal?" to "Have you ever taken paperclips from the office home?" Damn, that sounds really stupid. The politics of the reference -- an HR department will only volunteer a confirmation of the dates of someone's employment and his or her title. You can ask, however, if the person "available for rehire." If the answer is no, that could be an indication that things did not work out well. Privately-held companies tend to have looser lips, but all sorts of laws prevent people from saying more.

Training is key, of course. Today in the food industry, the first introduction to the kitchen is a trail, when a worker goes in and follows someone around without doing anything, just observing. The problem with this is that by law trails must be paid. Previously, a person was given a test to see if they knew how to handle heat and procedure. A cook can be asked to make a perfectly done omelet, a baker can be asked to bake a cake -- in that, the proof is in the pudding, and legally, the trailer does not have to be paid. The first step is orientation -- welcome, job-role info., where everything is. Job training: performance standards. And finally, retraining: if the job changes, if they never did the job right, if there is new equipment or a new menu item.

Recruiting / In the News / Cost Control

Before we got into the week's news, G described the ongoing saga of the server they let go for sexual harassment -- the guy has been calling his regular customers and basically saying the restaurant is going out of business and letting people go without cause. Richard recommends a lawyer send him a cease and desist order.

In the news, we discussed the silly video above and, in particular, the response video recorded by the president of Domino's the next day:



Shouldn't they maybe try some sort of education and rehab for those Beavis & Butthead types rather than lawsuits?

NY Times had an interesting article about bidders on the contract to run the restaurant which is now Tavern on the Green. The place, despite having a bad year, made over $36 million last year, and its rent is fixed by the city at 3.5% of revenue. So what's the downside? The article didn't say, but other members of the class saw the paperwork -- it seems the contract holder would be responsible for a very very crappy building that's landmarked, an infrastructure that hasn't been invested in, an inability to change anything, and rules up the wazoo. Huh.

If course you can't ignore the alleged Hamburglar who showed up at a McDonald's, recently...

We reviewed cost control, accounting for inventory inflows and outflows, the same stuff I fell asleep during yesterday....and now again today. Richard then did an hour of PowerPoint review, to help people with their product presentations next week...particularly boring for me, as I've spent a few years as a PPT designer...

The last part of the class was back to supervision -- recruiting. It's always a balance of how much work vs. how many works, and this market is definitely in favor of employers. Still, it's important to keep in mind things will turn around, and it's how well you treat your staff that determines loyalty. Food service is founded on low-paid, dirty, smelly, cramped jobs, with shitty pay and shitty hours, so it's one of the most diverse sectors, with a good deal of illegals. Richard spoke about internal vs. external hiring (and what it means when someone emails versus when someone shows up) but over all, it all sounded pretty hypothetical and up to the quality of the human resources people. It takes a modicum of common sense and awareness to conduct a good interview.

Cost Control / Cheese tasting (Cheese, Tasty and Nutritious)

Sorry for the skipped day, I did go to class on Monday but pretty much had to put toothpicks in my eyeballs just to stay vertical. Didn't take notes and in retrospect, should have stayed home and slept -- the restaurant is kicking my ass, in a good way. Opening week, I put in 83 hours. Today, however, I took off to attend a Passover Seder.

Since we're off tomorrow for the holiday, we started off with an abbreviated In the News, oddly all pizza-related. The Bruni reviewed Co. and gave it a single star, which is quite good for the low expectations that pizza brings to the table. Another article, from the past Sunday, was about how Cobble Hill's South Brooklyn Pizza is hosting a gay disco on the night they are closed. Insert perverted pizza joke.....here!

The next part of class was a continuation of the discussion of food cost control. It starts with a standardized 'recipe' -- what you need, how much you need it, and how much it costs per serving. Computer programs like "Chef Tech" will tie in to a point-of-sale system that the servers use to register sales and calculate how much is spent to generate exactly how many sales. No fuss no muss.

After a talk about weights and measures (which was also covered in Culinary Arts), we discussed inventory control. Capacity of your storage (refrigerated or not), perishability, vendor delivery schedules, savings on quantity, the potential harm of a stock outage -- all are part of puzzle that comes together to keep a restaurant running profitably. Par level, or the build-to level, is the amount of stock you want to achieve your minimum -- when you go below, you order more. Some is easy; dry goods like flour and sugar are "stores" (that can be stored indefinitely), and you can seek the absolute lowest price via quantity. Something like fish, however, has to be of the moment; no matter how good the price, ordering too much will probably be wasted.

"Spec" was discussed -- what exactly should be ordered. You can call a purveyor and order a loaf of bread, but unless you specify exactly what your looking for, what you get could be almost anything -- how large, what kind of style, how thick the slices, etc.? Providing specs (everything for quantity and style to grade and use) means less waste and less wasted time in inventory.

The second part of the class was dedicated to the series of silly videos above, and a taste of a variety of cheeses, from plain cream cheese to stinky Maytag blue. This was all stuff we hit up in culinary, only in culinary, Chef M did the ordering and got us some fantastic things (I'm still a fan of tallegio due to that day.) The aged goat cheese was surprisingly tasty, the cheddar too ordinary, and the blue way too strong, though pairing it with a fortified, sweet port proved the power of a good matching.

Guest Speaker/In the News/Cost Control

I played hooky yesterday to spend a full day at the restaurant for its soft opening. Didn't miss a beat today, other than feeling awfully sleepy. In the News was silly, again run round robin by a table of people who were all too scaredy cat to do it themselves. Outback Steakhouse ran a big menu promoting cheap meals in the New York Post -- is that really news, people? Man on a motorized barstool charged with DUI? What? Domino's forced to give out 11,000 pizzas due to an incorrect internet promotion? ZZZZZZ.

The only two interesting stories were about an 1825 vintage bottle of bubbly that was recently uncorked and tasted. Unsurprisingly, it was past its prime and had notes of 'rotting leaves'. Mmm, delicious. Also, a pimp paid his ho in Chicken McNuggets. 'Nuff said.

We had a great speaker, Ariane Daguin of D'Artagnan, a producer of out-there high-quality meat stuff like foie gras, buffalo sausage, and organic bacon. She described how "humanely" raised veal are treated....in an open farm house, free fed only cow's milk, never grain. The open room has a wall of nipples onto which the calves come and suckle. When they stand there, the floor acts as a scale; that, plus the digital IDs in their ears, communicates their weight. If they are too skinny, cream comes out of the nipple; too fat, skim. Purty cool! All the calves are uniform in weight when they get axed. Sigh.

We reviewed some accounting stuff, comparing receipts over time, but I felt really drowsy.

Cost Control / Odds n' Ends

The day started with odds n' ends. Japanese cooking dude spoke about his weekend, his first cooking at the new Fatty Crab uptown -- only 2 weeks old and doing over 350 covers on a Friday night -- with only 60 seats. That figure made me nervous since the restaurant that I've been involved with is opening up....tomorrow.

Long Island Guy spoke of the new video screen system his restaurant bought for the chef, so the chef can see what orders are going to what station in real time, and cook his pizzas accordingly, making it easier to coordinate the different cooking stations with the front of house staff.

I spoke a little about the pizza class I took the day before, and how one of the wine pairings actually kind of rocked my word -- Lambrusco and pizza, a fantastic combination.

The rest of the class was dedicated to the Profit & Loss statement, a master spread sheet to record money coming in (few) and the money going out of (many) a restaurant operation. It went from easy-to-understand principles (revenue minus expenses equals profit!) to a bit more complex (the cost of good sold for food and for beverages must be kept separate as they are very different and if calculated together will skew the final figures.)