Price controls pay dividends
Jahn Kirchoff, owner of the three-unit Deli Lane Cafe
& Tavern in South Florida, raises prices of specials
rather than regular menu items to avoid backlash
from customers who have become price-conscious.
helping one another out, and I’m
really loyal to the guys who have
been loyal to me.”
Linda Addy, general manager
of Salty’s on the Columbia in
Portland, Ore., agrees.
“We have had some vendors
say, ‘Name your price,’” she says.
Barring that, she says, she lets
her suppliers know they are competing with one another, and
that whoever gives them the lowest bid with the best quality gets
their business.
In addition, she and the management at the other two Salty’s
restaurants, in the Seattle area,
now work harder to consolidate
their purchases.
“We are joining efforts to see
how we can group-buy on some bulk items
to drive down costs,” she says.
Many operators say the key to managing food cost is to measure it accurately.
Ojugo of Delaware North stresses the
importance of measuring everything, making sure whoever is receiving product has a
properly calibrated scale, making sure storage temperatures are accurate so food
doesn’t spoil, making sure menu items are
being made according to specifications and
CONTINUED FROM PAGE 43
environment to renegotiate prices with
suppliers, operators also are using more sophisticated menu-engineering techniques
and making use of the latest inventory
technologies.
Even relatively small food cost savings
can have a notable effect, says Clement
Ojugo, West Coast financial controller for
the Delaware North Cos. and author of the
book “Practical Food & Beverage Cost
Control.”
Assuming a 5-percent profit margin at a
restaurant — roughly the industry average — Ojugo points out: “If you save $2,000
in purchasing, that goes right to your bottom line. But you would have to generate
$40,000 in sales to make that in profit.”
The challenge of growing profit is exacerbated further at the moment by height-
ened price sensitivity on the part of customers, says Jahn Kirchoff, who owns the
three-unit Deli Lane Cafe & Tavern in
South Florida as well as Sunset Tavern in
South Miami, Fla.
“I haven’t had a menu [price] increase in
four years, and I just can’t do it now with
the economy the way it is,” Kirchoff says.
But specials represent a different opportunity, he notes. Kirchoff makes money
through the four to five specials he offers at
lunch and dinner.
Although his customers would react
negatively to hikes in the menu items they
have been ordering for years, they have no
preconceived notions of what specials
should cost, “and those I can place anywhere I want [pricewise],” he says.
Most of his lunch sandwiches are in the
$7.95 to $9.95 price range, but if he offers
beef or seafood specials, he can charge closer to $12 for them, at a food cost of around
25 percent, instead of his normal 30 percent cost.
“If we do 800 covers in a day and we can do
100 specials, that takes care of a lot,” he says.
To encourage servers to sell specials, he
holds weekly contests. Whoever sells the
most specials wins something like a gift
certificate, a bottle of wine or tickets to a
football game.
Joel Bolden, manager of Delicatessen, a
restaurant in New York City’s SoHo neighborhood, also uses sales contests to encourage front-of-the-house staff to sell select
items, but he also explains to the staff how
much waste can cost.
“We try to educate the staff on a daily
basis [about] what goes to the bottom line,”
he says. “I have no problem showing them a
P&L.”
Delicatessen’s chef, Michael Ferraro,
agrees and keeps his cooks informed.
“They understand the dollar amount of
getting an extra portion out of a fish,” Ferraro says.
He has also cut deals with his purveyors
to include him in rebate programs if he
pays his bills early.
“If I guarantee a check within 10 days
[of delivery], I get a 3-percent rebate,” he
says. “That saves me two points right there,
and I didn’t even have to do anything.
“Purveyors are definitely willing to
work with you, and if they’re not, I’m not
even giving them the time of day,” he says.
“Everyone’s bending a little bit now and
All the beer taps at the
Heartland Brewery chain
in New York have flow
meters that measure the
amount of beer poured
and compare that with the
amount of beer rung up.
