or Connect
ChefTalk.com › ChefTalk Cooking Forums › Professional Food Service › Professional Chefs › Pricing, food costing, margins, fixed costs, inventory - can I help?
New Posts  All Forums:Forum Nav:

Pricing, food costing, margins, fixed costs, inventory - can I help?

post #1 of 27
Thread Starter 

Hello,

 

I have been reading this forum for some time and I have been fascinated by how number oriented some people are here. For instance, I have read a lot of discussions on prices, food costing, margins, fixed costs, inventory - this is all very interesting stuff since I deal with this daily as a financial analyst.

 

I still have a full time job, but I am looking into building my own business, the main idea is to be a virtual CFO/Analyst. Few areas where I believe I can help:

 

- Food costing

- Monthly Income Statement consolidation and review

- Budgeting and Forecasting

- Web analytics (if you have a site/social media)

- Cash flow analysis

- Defining and tracking your own metrics

 

The service should come at a fixed monthly prices, which would be a fraction of the cost of adding a headcount or consultant for this task.

 

The service would also be getting better and better over time since dealing with the same type of customers (restaurants and professional chefs) means I can see patterns and start developing best practices.

 

I would like to ask your opinion on something like this. From my end, it's a very exciting idea, but I am having difficulties finding people interested. The web seems to be full of sellers nowadays and it makes things very tricky when it comes to promote yourself, even though what I want is to genuinely build something that helps people.

post #2 of 27

I understand where your coming from.  The people who could really use your help will not have any money to pay you too. Numbers trained but not food business trained. The food business does not need another analyst.  It is a hard job in itself  for a someone running their own business just to gather the 60 or so numbers for you to crunch (i.e inventory)  and once you crunch them your advice wouldn't be worth much to a pro chef or an industrial food plant.  what would your advice be?

Hey you have too much inventory   or I think you need to focus on making more money.

and or  you food costs are too high.  

post #3 of 27
Thread Starter 

Lisa, thanks for the great feedback! This is exactly the kind of challenges/experience I am looking for. Indeed, that's one of the things I am worried about with this idea, but there are few things that I still want to explore before I part from it.

 

A couple of things:

 

Where I work finance can't give a lot of business advise as you just said, but they monitor and control the numbers. For instance, doing a monthly review of the income statement and the latest projections works quite well to keep the pulse of the business. So far this year our new president has managed to be above plan and I think part of that it's because is checks the numbers with us periodically.

 

Cost wise, depending on how this ends up being, I can see a various price tiers that start a $500 monthly. If it's a problem to pay that, I agree 100% that a professional restaurant owner or chef should be fixing other things first. Ideally, the cost more than cover itself in better numbers.

 

I see this service important for forward looking decisions. Because that requires modelling how your numbers change based on different events. For instance, if you are planning to expand your business, what's your payback time? How many more customers do you need to make it worthwhile? I see small business owners going with their guts a lot, a lot of times they fail because they did not look at the numbers. I had a friend investing in a huge gym expansion few years back, he is now doing worst because he has increased his fixed costs and he did not realize how much more volume he would need to make this investment worth the time and money.

post #4 of 27

"" he has increased his fixed costs and he did not realize how much more volume he would need to make this investment worth the time and money."""

This is basic stuff.  The kind of advice you can give would not help anyone anyway, because they think running a business is about wishful thinking.

post #5 of 27

mkuez,

 

How much food service experience do you have?  You will be getting better and better over time because you will be getting experience?  Why would anyone pay you to learn their business?  Have you ever owned or run a small business?  All you list as your services I had in school and there is software already out there that do that.  I don't mean to discourage you but I think you may underrate the knowledge of food professionals.  Welcome to cheftalk.

post #6 of 27
Thread Starter 
Quote:
Originally Posted by Jimyra View Post
 

mkuez,

 

How much food service experience do you have?  You will be getting better and better over time because you will be getting experience?  Why would anyone pay you to learn their business?  Have you ever owned or run a small business?  All you list as your services I had in school and there is software already out there that do that.  I don't mean to discourage you but I think you may underrate the knowledge of food professionals.  Welcome to cheftalk.

 

Thanks!

 

Well, finance folks change industries all the time. The thing is: how much time you spend on the numbers (collecting/reporting/making sense/tracking/projecting)? Managing a business and managing the numbers is not the same thing.

 

Take food costing.

 

How do you make sure you are constantly optimizing inventory/prices to make sure you buy stuff at the lowest prices given your volumes?

How do you price your items? Just cost plus?

Does it make sense to do a discount in some days? If so why and how much?

Are you constantly monitoring margins by mayor product lines?

What's the impact of different menus? What's the impact of a new item in the menu?

 

Etc.

 

Alessio

post #7 of 27

I have to agree with some of the things mentioned. I have owned a small business for decades. There are a number of computer programs that will give you the information you will be giving. If you understand business the owner will probably not benefit from your analysis.

  There is a large failure rate with the food business. There are a number of people that buy or go into the business totally void of how a business

is run. I think your information may be beneficial to the owners that don't understand numbers or trends. Many of these owners just use a bookkeeper and pray that the numbers at the end of the month are positive. I don't think most owners would pay that type of money for your information. If they don't understand numbers, they won't be able to respond to your information. You may want to look into small business bookkeepers and possibly piggy back with their service. I would think your success will come from lowering your prices and and think volume.

  If it were me, I would take on some accounts pro bono to build a resume. If you can offer some proven accounts that profit from your info will reduce the amount of time it takes to sell yourself. Usually the communication process with small food business owners is word of mouth. I would also learn every accounting program out there for food businesses.

Just my 2 cents.

FOR YEARS I LIVED TO WORK! NOW I WORK TO LIVE!
Reply
FOR YEARS I LIVED TO WORK! NOW I WORK TO LIVE!
Reply
post #8 of 27
Thread Starter 

I am quite interested to work pro bono, the thing is that owners still need to see a value in that, otherwise even that is not going to work.

 

On suggestions, if it's valuable great, if not the other piece I am exploring is simply doing the manual/time consuming work of putting the numbers together and track them weekly/monthly. You mention systems, how about somebody that helps managing such system? Or that does the set ups/configurations, etc.?

 

There are a lot of directions an analyst can go, it's difficult to see which is most valuable right now, definitely doing some work would help and I am looking into that.

post #9 of 27

You did not answer any of my questions?  What makes you think you know more about creating a profitable menu and calculating food cost than food service people?  Go buy a book on Cost control for Food and Beverage, a text book, study it then we may have a conservation.  A good chef tracks cost daily or weekly and does a comprehensive monthly cost and inventory.  If you had been in the food business you would know that there is a lot of competition among food purveyors.  Also a great chef spends time at the markets. 

Please answer my original questions.  What are your credentials and experience?   Asking in a friendly helpful sort of way.

post #10 of 27
I can see such a service in conjunction with a business intervention or growth planning consultancy but not so much as an on-going service to smaller businesses. I understand what finance folks do and appreciate it but after years of experience with management/finance consultants who offer a service but claim they have no need to understand the domain area to make a difference I remain skeptical because it rarely works. Surely some folks in business have no idea about how to manage, run, and grow a business... But they are often lost causes that wouldn't pay for help even if success could be guaranteed. And anyone who hires managers or financial advisors who don't understand their business and think they have some generic magic business potion are (for lack of more polite words) not very wise. Folks in those two extremes may not ever be able to recognize that they have a need for professional help. The folks in between, who have a balanced understanding of their domain area and have some business savvy, are more likely the target because they are wise enough to see when they may need to get help before the situation gets desperate or to do some planning to ensure future success. But I can only see the opportunity when a need has been identified - troubleshooter or planning services - not a regular on-gong service. If I were to even consider paying $500 per month for a number cruncher I'd need to be guaranteed that those services were directly responsible for THAT AMOUNT PLUS SOME, FOR ME AND MY BUSINESS in increased revenue/profit. I'm a bit skeptical because my experience with finance people and managers who claim that the can improve a business without knowing the business has never been good - in restaurant, or engineering, or religious environments. I'm sure you mean well and have a vision, but I resonate with the earlier comments on tieing these kind of services with other business management services as a bundle rather than stand-alone in all but a large- business context.
post #11 of 27

As a  financial analyst. This is just me now. I personally think that business is business. An analyst should be able to be productive in any type of business. I own two other business

other then my long running one. As an analyst in the food industry, I feel the most important thing is to is be totally committed to the industry. Trends, new innovations, technology, etc. in the field.

Numbers are numbers in any business. That's a constant along with the economy. As an analyst for food service I believe that most in house Chefs, not VC,group, outside ownership,

spend most of their time managing the house. Most are so far into the forest they can't see the trees.. Incorporating the trees into their numbers I think would be more productive. Attend all food related gatherings, food shows, product reviews, trends, new products, information on local sourcing, new food related technology, etc. I think it was 3-4 years before I was able to get out and attend these gatherings/shows. That is where I got the knowledge to interpret my numbers within the food industry and make corrections in my SOP and strategies.

I am fortunate that most food establishments in my area are not based on competition. There is a lot of communication between owners, even those with the same venue. When I was finally able to go outside the kitchen to attend large food service shows, conventions, etc.  It is common place for other owners to rely on me to pass on information for our area, national, and world wide trends and interests.

The food industry is an odd chicken. It takes a lot of time to keep up with all the changes. A large portion of other business, like the ones I own outside the food industry, usually offer up the same service or product. For instance, Products: office, tires, etc. or Services: pool service, lawn maintenance, day care, In my opinion the only difference is the successful ones practice complete adherence to SOP. consistency and most importantly customer service and customer relationships. 

FOR YEARS I LIVED TO WORK! NOW I WORK TO LIVE!
Reply
FOR YEARS I LIVED TO WORK! NOW I WORK TO LIVE!
Reply
post #12 of 27
Thread Starter 

5 years in a big multinational. Done: financial planning, plant controlling, internal audit. Currently I run the consolidation and reporting of a $700mm division. I am also very deep into data analysis, I am currently running a project to upgrade our reporting/data intelligence software.

 

What makes you think you know more about creating a profitable menu and calculating food cost than food service people?

 

I have never thought of that. I think I can do better analysis, not that I can come up with better strategies, that's up to you guys.

 

There are 2 things I can focus on, depending on where the value is:

 

1. Learn about the industry, learn about the best ways to run the numbers, offer advise

2. Support professional chefs and owners with their numbers

 

Reading from your comments, .2 might be valuable. Think if you can just go to a person and ask to set up numbers and reports in this or that way to analyze and track your business. This is not saying I am doing something you can't, it's saying I can save you time and help focus on the business instead than on putting numbers together.

 

As on reading books, the problem with that is that real work, or real conversations (like this here), is worth much more than books. Books for me should come further down the line, when I have defined if and how I bring value to the table.

post #13 of 27
Thread Starter 

If I were to even consider paying $500 per month for a number cruncher I'd need to be guaranteed that those services were directly responsible for THAT AMOUNT PLUS SOME, FOR ME AND MY BUSINESS in increased revenue/profit.

 

Agreed. Just let me add that if you are currently running numbers, you should consider that into your cost. If you or your staff spend 20 hours per month on number crunching, that's 1000 to 2000 (depending which hourly you use) of current cost, so $500 is a saving. And $500 is an estimate, it can be lower or higher, depending on the value for the business.

post #14 of 27

"Agreed. Just let me add that if you are currently running numbers, you should consider that into your cost. If you or your staff spend 20 hours per month on number crunching, that's 1000 to 2000 (depending which hourly you use) of current cost, so $500 is a saving. And $500 is an estimate, it can be lower or higher, depending on the value for the business."

 

When you say "1000 to 2000", is that dollars?  For 20 hours?   Not to be a nudge, but for curiosity, how much additional volume would you think an average restaurant would need to cover that?

 

How much additional volume for 500?

 

Thanks.

post #15 of 27
Quote:
Originally Posted by mkuez View Post
 

If I were to even consider paying $500 per month for a number cruncher I'd need to be guaranteed that those services were directly responsible for THAT AMOUNT PLUS SOME, FOR ME AND MY BUSINESS in increased revenue/profit.

 

Agreed. Just let me add that if you are currently running numbers, you should consider that into your cost. If you or your staff spend 20 hours per month on number crunching, that's 1000 to 2000 (depending which hourly you use) of current cost, so $500 is a saving. And $500 is an estimate, it can be lower or higher, depending on the value for the business.


Good point... but that is a cost avoidance, not an increase in business revenue/profit (directly). Hiring a consultant to do my work at a slightly reduced cost is something to think about, but too often I've had consultants "take my watch and tell me the time" with no additional benefit to my business.  Not that you'd do that, of course; I make no such implication. But you know what I mean... I want to pay a consultant to build my business. Sure, that newly acquired spare time can be used for building the business to achieve the added volume required to pay the consulting fees...  I guess I've been burnt by consultants one too many times and am extremely skeptical.  Please forgive me but that's me based on prior experiences.

post #16 of 27

I'm assuming the OP response right under me was directed towards me. I apologize for posting my 2 cents which I mentioned that is all it was. I don't claim to know anything about

being a  financial analyst. I was just responding as an owner. I had no intention to insult you or your ideas. I usually try only speak to what I know. I just envisioned if you approached me about your service. Good luck in your venture.

FOR YEARS I LIVED TO WORK! NOW I WORK TO LIVE!
Reply
FOR YEARS I LIVED TO WORK! NOW I WORK TO LIVE!
Reply
post #17 of 27
Thread Starter 

Quote:

Originally Posted by Raibeaux View Post
 

"Agreed. Just let me add that if you are currently running numbers, you should consider that into your cost. If you or your staff spend 20 hours per month on number crunching, that's 1000 to 2000 (depending which hourly you use) of current cost, so $500 is a saving. And $500 is an estimate, it can be lower or higher, depending on the value for the business."

 

When you say "1000 to 2000", is that dollars?  For 20 hours?   Not to be a nudge, but for curiosity, how much additional volume would you think an average restaurant would need to cover that?

 

How much additional volume for 500?

 

Thanks.

 

Good point, margins vary a lot between industries but I think you are pricing at least at 2x your cost of goods sold? So for $500 you'd need $1,000 of volume. Roughly, not considering all fixed costs of course.

 

Calculation was 50 $/hour @ 20 hours = $1,000 per month on crunching numbers. Now, if those 20 hours is you or your family and you do not consider this as a cost, you are making a fair point also of course. Just saying that whatever number of hours you or your staff spend on numbers should be costed too.

post #18 of 27
Thread Starter 
Quote:
Originally Posted by BrianShaw View Post
 


Good point... but that is a cost avoidance, not an increase in business revenue/profit (directly). Hiring a consultant to do my work at a slightly reduced cost is something to think about, but too often I've had consultants "take my watch and tell me the time" with no additional benefit to my business.  Not that you'd do that, of course; I make no such implication. But you know what I mean... I want to pay a consultant to build my business. Sure, that newly acquired spare time can be used for building the business to achieve the added volume required to pay the consulting fees...  I guess I've been burnt by consultants one too many times and am extremely skeptical.  Please forgive me but that's me based on prior experiences.

 

 

Hey, I just came here saying what I can do and doing some proposals, I am really thankful we are having such a deep conversation on the topic! If I can't bring value to the table, then that's one business idea less from my list, I am not particularly attached to ideas.

 

I'd say, though, I am not yet 100% convinced that I can't bring value. As you said, Cost Avoidance might be something to look into from my side.

 

As for consultants, I think I probably should have done a better job at messaging things. I believe the value of an analyst comes from having somebody that periodically collects and reports the numbers for you. That will help you maintain a firmer pulse on the business or will save you from something you'd prefer not doing or both.

post #19 of 27
i wish you the best, of course. It's not easy breaking into new areas... Or convincing skeptical old grouches! smile.gif
post #20 of 27
From another "old grouch's" point of view, I woudn't be comfortable with a non-employee who had access to financial information of the busines. If a Chef isn't constantly exploring new purchasing options, trying out new items (a.k.a. daily specials) and finding ways to lower staffing, food, and overhead costs, then a cook is being paid too much to do a Chef's job., or an owner is taking too many holidays.

You have to understand that from my point of view, as an owner/operator and chief bottle washer, any help offered to me, in whatever form it takes, has many tenacious strings attached.
...."This whole reality thing is really not what I expected it would be"......
Reply
...."This whole reality thing is really not what I expected it would be"......
Reply
post #21 of 27
Thread Starter 
Quote:
Originally Posted by foodpump View Post

From another "old grouch's" point of view, I woudn't be comfortable with a non-employee who had access to financial information of the busines. If a Chef isn't constantly exploring new purchasing options, trying out new items (a.k.a. daily specials) and finding ways to lower staffing, food, and overhead costs, then a cook is being paid too much to do a Chef's job., or an owner is taking too many holidays.

You have to understand that from my point of view, as an owner/operator and chief bottle washer, any help offered to me, in whatever form it takes, has many tenacious strings attached.

 

That's a great point. There is a student reporting to me now (since last week). It's helpful, yes, but it's also another additional headache to manage.

 

I think I need to go more specific into this. The more specific, the more clarity there is around the value of the service I offer. Going back to the student, if put her on specific tasks and train her on those, then she is really useful.

 

May I ask what type of indicators and figures you check more often? Also, where do you usually get your numbers from (Excel, special software, people, etc).

post #22 of 27

I wasn't going to post anymore to the subject but foodpump reminds me of what was my biggest concern. Giving

someone else my financial figures. Heck, I set up a kinda, sort of, anonymous, bank account just to draw out taxes, 941's, state, franchise, etc. 

I certainly didn't want the Government to have access or even know of my business account. I'm aware they can get it, but I didn't like

the idea of just giving it to them.

I have used QB since they started. I do all of my own numbers. input, reports, payroll, taxes.

Knock on wood, we have had an increase in income, although some small and some large, over twenty years.

I often wonder where my numbers stand in comparison to others seasonally. I know these are not services you

would provide but I have difficulty with finding local sources. I always have to search them out. The more cost efficient

ones usually do not advertize. I also have trouble (old grouch) getting response from vendors. I'm old fashioned and

I still send out vendor bid sheets weekly. They usually get passed on to my sales reps which over the years have all

become order takers and are banned from visiting me.:>)

Just curious,@mkuez , do you have some sort of confidentiality agreement with your clients?

FOR YEARS I LIVED TO WORK! NOW I WORK TO LIVE!
Reply
FOR YEARS I LIVED TO WORK! NOW I WORK TO LIVE!
Reply
post #23 of 27
A few thoughts from someone in the industry for 28 years with 15+ years as a consultant.

1. What you're proposing is not an original service. Most restaurant consultants offer some sort of "Virtual CEO service", and most price it much less than $500/mth. I'd say an average price is around $200/mth.

2. No restaurant owner is going to listen to someone without significant industry experience tell them anything, much less pay them $500/mth to learn the industry they're are being paid to be an expert in.

3. Anyone who thinks financial analysis in any other industry prepares them to analyze finances in the restaurant industry doesn't know enough about the industry to earn the trust of a restaurant owner. There is no other industry that requires an expertise of sales, psychology, logistics, production, warehousing, purchasing, contract negotiation, property maintenance, and all dealing with extremely perishable goods. It's not a "learn as you go" business that a financial analyst without significant restaurant experience can expect to offer value to their clients.

Performing financial analysis for a restaurant owner requires expertise not only in industry averages, but operations experience in restaurants of different services styles, sizes, price points, menus and demographics, because all those things affect the key operating ratios and standard operating procedures necessary to make money in that particular restaurant. Yes, there are some procedures that carry over from one type of operation to another, but many many more than not only vary based on those metrics, but may not exist in any other similar operation. Only an analyst with years of experience and thousands of hours working inside restaurants and other food services is qualified to offer advice to someone who does have that type of experience.

If it's just a matter of outsourcing work, $500/mth is a really steep price for that type of service, and a restaurant would be smarter to spend a fraction of that amount on a good CPA who has restaurant specific knowledge, then train his staff to perform any of the in-house work that they can do, which helps develop the staff as a whole besides.

Brandon O'Dell

 

Friend That Cooks Home Chef Service

www.friendthatcooks.com

O'Dell Restaurant Consulting

www.bodellconsulting.com

 

Reply

Brandon O'Dell

 

Friend That Cooks Home Chef Service

www.friendthatcooks.com

O'Dell Restaurant Consulting

www.bodellconsulting.com

 

Reply
post #24 of 27

We provide a very similar service plus a few other bells and whistles for $39.99/month. Chefs can upload order sheets, track invoices, and auto-generate food cost reports and other key metrics for their kitchen: www.localline.ca/#/purchasers.

 

In our experience having someone to organize and analyze the numbers is only half the equation- the other half is providing the knowledge of what to do with it. Great chefs can derive insights from numbers, but for other chefs it needs to displayed in a more directed fashion. 

 

Best of luck as your try to carve out your niche. 

post #25 of 27

I'm bombarded with services all the time. I think of you when I receive them.

That part of the business is starting to split into specialties as most services.

Just one I received today:

 

Did you know that Toast launched a Menu Engineering Bootcamp that gives you tips, strategies, and worksheets you need to become an amateur menu engineer?

Check out our Menu Engineering Bootcamp: a free course designed to kickstart your menu engineering and menu design initiatives this year - in 30 days or less. With5 lessons and assignments and over 50 takeaways and strategies, this free course can help you increase restaurant sales by 27% or more and become a menu engineering expert.

Click Here to Get Started!

Let me know what you think, and feel free to forward this course to a friend.

Nicole L'Ecuyer
Marketing Manager
617.297.1005

I never respond, but i would bet there is an agenda.

FOR YEARS I LIVED TO WORK! NOW I WORK TO LIVE!
Reply
FOR YEARS I LIVED TO WORK! NOW I WORK TO LIVE!
Reply
post #26 of 27
That's great; what a concept. Thanks for sharing that Panini. Like all free seminars it is a door opener for services-for-fee, which is fine. I always wonder what the unique angle is to the services and if they can support the claim of 27% increases.
post #27 of 27

That is an interesting link.  At school it was called Menu Planning 432. I wonder if all these marketing consultants use these terms?

 

qRates menu by profitability measurement of each item in the menu
qGroup , name, and classification of the menu items
qStars
qPlow horses
qPuzzles
qDogs
New Posts  All Forums:Forum Nav:
  Return Home
  Back to Forum: Professional Chefs
ChefTalk.com › ChefTalk Cooking Forums › Professional Food Service › Professional Chefs › Pricing, food costing, margins, fixed costs, inventory - can I help?