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Chapter Seven
Restaurant Management
I. Chapter Objectives
After reading and studying this chapter, the student should be able to do the following:
- Describe a restaurant’s front of the house.
- Explain how restaurants forecast their business.
- Describe restaurant service.
- Describe front and back-of-the-house systems
- Outline back-of-the-house operations
- Summarize restaurant management financials
II. Chapter Outline
Front of the House
Operations are divided into two sections: the front of the house 1 anyone with guest contact (dining room manager/hostess/bus persons/servers)—and the back of the house (kitchen manager/ cooks/prep cooks/expediter/receiving/dishwashing). The restaurant is run by the general manager, or restaurant 1 manager. Depending on the size and sales volume of the restaurant, there may be more managers with other responsibilities. Managers should all be cross-trained to relieve each other. The hostess’ job is to greet the guests and to manage seating in 1 the dining room sections. Tools such as seating charts and reservations books help the hostess to control the flow of seating. The front of the house must create and maintain a curbside 1 appeal, meaning keep the restaurant looking attractive both inside and out In addition to the 7 steps of the table service , servers are 1 expected to be NCO—neat, clean, and organized—and to help ensure that the food is served at the appropriate temperature.
Restaurant Forecasting
Most businesses, including restaurants, operate by forecasting a 2
budget of estimated sales and costs for a year. These expenses are broken down in a weekly and monthly basis. Sales budgets are forecasts of expected business. The two components used in forecasting are guest counts (covers) and 2 the average guest check. The guest count reveals the number of guests patronizing the restaurant over a period of time. The number of guests will vary during the week. Mondays are usually the slowest. Friday, Saturday, and Sunday usually provide up to 50% of the operation’s revenue. Day of the week, meal period, previous forecast materializations, and special holidays are all factors of forecasting. The average guest check is calculated by dividing the total sales by the 2 number of guests. Multiplying the number of guests by the average guest check reveals the forecasted sales. The year is divided into twelve 28-day and one 29-day accounting 2 periods. Weekly forecasted sales are combined to form one accounting period. The 13 accounting periods, when totaled, become the annual total. Beyond using forecasts for estimating sales, managers also use them to 2 predict staffing levels and labor cost percentages. Once sales figures are determined, all expenditures, fixed and variable, 2 must be deducted from sales. The money remaining becomes the operation’s profit.
Service
Today, the quality of service has become very important to American 3 diners. The quality of the service can often set a restaurant apart. The industry's response to this desire is evident by its increase in service training. A new American service has emerged. A less formal yet professional approach is preferred by today’s restaurant guest. Servers are not merely order takers. They are salespeople of the restaurant and must learn to gauge the guests’ satisfaction levels and 3 to be sensitive to guests’ needs. Restaurants in the United States, Canada, and many other parts of the 3 world use American service, in which food is prepared and appealingly placed on plates in the kitchen, carried into the dining room, and served to guests.
Suggestive Selling
Suggestive selling can be an exceptional tool to increase food and 3 beverage sales. Servers report that most guests are not offended or
Wireless POS Systems The Pocket POS system by PixelPoint allows servers to use a 4 handheld PDA, which operates on the Windows CE platform, to send orders to the kitchen. Given that wireless POS systems speed up orders, their use is likely to increase. Labor Management FOH systems track employee working time. A BOH management 1, 4 package adds the ability to manage payroll and human resource information. Labor management includes a human resources module to track 1, 4 hiring, personal information, vacations, tax status, availability, and so forth. Scheduling capability lets managers create schedules based on forecasted business. These are enforced as employees check in and out, allowing management control of labor costs. The labor management package also tracks actual working time and 1, 4 pay rates, feeding data into a payroll processor to generate paychecks and file tax data. Financial Reporting FOH and BOH systems post data into a relational database on the 6 CPU. Restaurant managers use this data for reporting and decisionmaking. The data must be reported in useful forms. It is important to get reports in real time so that losses can be limited. 6 Some reporting packages provide a continuous graphical representation of financial data. Personal Digital Assistants Personal digital assistants (PDAs) allow improved time management 1, 3, 4 and speedier service. They allow servers to post data on the spot and not at a computer terminal. Orders don’t have to be written down. PDAs also can be used in hotels, especially in housekeeping where 1, 3, 4 they can give housekeepers and the front desk real time information about room status.
Back of the House
The back-of-the-house refers to all areas that guests do not typically 5 come in contact with; it is generally run by the kitchen manager. The back-of-the-house includes purchasing, receiving, storing/issuing, food production, stewarding, budgeting, accounting, and control
Food Production The kitchen manager, cook, or chef begins the production process by 5 determining the expected volume of business for the next few days. Much of the prep work is done in the early morning and afternoon. The Kitchen Manager checks the head line cook’s order, which will bring the prep area up to the par stock of prepared items. The kitchen layout is set up according to the business projected as well as the menu design. Most full-service restaurants have similar layouts and designs for their kitchens. The cooking line is the most important part of the kitchen layout. The size of the kitchen and its equipment are all designed according to the sales forecasted for the restaurant. The kitchen will also be set up according to what the customers prefer and order most. Teamwork is especially important in the kitchen; for example, helping each other with the prepping and the cooking. A number of chefs are joining the green hospitality movement by encouraging the purchase of sustainable farming produce. More than 20,000 American Federation members are emphasizing organic and locally grown produce, whole-grain breads, and grass-fed meat products.
Kitchen/Food Production
Staffing and Scheduling Practicing proper staffing is crucial in running a successful 5 kitchen. Overstaffing, rather than understaffing, is often the best idea, for it is much easier to send someone home than to call someone in. Extra employees allow for cross training and development. Problems can also be eliminated if a staffing plan is created. 5 Also crucial to a smoothly run kitchen is a competent staff. Training and Development Implementing a comprehensive training program is vital in the 5 kitchen due to a high turnover rate. Often, the most competent chefs are used to train new hires 5 Developing the skills of all employees is critical to the growth and 5 success of the kitchen and, ultimately, the restaurant. A development program may consist of delegating duties or projects to the staff, allowing them to expand their horizons within the kitchen and the restaurant business. Such duties include projections of sales, inventory, ordering, schedule writing, and training.
Purchasing
Purchasing for restaurants involves procuring products and services 5, 6 that the restaurant needs in order to serve its guests. Operators need to determine standards to set up an effective 5, 6 purchasing system. The following must be established – standards for each food item, systems to minimize theft/pilferage, par stocks, who will do the buying, who will do the receiving, storage, and issuing of items. Product specifications establish standards for each product. 5, 6 Computerized or manual systems can be used to minimize theft and 5, 6 pilferage. But it can’t prevent it. responsible for receiving should not be the same person. Keeping these responsibilities separate is important to guard against theft. 88 An efficient and effective system establishes a stock level that must be on hand at all times. This is called par stock.
The person who is responsible for ordering and the person who is 5, 6 Pre-purchasing functions include - planning menus, determining the quality and quantity needed to produce the menus, determining the inventory of stock levels, identifying items to purchase and the amount to be purchased, and writing specifications and market orders for purchase. Purchase orders come as the result of the product specifications.
Receiving
When placing an order, the restaurant operator specifies the time and day the delivery is to be made. Receiving is a point of control in the restaurant. The purpose is to ensure that quality, quantity, and price are what was ordered.
Perishable items may go directly to the kitchen. Non-perishable items go into storage.
Storing/Issuing
Control of the stores is often a problem. Records must be kept of all items going into and being removed from stores. The more people that have access to the storage areas, the more difficult it is to maintain strict controls.
Items should only be released when an authorized requisition has been completed. First in–first out (FIFO) ensures stock rotation by placing the most recent purchases, in rotation, behind previous purchases.
Budgeting
Budgeting costs fall into two categories: fixed costs are constant regardless of the volume of business and variable costs fluctuate with the volume of business.
Restaurant Accounting
One of the most important goals of any business in a fair return on investment, otherwise known as profit. Accounting for income and expenditures is a necessary part of any business enterprise.
Balance Sheet
A balance sheet reflects how the assets and liabilities relate to the 6 owner’s equity at a particular moment in time. It is used by owners and investors to verify the financial health of a business Restaurants are one of the few, fortunate types of businesses to 6 operate on a cash basis for income receivables. There are no outstanding accounts receivables because all sales are in cash.
Operating or Income Statement
The income statement, which is for a month or a year, begins with 6 food and beverage sales. From this total the cost of food and beverage is subtracted; the remaining total is gross profit. Other expenses and sources of income are identified by category to eventually realize net income. Managing the money to the bottom line requires careful scrutiny of 6 all key results, beginning with the big-ticket controllable items such as labor costs, food costs, and beverages, on down to related controllable items. Additionally, management may want to compare several income statements representing operations over a number of different periods.
Operating Ratios
Operating ratios are industry norms that are applicable to each 6 segment of the industry. Several ratios are good barometers of a restaurant’s degree of success. Some ratios are, food cost percent, beverage cost percent, labor cost percent, contribution margin and prime cost.
Food Cost Percentage
Food cost percent equals; cost/sales x 100 and is a comparison of 5, 6 cost of goods sold to sales. Food cost percentage has long been used as a yardstick for measuring 5, 6 the skill of the chef, cooks, and management to achieve predetermined food cost percentage – usually 28 – 32 percent for a full service restaurant and a little higher for a high-volume, fast-food restaurant.
Contribution Margin
The contribution margin is the amount that a menu item contributes 5, 6 to the gross profit or the difference between the cost of the item and its sales price. Some items contribute more than others on the menu therefore food operators focus more attention on the items that contribute more dollars. The beverage cost percent is calculated like food cost percent and is used to compare the cost of goods sold to sales.
Lease and Controllable Expenses
Financial Management Key elements that must be addressed by Foodservice Managers 6 include: Accounting and Cost Control Administrative Management Key elements that must be addressed by Foodservice Managers include Scheduling and Coordination, Planning, Communication, and marketing management. Operations Management Key elements that must be addressed by Foodservice Managers include Facility Maintenance, Food and Beverage Operations Management, Service, and Sanitation and Safety.
Recycling
At the end of the night in most restaurants, leftover food, paper, bottles, and cardboard are typically put in a dumpster. Separating garbage is dirty; it requires people and time. But, many operators say making minor changes reduces trash and helps the budget.
Trends in Restaurant Operations
A few trends include more restaurant food truck and mobile vendor operators, simplifying menus, increased use of technology, delivery, fast fresh casual, credit card guarantees and overbooking, and more large retail restaurants.
III. Check Your Knowledge
- Question: Describe the principle functions of the front-of-the-house table server.
- Question: Why might guests be asked to wait a few minutes even if there are some tables available?
- Question: Define curbside appeal.
- Question: Explain the importance of restaurant forecasting. Question: What formula would a restaurant use to forecast guest counts and guest checks?
Check Your Knowledge
- Question: Describe the different types of restaurant service.
- Question: Explain the concept of suggestive selling.
- Question: Name three characteristics of a good server.
Check Your Knowledge
- Question: What are front and back-of-the-house systems? Describe their purpose and function.
- Question: Briefly define guest services solutions.
- Question: Explain the ways in which advances in technology aid the inventory process in restaurants.
- Question: What are the benefits of using a PDA?
Check Your Knowledge
1) Question: Outline back of the house operations. 2) Question: Explain the following terms: product specification and production control sheets. 3) Question: Discuss the five rules for running a kitchen that TGIFriday’s has implemented.
Check Your Knowledge
- Question: Create a recognition program that would encourage restaurant employees.
- Question: What is the storing/issuing process? Why is it important?
- Question: Briefly explain the term contribution margin.
