Pay Attention to Both the Menu and Staff in Your Concessions Operation
Food-and-beverage operations don't have to be a riddle or necessary evil. For the business owner willing to take the time to study concessions, it is not unlike a combined science of mathematics and marketing. There is a fine line between maximizing profits and affecting the customer experience, and that line is always moving. It is up to the operator to monitor the movement daily, react to trends and be willing to conduct a few experiments to discover what fails and what succeeds.
Money - and lots of it - can be made through concessions. Why else would outside concessionaires be willing to deal with the inconveniences associated with a food-and-beverage operation, yet cheerfully sign agreements that require them to hand over healthy percentages off the top or bottom line. Conversely, poorly managed concessions can yield only a few copper coins of profit for every dollar taken in, or worse, red ink. So how do concessions-operations managers go about reaching margins that make their efforts worthwhile.
Profits from food and beverage operations are grounded in volume. The more business you can turn, the more money that falls to the bottom line.
Fast behind-the-counter service or patron line speed is dictated by several factors, and chief among them is a streamlined menu. Trying to offer everything to everyone has rarely succeeded. Pull the sales mix (the point-of-sale report that tells how much of each item is sold) and study it for clues. Figure out what food items have been selling and which ones have been a bust. Deleting non-movers frees up shelf space, reduces waste and no longer ties up money in excess inventory.
A menu that is tight in content and easy to read from a distance ensures that customers will be prepared to order when they reach the window. If a menu must be extensive, consider having a staff member take orders from patrons in line, answer their questions, make suggestions or simply alert them to the fact that an effort is under way to move patrons through quickly.
Pricing also plays an important role in keeping the line moving. Setting prices in 25-cent increments and with tax included is one surefire way to speed up the transaction process. The fewer coins the cashier and customer must count, the faster the line moves. In many venues, change dispensers also have helped move the line while maintaining accuracy. In any case, decreasing transaction time by five to 10 seconds several hundreds or thousands of times daily will increase sales and help convince would-be buyers that the wait in line will not be long.
Try to anticipate food-and-beverage rush hours. The hunger rhythm within large crowds usually dictates there will be a rush at peak meal times. In facilities not designed to handle sudden demand efficiently, management strategies are limited. An all-too-seldom-used game plan is to take the "sense of urgency" approach to an impending meal rush. The goal here is to treat the trickle coming in a half-hour prior as if things are in full swing, thus staving off the eventual long lines. Many operations make the mistake of waiting until after the lines are well developed to kick full efficiency into gear.
Profitability will hinge to some extent on what patrons are willing to spend once they reach the window. Believe it or not, most facilities could be charging more for concessions than they currently are. Whether in a captive-market venue (no food allowed from outside the gate) or one in which bringing your own food is allowed, people accept the idea that prices are not likely to be comparable to those found at their favorite grocery store. At the same time, patrons won't enthusiastically embrace prices pushed to movie-theater heights.
Patrons' perception of what they get for their money will impact profitability in the long run, too. It used to be that customer expectations were fairly low in terms of value and quality of food and beverage in a concessions setting. This is changing, however, as operators are upping the ante in efforts to satisfy diverse and sophisticated appetites. Food and beverage has come to be regarded as an important part of the overall experience when attending an event. One formula for success: You can charge a price pushing the upper limits if the product you serve wows the customer, who consequently won't dwell on what he or she paid for it. On the other hand, you can charge the bare minimum, but if the product is poor in presentation and quality, the customer will feel cheated and remember it forever. The chances of a repeat visit are greatly reduced.
Finally, one must be wary of those factors that can work against food-andbeverage profitability. The only reason for having vending machines, for example, should be for the dispensing of product not offered at staffed concessions venues, or for capturing sales in remote areas that cannot be serviced by a kitchen facility. A smarter alternative to vending machines is the use of mobile carts. Whether packed with ice or powered by an electrical source, carts offer greater profit margins than vending machines, as well as the opportunity to present something perceived as "freshly made" or "ice cold." Glass display cases, meanwhile, are designed to market product, and they do a fabulous job. The downside is that they help to move items with low profit margins, most notably bottled beverages. If an operator has gone to the trouble of installing fountain sodas (which have high profit margins), placing a beverage display case close by may be counterproductive.
Kitchen design can help or hurt profitability, too, and bigger is not necessarily better. The well-designed kitchen is laid out to facilitate the food's preparation and journey to the counter, positively affecting line speed, requisite staffing hours and quality of the employee work experience. Design your kitchen with attention to what food will be prepared there. This usually means a menu will need to be determined more than a year in advance of a construction project. By contrast, most existing facilities looking to improve concessions face the unenviable task of building a menu around the kitchen's established design.
Also, planning a design that is not tied to an equipment dealer is important. A dealer may design for "free," but it is very difficult to design a kitchen that is in your best interests when the designer makes 20 percent or more on every piece of equipment that the designer specifies.
No magic wand exists for making money from concessions. It is the type of operation that seems to thrive on a concept that most business experts generally abhor: micromanaging. Without a set of procedures that monitor where all of the pennies, nickels and dimes (yes, concessions is that type of operation) are going on a daily and weekly basis, it is nearly impossible to keep track of profitability.
Here are a few food-and-beverage management tasks that are a must:
• Carefully plan the menu. Define who the core spenders are and what they want. Analyze the product mix daily and be ready to pull the plug on items that do not move (see "The Menu: What Works, What Doesn't," p. 77). Have an outlet to experiment with new items. For example, a chalkboard is great for stimulating interest in daily specials or items that do not appear regularly on the standard menu.
• "Cost out" every menu item. This is done using a formula by which the cost (what was paid to bring the item through the back door) is divided by the menu price. Paper goods, condiments and garnish should be included in the cost. Simply put, the lower the cost percentage, the greater the profit margin. If the overall cost-percentage goal for an organization is 25 percent, it is safe to say that the items that sell best (say, the top 10) need to land in the 20 to 30 percent range. For example, if your cost for a turkey sandwich (meat, bread, lettuce, tomato, condiments, plate) is $1.35, and you sell it for $4.50 (before tax), then this sandwich would hit the set cost-percentage target range at 30 percent. Not everything will fit into this group; grab-and-go items like chips and candies may be closer to 35 percent, and bottled beverages even higher. Fountain sodas, popcorn and cotton candy usually are found at the opposite end, with costs sometimes less than 10 percent. The key to reaching your goal is to use the sales-mix numbers to find the perfect balance.
• Bid out food-and-beverage accounts at least once every two years. Use the leverage of competition and never underestimate the value of your business to a supplier, particularly if you pay your bills on time and know how to order. In many instances, there are discounts to be had for drop sizes (the amount of food that is delivered at each order) and early payment, but you may have to broach the subject to make it happen. Remember that getting better prices from your suppliers does not guarantee low foodand-beverage costs. It is more like a gold star for doing your homework.
• Take weekly, or if special circumstances dictate, daily inventories. Operations that rely on monthly counts are asking for trouble, since the count is usually forwarded to the accounting department, which may produce the cost numbers by the middle of the next month. For example, if someone has "borrowed" a case of meat in the first week of June and the month-end inventory isn't resolved until the second week of July, a six-week window remains to be investigated.
• Post invoices within the same time frame that inventories are taken. Posting bills makes management more aware of what they are spending, and price fluctuations from suppliers are more apt to be noticed, too.
• Create a parallel set of books. If accounting is keeping the books, then it is strongly recommended that food-andbeverage management create a parallel set of books. Weekly cost of goods can be calculated using a simple formula: beginning inventory plus purchases minus ending inventory equals cost of goods. The cost of goods is then divided by net sales for the same week, yielding a cost-of-goods percentage. If accounting produces numbers that are not in line with the food-and-beverage department's figures, there is now a reference to which comparisons can be made. In addition, the extra set of books often catches bills that are paid twice or helps to keep track of missing credits.
• Keep track of waste. Train staff to let you know when food products have to be thrown away, either from overproduction, poor rotation or some other mistake. The goal for waste dollars should be no more than one-half of 1 percent of net sales. If weekly sales are $10,000, the maximum waste target should be $50. Employee discounts and complimentary meals and beverages should also be logged.
No one in this business has the ability to predict just how much of any or all items will be sold each day. But there are tools that can be used to help make an educated guess. Start with a sales summary that tracks daily and weekly revenues within a monthly period. By paying attention to the sales mix, a preparation schedule can be built that helps determine how much product management should order and how much the staff should prepare. Portioning key items beforehand also creates consistency in efforts to stick with portion control.
Just because the cost of goods appears satisfactory doesn't necessarily mean all is in order. The true reference is to create a "theoretical" cost of goods against which the actual cost of goods is compared. The theoretical cost of goods represents the perfect world: no waste, no pilferage and no over-portioning. The difference between actual and theoretical cost of goods is rarely close, but getting within 1 percent is a good indication that not much profit is being squandered.
Despite its rank as the second biggest expense next to food, labor management is often the most misunderstood facet of the food-and-beverage business. Usually the first target of managers in cost-cutting mode, the staff deserves more attention in the early stages of operation than after employees have long been allowed to run unchecked.
Here are a few tips to get the most out of the staff and work schedule:
• Compare the scheduled hours with the actual payroll hours. More often than not, the payroll time will exceed the scheduled time. Make it policy that staff members only work the hours for which they are scheduled.
• Avoid creating a schedule tailored to staff needs rather than business needs. Yes, it makes good business sense to honor school-schedule conflicts and grant requests for important time off, but many a schedule has evolved into a blueprint for keeping everyone happy but the customers and the manager.
• Stagger "in" and "out" times. Scheduling people to arrive on the quarter and three-quarter hours helps reduce traffic and socializing that usually accompanies more than one employee coming and going simultaneously. This staggered staffing rarely affects the customer or is even perceptible.
Keep in mind also that there are hidden labor costs related to hiring practices. Giving employees the attention and nurturing they deserve early on minimizes the chances for high turnover. Do not underestimate the power of orientation and the first few days of training. Orientation is a time when new employees develop perceptions about the organization, its management and other employees. Is the work environment businesslike? Will it be an enjoyable place to work? Initial opinions are hard to change, and these perceptions are particularly critical to part-time workers, who understand that if this job doesn't measure up they can easily find employment elsewhere.
The way the first day ends is just as important as the way it began. Before parting ways, the manager should spend some private time with each new employee. Assuming the employee put forth good effort on the first day, communicate directly that you noticed what was accomplished, and find something positive to say about it. Closing on a positive note allows the employee to leave with a good feeling and look forward to the next day at work.
One of the most radical of recent business practices has been the sharing of numbers with the food-and-beverage team members. Though this has long been considered taboo ("It's none of their business"), enlightened managers are discovering that giving employees access to the financial results helps increase productivity. People by nature want to do a better job but need signals (in addition to traditional management interaction) to let them know how they are doing.
Posting food-and-beverage information can come in many forms and serve several purposes. Informing employees about the cost of product - from paper goods to entreé components - discourages waste. The number of transactions handled during a specific rush period alerts employees to the importance of line speed. Cash accuracy for a given shift holds employees accountable for overages and shortages. Sales counts for a particular item can be used to promote suggestive selling and upselling techniques among counter staff. And weekly graphing of cost of goods helps illustrate the accessibility of longterm goals.
Plus, people who learn more about their work are more likely to stay on through the entire season. Sharing information promotes a sense of ownership, at least in the sense of documenting progress. Giving employees access to certain data may also help dispel notions that ownership and/or management is raking in mountains of money, a common misperception that fosters a sense of entitlement among employees, who then justify pilfering food or giving food away to friends.
Where to draw the line as to what financial information is made public and what remains confidential is open to debate. But keeping it all top-secret cannot possibly help your cause.
Another way to keep employees interested in your operation's success is by creating an incentive program. Corporations have long rewarded employees for increased productivity and higher margins, and a concessions operation can do the same. If the team is doing a fine job, they should be rewarded accordingly, but design your program so that rewards are not based strictly on numbers. Cleanliness, openness to training and level of customer service are examples of other areas that can be measured for growth and advancement.
Maintaining a successful food-and-beverage operation is not easy, and the fact that it falls outside most people's comfort zone doesn't make it any easier. It would be hard to find another trade that requires such an acute sense of awareness. It is a nickel-squeezing exercise susceptible to sabotage from all angles. Managing the numbers starts at the back door, when the product is delivered, not when the profitand-loss statement hits the desk. The savvy concessions manager who follows the aforementioned systems and controls will know where things stand long before the official word from accounting comes down. With diligence and the inclusion of every team member, food-and-beverage operations have the potential to show profits that will make all your efforts worthwhile.