Dan expands on the following prescription:

I.  Limit food costs
II.  Look at equipment and software
III. Streamline other physical costs
IV.  Look at labor
V.  Grow the business through marketing

I. Limit Food Costs

1. Determine unit cost

Start at the beginning. What is your food cost, and your margins, and weigh these against volume sold. The unit cost of items should be readily available; this allows us to see contributing factors to profit or lack of profit. Once you are aware of costs, you can phase out unprofitable products; then focus on highlighting and development of new profitable product lines. Don’t just run a business by focusing on what is selling well. If your best seller is not yielding a significant margin, the food operation may be simply spinning its wheels.

Click here for a break-out article on Determining Unit Costs.

2. Scrutinize recipes and formulas

Many formulas are of historical origins and haven’t been recently optimized. Note that

• Processes and ingredients change over time and there may well be redundant, unnecessary or even counterproductive ingredients, especially with conditioners. There is usually opportunity to eliminate expensive ingredients or re-configure a formulation that is either easier to manufacture or yields a more attractive result.

• Bakers and chefs tend to add ingredients over the years to solve a problem, or for one reason or another, but don’t seem to think “what can we take out to solve a problem”. For this reason alone a significant percentage of formulas have unnecessary costs if they aren’t constantly evolving.

• As equipment and practices evolve, an option for creating a desirable resulting characteristic by a formulation several years ago may be the less desirable approach to that same outcome today. We need to always be adapting the formula to new processes.

• Something as simple as cleaning up the process to allow for optimum hydration of bread, pastry, quick bread or scone dough may vastly affect yield and thus unit cost.

Click here for a break-out article on scrutinizing recipes and formulas.

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(0) Comments • Permalink • 11 19 2008

• Dan Ettling
• 8 ball shifter photo by flattop341
• Calculator photo by Kurt Nordstrom
• Magnifying glass photo by Andy Beatty
• Trader Joe's shelf photo by Shaners Becker
• Waste photo by hipsxhearts

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