Employee theft is a $11 billion problem in the U.S. and accounts for 4 percent of restaurant sales according to the National Restaurant Association, but it need not be, says Dan Smith, CEO of BevIntel, a beverage auditing service in Louisville, Kentucky.

Alcohol is typically stolen through three methods, he says—deliberate theft, spillage and overpouring.

“It’s a combination of all three that’s hurting restaurants,” he explains. “Employees often don’t realize that giving a drink to a friend or pouring someone more so they get a better tip, really is stealing.”

So what can you do to ensure your restaurant isn’t losing money through your drinks program? Smith offers these tips:

• Communicate with your employees and make them understand how you make money in a restaurant. Let them know what your expectations are.
• It’s an important part of any restaurant to comp frequent guests, but make sure it’s only on occasion. It’s important to keep it controlled. Have employees write down any comped drinks with a brief explanation.
• Allow employees to give away a certain number of free drinks but they should not exceed that number. And give them guidelines (preferably written) about giving away freebies.
• Spillage is especially a problem in busy restaurants, and becomes even more so during holiday season when there are a number of parties. Make sure your bar is set up correctly so that in a rush nothing is missing. It’s about being organized, being disciplined.
• Use jiggers to control the pours for cocktails—especially for holiday parties. Control spouts can also be added to liqueur and wine bottles but can be frowned upon in fine dining restaurants whose owners often think they cheapen the experience for the guest.
• Let your staff know what your disciplinary actions are in case you catch an employee walking out with a bottle of alcohol in his or her bag.
• Detail all your expectations in an employee manual and have employees sign off to show they’ve received it.
• Teach employees not to empty bottles of wine or liqueur into a customer’s glass even if there’s only a little there. It all adds up.
• Draft beers should never be topped off.
• Point out to employees that if they “steal” it hurts the restaurant. This could lead to it going out of business and then they won’t have a job at all.

Source: Restaurant Management Magazine, By Amanda Baltazar, December 2011

At the low end of the gift spectrum are things like concert and sports tickets or a ham or turkey around the holidays. However, there are also situations where chefs and managers receive items of much higher value like exotic vacations, high-end merchandise and even cash in return for their continued patronage .

As a result of these “gifts”, the restaurant owner ends up paying higher prices on the supplier’s products.

Every restaurant should have a straightforward and well- communicated policy regarding what’s appropriate and not appropriate for employees to receive from suppliers in the form of gifts.

You may think that a few free hockey tickets are no big deal but here’s Wal-Mart’s policy: Wal-Mart employees cannot accept anything from a supplier, not even a free cup of coffee. If they do, and the company finds out, it’s grounds for immediate termination. They don’t want anything to get in the way of employees doing what’s in the best interest of the company.

It’s also good to rotate people out of the purchasing function occasionally. Don’t have the same people control your purchasing decisions year after year. The longer they deal with the same suppliers, the warmer and cozier the relationships (and potential for abuse) can become.

If you suspect someone on your staff is receiving kickbacks, check to see if any suspected supplier’s prices are excessive. Have someone outside of purchasing, like a bookkeeper, do some competitive bidding on a few of your key products with those suppliers. If you’re paying premium prices, it should be fairly evident.
(Source: Restaurantowner.com; October 2011)

Lasting Impact
When a restaurant sends an email, it should not just be words on the screen; it needs to be visually stimulating and exciting to create a lasting impact. Restaurants want individuals to remember their email. The headline has to be attention-getting. If the email is about a new offer, write it in the headline, “Get 40 percent off your next meal!” If someone reads that, they are going to want to know how to get it. Keep the copy short and to the point – use bullet points if need be.

Relevant
It is extremely important to keep the information relevant. Fact – people don’t have long attention spans and they don’t have time to read over things that are of no importance to them. For example, if your restaurant is having new summer specials, send out information about it in May, not in July when summer is almost halfway over. To keep items relevant, ask for some information from the customer, like their birthday and their location. If you own a chain restaurant and the one in San Antonio, Texas is having a special deal for Alamo Day, don’t send that email to other customers around the US as it is not relevant to them.

Provide Value
The recipient of your email is looking for value. They do not want to simply read a general update of your restaurant – they want to know about events, discounts, and great promotions. In one email, a restaurant could provide discounts for a meal and tell recipients to stay tuned for new dishes and promotions. It is not so much to let people know about the new promotions or deals but let them know how it can benefit them. Maybe the new food options being introduced are healthier meals – let them know what the healthier options are and why they should come try them.

Beware of Email Frequency
No one likes to be inundated with daily emails from a restaurant. They are very likely to label those emails as “spam” and not check them anymore. At the same time, however, they do not want to wait months before finding out the next promotion. Email frequency needs to be gauged to ensure just the right impact. The best rule of thumb is to send customers emails at a regular interval but not so much that they will seek to take their name off the email list – for restaurants this seems to be 1-2/month or even weekly for certain concepts.

Include Social Media
Do not forget to mention in all emails that recipients can check out the restaurant on different social networking websites, including Facebook and Twitter. By becoming a Facebook friend of Twitter follower, individuals are provided with additional information about the restaurant and it will further deepen the relationship. As well, it is another great way to promote!

Be Smart Phone / Mobile Friendly
As more individuals are on the go, they check their emails on their mobile smart phone devices, including iPhone, Blackberry, and Android. Restaurants must ensure their emails are mobile friendly. Many traditional email formats do not translate well to the small screens of mobile devices. While the email must always maintain a sense of appeal, it must also be legible so it can be properly displayed on all screens. Furthermore, if the restaurant places any links into the email, these links must also be mobile friendly. The worst thing to happen is to send links that cannot be opened on mobile devices.

Include the Opt-in Link in Every Email
Most people think why should they put the opt-in link for those who have already subscribed to the restaurant’s emails. It might seem silly but there is some common sense behind this tactic. Customers will forward restaurant emails to their friends who they think would be interested in the news you are sending, whether it is about new items on the menu or a new promotional deal. These people may not be subscribed to your email. After they read the content and see the offer, they may want to subscribe to the email as well. A great place to include the opt-in link would be a “P.S” at the bottom.

Email marketing has great potential to provide restaurants with fast response. It is an opportunistic medium that allows restaurants to directly engage their customers. When executed correctly, email marketing can net restaurants increased profits and a solid return on investment.
(Source: Jaime Oikle is the Owner of RestaurantWebGuy.com and RunningRestaurants.com, a comprehensive web site for restaurant owners & managers filled with marketing, operations & service tips to help restaurants profit and succeed.)

Simply put, the dish room is a numbers business. On average:

• Every three people your restaurant serves creates one rack of dishes
• 50 cents per run, per rack is considered optimal efficient for most dishwashers
• Nearly half of restaurants are not running at optimal efficiency. In fact, many are running per rack rates of 70 cents or even a dollar. In short, they’re bleeding money in the dish room!

Apply those numbers to your establishment. If you serve an average of 150 people per day, you’re likely washing at least 50 racks per day. Over a month’s time the difference between 50 cent racks vs. one dollar racks is $750 out of your bottom line. Over a year the difference is several thousand.

Operators looking to bridge that efficiency (and monetary) gap can take a number of simple steps.

#1 Replace Racks
Are the racks worn? Pegs missing? Being racked properly? If your equipment is worn and you’re only getting 9 plates on the rack instead of 20 – the ramifications are obvious. Also, make certain employees are racking glass in a glass rack and dishes in a dish rack. This prevents breakage and reduces the number of cycles required. With racks costing as little as $20 to replace, it is easy to see how quickly the cost of replacing broken or worn racks can be recouped.

#2 Have Dishwasher Inspected
It’s wise to have your dishwasher looked at monthly by your chemical supplier to ensure it’s operating at peak efficiency. Are the temperatures right? Are the jets at right angle? Have they worn? Are you getting 20 lbs. of flow pressure during the rinse? Sometimes the jets can wear in as little as six months, increasing utility costs.

#3 Replace Curtains, Arms, and Jets
When times are tight, restaurateurs often try to hold out as long as possible to replace items. The dish room is one place where this strategy can be penny wise and pound foolish. Worn curtains let heat escape which can increase energy costs, worn jets also can allow too much water through. It costs 3 cents per gallon to heat and run water through the cycle – so wasted waster adds up to wasted money.

#4 Presoak Silverware
It is important to properly pre-soak silverware from a cost, as well as sanitation, perspective. Take the full 15 to 30 minutes required to presoak silverware. If this is done, then silverware can be run through wash cycle twice, rather then three or four times – which can be a real savings.

#5 Check Final Rinse Flow Pressure
Final rinse pressure and optimum range is 20 to 25 pounds per square inch optimum. Most machines have a gauge you can use to check yourself. Too little pressure and you get a poor rinse. Too much pressure and water usage goes up and the jets spray everywhere.

These simple steps could help your restaurant save thousands each year on utility and even labor costs- allowing your staff to spend less money in the dish room.

Facebook
Boasting over 500 million accounts, you can’t afford to not pay attention to this behemoth daily destination of your customers. Can be connected to Twitter and LinkedIn easily. www.facebook.com

Twitter
Real time conversations and information in 140 characters or less. Think conversations about your industry, interest and your menu items. www.twitter.com

LinkedIn
Widely used for business and professionals to network and keep in contact. Integrates well with Facebook and Twitter feed. www.linkedin.com

FohBoh
Front of the house, back of the house. Where the industry meets, networks and information is shared. They also offer an array of services dedicated to helping your business (at a cost). www.fohboh.com

Yelp
Directory site where you can post basic information. Allows users to review and comment about your establishment. You can respond to reviews, tread lightly though. www.yelp.com

City Search
Another directory site much like Yelp but not as centered around user reviews as Yelp. www.citysearch.com

Fishbowl
Endorsed by the National Restaurant Association, tech platform provides email newsletter and add-ons such as customer retention programs. Designed for the restaurant industry. www.fishbowl.com

Constant Contact
Popular basic email newsletter service with ability to see end user data like open rates. www.constantcontact.com

Mail Chimp
Very similar to Constant Contact but with more control over look and feel. www.mailchimp.com

Whether restaurants reach out to customers through social media’s “big three” of Facebook, Twitter and YouTube or with growing location-based services like Foursquare, they must be ready to keep the conversation going when those guests answer back, speakers during the “Making Friends, Building Followers and Turning Fans into Ambassadors Through Social Media” panel.

“We want to get people who care,” said Ken Langdon, partner in Langdon Flynn Communications, a firm that consults independent restaurateurs and chefs in optimizing their digital marketing. “We want a conversation to happen, and we want the customers of those brands to really feel like they’re part of it.”

Case study: Wow Bao changes the conversation
In the case of Wow Bao, a three-unit Asian-dumpling concept in Chicago owned by Lettuce Entertain You Enterprises, responsiveness salvaged a conversation on Twitter with a guest who started out as a harsh critic and eventually was won over as a brand ambassador, said Geoff Alexander, the brand’s managing partner.

He walked the audience through the timeline of Wow Bao’s response to a customer named Tony Bosco, who first asked his Twitter followers if Wow Bao “was going to suck as much as the reviews suggest.” Alexander and his team contacted Bosco immediately to ask which review he referenced, offered him a mobile coupon to try a free entrée, and followed up days later to ask how it all went.

The customer had a very positive experience, and within a few months, he was posting positive tweets about Wow Bao’s products and sharing a picture of him eating the dumplings at a Chicago White Sox game. Wow Bao gained further notoriety when an Associated Press reporter picked up on the story and spread the news of the chain’s social-media strategy nationwide.

“Twitter is about trust,” Alexander said. “If you feel like you’re getting real information [as a customer], and you feel like there’s a person on the other side of the conversation, you want to engage that brand and look forward to hearing from them.”

He ended his case study by pointing out that Wow Bao was named to DigitalCoCo’s “Most Influential Restaurants on Twitter” rankings despite having far fewer followers than the nearly 1.5 million people getting updates from No. 1 Starbucks.

“We have 2,500 followers, and 3,200 on Facebook and about 1,800 in our text message club — we are not the biggest,” he said. “It’s not about being the biggest, it’s about being the best, and taking the time to do it.”

Social-media best practices
Langdon, Alexander and panelist Seth Gardenswartz, vice president and general counsel for CoverBoom, shared several practical tips for beginning or refining restaurants’ social media strategy:

• Facebook is a billboard, Twitter is a cocktail party

Alexander said Twitter is Wow Bao’s primary venue for communicating directly with customers, who tend to ignore brands that use the platform only to self-promote and talk about specials, limited-time offers and deals.

“If you’re just going to be billboard after billboard, people are going to stop reading your tweets, so we use Facebook as that billboard,” Alexander said. “We drive traffic to Facebook from our Twitter feed, but that [platform] is about having conversations.”

He thinks of Twitter as a “cocktail party,” where the chain can jump in on different conversations, even when it wasn’t originally invited. If Wow Bao sees a Twitter user saying it’s her birthday, the brand sends a quick “happy birthday” tweet. Every time the brand gets a new follower, it thanks that person as quickly as possible.

• Keep tweets short and sweet

Twitter limits every tweet to 140 characters, but Alexander suggests that brands try to be even more succinct, making posts 100 characters or fewer. That leaves room for followers and other people to “retweet” the post and add their own comments, which their network of followers can then see and perhaps learn more about Wow Bao.

• Promote your brand, but also have “selfless content”

Langdon advises clients to promote news about their restaurants, such as new menu items, on their Facebook pages, but he suggests also mixing in some non-restaurant content so viewers aren’t bombarded by self-promotion.

“To create an engaging page, you want at least half of it to be selfless content, and half of it to be promotions,” Langdon said. “We’ll go out and find things that match the brand’s positioning and that match the customers’ interests.”

For instance, chefs of seafood-focused restaurants could link to online content about sustainable fishing, he said.

• Embrace online videos

Gardenswartz said YouTube gives restaurants a chance to share cooking demonstrations or an inside look at the back-of-the-house for guests who have become more interested in the creative side of food from its exposure in popular mass media.

“Social media gives you your own Food Network,” he said. “People love to watch shows where chefs have to make a soufflé under time pressure, so seeing the inside of the kitchen adds authenticity and makes people feel like they’re on the inside. They love to share that kind of great content.”

• Stick with it

Gardenswartz pointed out that most Twitter accounts are abandoned relatively quickly. However, brands that keep their efforts on that platform going can cultivate a loyal fan base, as long as chains are interacting rather than endlessly broadcasting offers.

If a brand’s Twitter page contains only news about deals, other users will follow the restaurant once to redeem an offer and then ignore that brand from then on, he said.

Complaints also give you the opportunity to make up for the problem and, if handled right, can even turn dissatisfied diners into loyal, repeat customers.

Here are some tips for handling disgruntled guests:

1. Show you care. Thank the customer for letting you know about the problem. Once upset people know you care, their mood often improves immediately.
2. Offer a sincere apology. Don’t get defensive or make excuses. The guest doesn’t care about why it happened. They just want to know you’re going to fix it after they’ve heard you’re sorry for the situation.
3. Tell them you are going to fix the problem the best you can. If it’s food related, fast track another meal. If it’s service related, do what you can to get them taken care of NOW.
4. Offer them something for their trouble. Depending on the situation, offer the guest something for the unpleasant experience. A couple free deserts may be all that’s needed.
5. Get them back in your restaurant. Let them know that you can do a better job and offer a discounted or complimentary meal when they return. This is not about the cost of a free meal, this is about turning a disappointed diner into a satisfied, repeat customer who may be worth hundreds, even thousands of dollars, in future business.

(Source: Restaurantowner.com)

The “Usual Suspects”

When looking into high food cost we usually investigate the usual suspects:

• Back door security
• Inventory control
• Proper documentation of “waste” (raw and completed)
• Portions and yields

We start with accessibility of the back door. If not controlled, and employees have unlimited access, product can easily be stolen during trash runs, breaks, or – whenever. Effective inventory control involves a systematic approach to counting inventory and ordering properly. Improper counts leads to under or over ordering negatively affecting sales, quality of the product, and inefficient use of inventory. Not documenting raw and completed waste properly misses the mark on effective inventory control. Improper portions and yields again negatively affect either sales if they are too small or profitability if they are too large.

The Connection

We know that controlling food cost is all about controlling the inventory. We know so much about it, and focus so much on it, we may fail to include the front end of the operation as an accomplice to poor food cost. Handling the sales transaction improperly will negatively affect food cost. Very often we fail to make the connection of poor food cost performance with poor cash management. A cashier or server rings a customer transaction and the food is prepared and served to the customer. It happens hundreds of times a day. The sale is rung and the food is delivered to the table, or to a car in the drive thru, or even to a home or place of work. If the customer received their food and that cash transaction is negated by a void, price reduction, deletion, no sale, refund, coupon, promotion, under ringing, or some kind of manager override – you lost money!  Your inventory was negatively affected (food cost), and, if done fraudulently, the cashier committed theft and you may never know it!

Cash Components

A cash shortage in the register usually triggers questions. It grabs our attention. Who was operating the register and what happened to cause the shortage? If the shortage is unusual, it may be a ringing error, a fraud perpetrated by a customer, or simply unexplained. However, if the cash components such as those mentioned above are not routinely audited, it may go unnoticed if any of those categories are significantly high. If a cashier is stealing by one of the methods above, it is easily hidden.

Dig, Drill Down, Explore, Investigate…

Run the reports on your POS system that allows you to assess cash handling. Cash handling includes performance of voids, no sales, average check, refunds, price reductions, etc. Know what acceptable limits are on those categories and investigate those that are abnormal. Look for patterns of abnormal activity and then drill down by individual cashier. When you discover abnormal or even suspicious activity, incorporate progressive disciplinary measures to change the behavior. If theft is occurring, you will quickly know.

The connection of cash management contributions to poor food cost will be made and interrupted with sound auditing and disciplinary procedures. When future issues crop up with high food cost, you will know to place another “suspect” in the lineup.
(Source: Libby Libhart, May 2011)

Supplies from eco-minded farmers and fisherman often cost more than food restaurants buy from large-scale providers. Many operators say that’s why they’re sitting out the sustainability trend; they’re convinced they can’t afford to join it.

Some chefs have discovered how to counterbalance the expense and keep their profits as sustainable as their fare. The Chefs Collaborative, a Boston-based network of culinary professionals devoted to local and sustainable sourcing, says its members have identified a number of ways to keep food costs under 32 percent.

Executive director Melissa Kogut shares these tips from members:

• Use every bit of what you buy. If you’re purchasing local vegetables, use the scraps and trimmings — “the pieces that don’t look pretty” — in soup. Ditto for fish bones or pieces of meat that don’t end up on the plate. Try not to throw away anything edible.

• Cost out the whole dish. Local ingredients, such as beef or artisan cheese, can hike food costs into the 40-percent range. But serving them with low-priced items that fill out the plate, like pasta or potatoes, can bring your margins back into a comfortable zone.

• Use what others don’t. Underutilized cuts of meat, even from local farms, can cost a fraction of what popular cuts will fetch. “They’re far less expensive, and it gives customers a chance to taste something that they don’t usually have,” says Kogut. Members specifically recommend oxtail and short ribs.

• Start small. Find just one item that’s sustainable yet affordable, whether it’s a local ingredient in season (and hence plentiful) or products like potatoes or eggs from the area, which might not carry much of a premium in price. “Sustainability is a journey, not a destination,” Kogut says.

(Source: National Restaurant Association, November 2010)

Freeman noted that Hill Country Chicken in New York City even sponsors a “Pie Happy Hour” to showcase its wide variety of pies from whiskey-buttermilk to apple-cheddar and more traditional banana and coconut cream pies. “This is not just sweet pies, this is savory pies, bite-sized pies. They are even blended into milkshakes,” he said. “I’ll eat pie if I don’t get this one right at the end of the year.”

Other trends noted by Freeman included:

The new mom and pop – Self-financed restaurants built on limited budgets are growing in number. “This is an economic decision,” he said. “There are a lot of people out there who still want to open up restaurants, and it’s a good opportunity to look at real estate in a down economy.” The restaurants are typically small and the owners are extremely involved. Some examples are eVe in Berkeley, Calif., and Sons & Daughters in San Francisco.

One ingredient restaurants – “Restaurateurs are taking one ingredient and building full restaurants around them,” Freeman said. Following on the several-year trend of gourmet burgers, the trend is extending to grilled cheese sandwiches, hot dogs and sliders. “We’re predicting perhaps a peanut butter restaurant next or a big biscuit restaurant,” he said.

Mini plates – “Small plates were the big buzz word over the last couple of years,” Freeman said. “This year mini is the new buzz word. Mini everything: mini portions, mini desserts.” The reason, he said, is it fits into tighter budgets. “Everybody wants a little more of everything. Our sense of wanting to be satisfied and fulfilled and experience as much as possible is really, really key.”

Multi purpose spaces – Eataly in New York is an example. “We are going to see markets opening in the corners of restaurants,” he said.

Minimal menus – “A couple of years ago, we found a lot of people were getting very wordy and descriptive in their jargon on their menus,” Freeman said. Eleven Madison Park in New York focuses on ingredients.

Dirt – Abandoning sauces, some chefs are turning to dried, crumbled, powdered ingredients to add texture and flavor. Noma in Copenhagen, Denmark, offers radishes with toasted-malt “dirt.” Such a technique may be used by chef Dominique Crenn, who plans to open a restaurant in San Francisco in January.

Hearth healthy – Wood-fired ovens will be used to roast vegetables and larger cuts of meat and whole animals.

Hot dogs and sausage shops – Examples include Brats Dogs & Wieners in New York. “They are moving from stands into restaurants,” Freeman said.

Vegetables – “There are even restaurants that are going meatless Mondays,” Freeman said. “The reason is the celebration of gardens and farms and relationships with farmers.”

Fried vegetables – Once-obscure vegetables are getting the crisp treatment with such items as fried Brussels sprouts, fried cauliflower and turnip chips.

Soft serve – Chefs are using soft-serve ice cream machines to produce savory flavors as well as more exotic flavors, such as the coconut-water soft serve with brownie bites at Belly Shack in Chicago.

High end junk food – “I feel like the munchies we grew up on are going to show up with interpretations done by chefs in really unique ways,” Freeman said, suggesting house-made Cheetos, Bugles, Slim Jims and jerky.

Popsicles – Similar to the soft-serve trend, iced treats are showing up in flavors such as sugar-snap pea.

Yogurt – It will show up as sun-dried, freeze-dried, smoked and pressed and in imported variations such as skyr from Iceland and labne from Lebanon.

Swede inspiration – As a trend-influencing region, the Scandinavian countries are now invading U.S. menus.

Breads – “Chefs are doing signature breads that they are serving as if they were a course,” Freeman said, citing the Popovers at Wayfare Tavern in San Francisco.

Bellies – Goat and lamb belly are showing up on menus as pork-belly prices rise, producing such dishes as the lamb-belly watercress BLT at the Lonesome Dove in Fort Worth, Texas.

If you are a restaurateur thinking about ways to increase sales, increasing marketing, making capital expenditures, or otherwise investing in your business and looking for a restaurant loan, try Advance Restaurant Finance, LLC (ARF). ARF has been making short term business loans to restaurants for almost a decade. Despite the economy, ARF never stopped making business loans to restaurants, and ARF makes restaurant loans up to $1,000,000 per location. If you are looking for a restaurant business loan, ARF is one of the first calls you should make.

ARF is a lender you can trust, and our team of experienced hospitality specialists provides a funding solution with no surprises, a quick and simple funding process, and professional, personal service.

(Source: Andrew Freeman & Co., Oct. 27, 2010)