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The Incredible Shrinking Restaurant

Commodity pricing is the norm for the food service industry. Lettuce is $12.00 a case one week, $26.00 the next. The Yellowtail Tuna you special ordered at $6.00 a pound comes in at $6.50--did anyone catch it?

Foam cups are a petroleum-based product, and they mirror pump prices. If you live in New York, like many of our clients, you don't see the pump often, but I live in New Jersey, and as I write this, I'm wagering that foam cups are expensive enough to be the foundation for a small country's currency.

The bus boy you have checking in deliveries is best friends with the driver of the produce company. The waitresses and cooks get together for cookouts at least once a week and rave about the filets. The chef spends all morning getting the lunch specials prepared, punched into the POS and prepping the wait staff----yet makes up a price off the top of his head.

When food cost goes up, the GM blindly throws darts for a couple of days and then it's back to business as usual. Food Service Directors agonize over whether or not to feed a tenth grade student who has forgotten his/her lunch money -- yet will serve 10,000 lunches and not know if the cost of the Type A lunch is 65 cents or 85 cents.

My name is Robert Sloop, CEO of Kaizen Management LLC. We are a food service software systems provider, consultant and integrator for both retail and institutional food service. In my thirty years as CFO of some of the most renown multi-concept organizations and implementing food service-restaurant software systems and providing back office solutions for restaurants, I am amazed at how much money is left on the table every day--and I'm not talking about tips.

What I am talking about is SHRINKAGE. Shrinkage is LOST PROFITS. In the hospitality industry this number in dollars often exceeds the net-net profit of the operation.

Shrinkage, by definition, is the difference between what you used today in your operation and what you should have used based on your plan. In a perfect world you would get paid for everything you used and your employees would ensure that the customer only received what he or she paid for. No mistakes, no over-portioning, no spoilage, no theft, no short weight deliveries. In short, food service nirvana.

Shrinkage robs owners and operators of what is rightfully theirs. The median shrinkage we have found in operations is 8.4% of sales. That amounts to $84,000.00 per year in a million dollar operation. More than enough to pay someone to do nothing but find out the who, what, when, where and how shrinkage is occurring. Failure to control shrinkage often results in a "business closed" sign for retail restaurants or "food service management contracts" in institutions.

Finding this $84,000.00 is not for the undisciplined. It's not for the folks that ended up right here, right now who are looking for something for nothing. If you did an Internet search for "free or cheap inventory, menu and/or restaurant software," please hit the "Back" button and shop elsewhere. 

  1. Your tables are filled every day and you have a 30-minute wait on the weekend. A short week for you is 80 hours and there still isn't enough money to pay the bills. (But all your customers shook your hand and told you what a great meal they had!)
  2. You bought one of those “cheap” restaurant software packages that "did it all" yet, despite diligently entering data 10 hours per week, your numbers don't add up. You've wasted your time.  (Was it REALLY cheap?)
  3. Your owner told you to search the Internet to find him a "silver bullet" -- a software package that did it all, including taking out the garbage, for under $500. And it has to include training and support. (“Silver bullets” only work in Werewolf movies.)

Finding this lost profit is a lot of hard work up front. What we  offer is a whole lot more than menu planning or inventory control or restaurant software. More than software, we offer a system and finance model that is proven successful.

The system is based on a control approach, and our current software of choice is called Compeat. If you are interested in protecting your investment and taking home more money at the end of those long, arduous days, you deserve to have a conversation with Kaizen. 

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