Cutting expenses on food & beverages
CASE 1. LOCAL PRODUCTS
Buying from local suppliers often results in higher quality at lesser costs. We used to purchase imported syrups for out cocktails, but that’s in the past. Our bar managers, to whom we had delegated running the bar, suggested an alternative: making similar sweet, alcohol free concentrated beverages — cordials.
By producing cordials from berries, fruits and even popcorn, we solved the issue of having to import costly syrups. We’re now using cordials in lemonades, liquors, cocktails, and our signature tea blends. For example, we brewed a tart black currant syrup by boiling branches with buds in sugar.
We only buy raw materials for cordials in their season, making several seasonal purchases within a year. In winter, we stock persimmon, kiwis, tangerines, pomegranates and other stuff. In summer, it is endemic berries, fruits, melons and watermelons. All these are stored in specifically designated refrigerators and warehouses.
Win-win: we significantly reduced the production cost of our beverages (from 35% to 12%) while increasing their quality thanks to natural ingredients.
Prior to that, the production cost of our beverages amounted to 32–35%. They were good, of course, but now the production cost is just 10–15%, and Guests like it that we use natural ingredients and make beverages on our own. For example, if persimmon is «out of season», they can order a beverage with natural mashed fruits or berries at a low cost, while we profit from it considerably.
Economy: all cordial-based beverages are high-margin products as their production cost is below 15%. With our turnover, we save 200–300 thousand rubles depending on the current month. You can easily imagine how much you can save by cutting two thirds of the production cost by producing stuff on your own. For us, they are homebrew lemonades, liquors, all kinds of cocktails and tea blends.
CASE 2. HIGH-MARGIN MENU
I’m certain that the ABC-analysis, timely alterations in the trade matrix and regulating prices can help you increase the margin value of your food and beverages section.
We performed the ABC-analysis and determined which products of ours are most profitable. We immediately excluded articles with higher production costs, because Guests tend to order something anyway, so the high-margin products simply net more. For instance, we excluded almost all dishes with wish and seafood. Special offers have also been redirected at high-margin articles.
Win-win: reduce products made from more expensive but less popular ingredients, and you will get more profit while selling the same amount of stuff.
Economy: the total production cost of the menu dropped. With our turnover, we save 100–150 thousand rubles depending on the current month. One of the amusement centers was able to save 50% of the production value of their café menu with the help of our consultations and this case.
Excerpt from «Fantastic Park. Entertainment Centers: From Projects to Happy Guests» (Part 5. Food & Beverage. Chapter 1. The Kitchen).
Evaluation of F&B efficiency includes such parameters as food cost (production cost in proportion to final price) and delivering on the average check expectations. Usually, the average check is evaluated as per the individual or table. We do that differently: we divide the total of F&B sales by the total amount of Guests. This is a rare approach but it was our option because our center employs the universal entry ticket system. This also allows us to formulate tasks for F&B managers more efficiently. Their goal is to increase the average purchase size by selling as much products as possible to every single customer.
You can find more about working with the F&B in my book Fantastic Park. Entertainment Center: From Project to Happy Guests. I devoted a whole chapter to the nuances of F&B in entertainment centers, concepts of the bar and kitchen, compilation of the menu, choosing suppliers and purchasing ingredients.
CASE 3. PARTNERS AND SUPPLIERS
Every commercial company that seeks to survive and thrive is interested in one thing before all: boosting sales. We are urging our suppliers to do more special offers together, which gives us «free products» and other bonuses.
Suppliers use batches of «free products» to do special offers and stimulate demand. For example, when there’s a «2+1» offer, the supplier provides every third bottle of beverage for free. Other things we get from our partners are: branded uniform, dishes, kitchen and bar wares, promotional materials etc.
Excerpt from «Fantastic Park. Entertainment Centers: From Projects to Happy Guests» (Part 3. Chapter 4. Marketing & PR).
Big suppliers that we cooperate with often agree to do promo campaigns, which we suggested ideas for. Once we cooperated with PepsiCo on the special offer titled «Student Book».
PepsiCo started giving out special «books» (similar to grade books) to students buying their products in their campus based outlets. The book was basically an assortment of coupons signaling about special offers in a variety of places, including our entertainment center.
Almost same with Heineken: when buying beer sets in supermarkets, the customers would get a coupon that stimulated them to visit our entertainment center. That was basically free advertisement; we only had to invest in printing the coupons.
CASE 4. AUTOMATIC BAR STATION
We set up the automatic bar station SKBARA in our restaurant «Vozdukh». Not only it looks neat and feel progressive; the thing is also quite efficient. Before that, the bartender would have to take all the necessary ingredients and blend them to make a cocktail — you can probably imagine how much time that would take. For example, a whole minute to pour just one Long Island and give a check to a customer. The automatic bar station (ABS) does that in 7–8 seconds.
All the ingredients for cocktails are now stored under the bartend or just stand upon it. The ABS is connected with the cash register, so when the bartender inputs the necessary information, the wonder machine makes a beverage all by itself.
The ABS guarantees stable proportions and quality of the beverage. There’s never too much or too little drink in your drink, so switching to ABS turned out to be a huge improvement on the quality of both service and produce. The bartender is susceptible to the human factor; they can always make an accidental mistake (and sometimes, there are dishonest bartenders). The ABS will never make those kinds of mistakes. Provided that it runs smoothly, of course.
The ABS receives commands from the cash register. It is fully compatible with any accounting programs. In our case, it’s iiko.
The ABS is ergonomic, taking up only 0,15 square meters of space, and contains a lot of slots for cocktail ingredients. We’re using about 15 ingredients which can be mixed in any kinds of proportions.
Win-win: the ABS relieves both bar employees and Guests, making the flow faster. Guests can always be certain that they will get the exact cocktail that they want. In the end, all that boosts profit.
Economy: the ABS reduces bar running expenses during periods of peak attendance. It requires fewer bartenders to handle more Guests. Shortages and regrading are also excepted.
CASE 5. AUTOMATION OF MIN AND MAX CASH BALANCE
Usually, when something is out of stock at the bar, the bartender notifies the supplier. However, any kind of automation software (r-keeper, iiko, Tillypad and others) have the «min and max cash balance» functionality.
We’ve been showing our employees how to handle various programs, and now any of them can get in one click a purchase list for a certain period or optimal purchase volume based on average expenditure. The program counts up the cash balance automatically and adds the necessary amount of products to buy.
Win-win: automation is always good, especially purchase automation. Buying wrong stuff, or too much stuff, is no longer an option. In addition to that, the employees don’t have to worry more than they should about numbers and spend more time with Guests.
Full list of related materials:
- 6 cases on wage fund reduction
- Sharing profit among employees
- Win-win. Economy, which improves the service
- Total reduction. Series of cases on cutting expenses
- Changing work schedule
- Reducing costs for the equipment rental and purchase
- Reducing costs for maintenance and administrative expenses
- Ways to increase revenue