Restaurant Handbook - Tools & Rules - Operations Control Summary:

CONTROL - PRIME COSTS - OVERHEAD
Entropy and human nature continually prove: without timely and effective control, costs always escalate and quality slips quickly. Control is absolutely necessary, yet all control detracts from our primary focus on the needs of people. The costs of control in the form of diverted dollars, time, and attention must never surpass the potential savings from control. Neglected people are always costly. Careful design of controls will assure maximum of feedback for decisions balanced with a minimum of assets diverted from people.
Cost control deals with two primary categories. (1) Prime costs are the direct costs of producing and delivering your product and service. The two major components are cost-of-goods sold, and direct labor costs. Both of these costs are large and provide much room for control that so affects your fragile bottom line. (2) All indirect costs are overhead. Any time we can reduce overhead, we can redirect resources to people and producing value to the customer.
Control uses the various tools of value chain analysis (VCA). Value analysis is the systematic activity and discovery to reduce costs and improve the performance of products and services. Use the tool & rules provided for smooth and efficient flow of value.
Remember: Do not lower any cost, if it will lower customer perception of value.
Section 5     CONTROL – OPERATIONS
    INFORMATION SYSTEMS
    ACCOUNTING FOR DAILY OPERATIONS
        POINT OF SALE CONTROLS
PRIME COSTS
    COST OF GOODS SOLD
PURCHASING
        INVENTORY CONTROL – SUPPLY CHAIN
        THEFT CONTROL
        BAR CONTROL
    LABOR COST CONTROL – PRODUCTIVITY
        LABOR COST PERCENTAGE
        PAYROLL PROCESSING
    COST ANALYSIS
        BREAKEVEN
OVERHEAD CONTROL
ACCOUNTING TO GOVERNMENT
    REGULATORS
OPERATIONS
    OPERATIONS MANAGEMENT
        FOOD HANDLING
            WALK-IN MANAGEMENT
    RED MEAT
            DAIRY
            BAKED PRODUCTS
            BEVERAGES
                WINE
                COFFEE
    FACILITY MANAGEMENT
        EQUIPMENT
            MAINTENANCE
                INDIVIDUAL EQUIPMENT
                KNIVES
                THERMOMETERS
    HEALTH / SANITATION / CLEANLINESS
        FOOD ILLNESS
        PEST CONTROL
        FIRE SAFETY
        FIRST AID – CUTS – BURNS – SLIPS
        DISH WASH / CHINA POLICY
        JANITORIAL
CHECKLISTS
RESERVATIONS


About the Author:

Roderick Clelland, MBA, has over two decades of restaurant experience, in both operations and consulting to the industry. He formed a consulting firm with Joseph M Tierney, MBA, and Glen A Wilt, PhD to bring science and research to the fundamental restaurant decision process. While completing contracts with successful restaurant chains, he naively decided to start his first restaurant on the side, and quickly learned that great restaurant management cannot be a part-time job.

He designed, financed, built, staffed, and operated several highly profitable and popular award-winning restaurants. “My proudest achievements were the low turnover of my restaurant staff over the years, and the large number that became wealthy in their own operations. When you select great people and insure they have excellent knowledge and skills, you have happy staff and happy customers”

Mr. Clelland continues to consult to the industry, and is still constantly dismayed by observable poor restaurant operating practices. He currently lives in San Francisco.