Restaurant Handbook - Tools & Rules - Operations Control
by Roderick A. Clelland
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Restaurant Handbook - Tools & Rules - Operations Control Summary
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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. |
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