BPAA Food and Beverage:
October 30, 2010
Money in Your Pocket
It is no secret that over the last decade, the food and beverage portion of the bowling industry has truly become a profit center within individual bowling centers, contributing largely to the bottom line of some. This is accomplished through several avenues:
- Day-to-day food and beverage operations;
- Birthday parties, corporate parties and special events;
- Catering, on and off-site;
Chef Joey Maldonado from Vista Entertainment Center in Vista, Calif., has focused on all the three, as well as signing on with a national purchasing program in order to benefit from discounted pricing and rebates. By addressing these issues, he said his food service operations are thriving.
For the best chance of success, the food and beverage portion of the bowling center should have experienced personnel in place in order to take advantage of these opportunities and contribute to the center’s bottom line.
The first order of business should be to evaluate the current food and beverage operation. Look at the food service and bar areas from the perspective of a guest in the center and ask several questions:
First, what type of business are you operating? Is it a snack bar, sports bar, a bar and grill or a full service restaurant? Next, look at your operation as a customer would. Do they perceive your operation the same way you do? And finally, ask yourself how does your operation complement the business?
Be realistic and honest with yourself and the way you view your business. Understand, you need to evaluate the way you do business from a customer perspective and how often you should take stock is up to you, but you need to do it often enough that you don’t get stale in your appearance or menu.
Extra income from a food and beverage operation can strengthen your bottom line and drive revenue during tough economic times.
The biggest element in controlling profitability is food cost. The food and beverage cost percentage should be calculated on a weekly basis as a way to measure the effectiveness of all other cost control measures. It is performed using these mathematical equations:
(Beginning Inventory + Purchases) – Ending Inventory = Usage
Usage / Sales = Overall Food and Beverage Cost
The individual item cost is figured using a similar equation and should be done regularly to ensure each item’s ability to contribute to the bottom line of the business, and to ensure that the item is generating the highest level of profit possible. To find the individual item cost, use the following formula:
(Menu Item Price – Actual Production Cost) / Menu Item Price = Individual Item Cost
There are a number of factors that you can control that will affect your cost, you must inventory on at least a weekly basis. Count your inventory before placing an order with any of your distributors and follow your par’s on the inventory sheets. You also have to account for waste and loss attributed to over prep, spoilage, or mishandling and this must be logged so that it can be taken into consideration in food cost percentage. Unfortunately, you have to address the unpleasant task of theft. Theft is a serious problem in this industry and must be dealt with in a firm manner or risk becoming a target.
Watch the price of goods as they are purchased and educate yourself as to what is going on in the market place. There are numerous Web sites and sources available that report market conditions and raw cost of goods as they enter the market. Understand what the cost of raw goods means to your cost of goods. Question your sales representative about prices if they seem too high. You are the customer and this is not the retail world. Educate yourself and demand the best price. Review your individual item cost as it relates to the sale price and determine if you are maintaining a profit margin that you can live with.
Third, consider where you get your items. Do you purchase from local merchants, wholesale clubs or regional or national distributors? There are several factors that should go into this decision. Quality, availability, ability to develop a relationship and price. You have to ask yourself “Am I getting the best product for my money?” In addition to your internal controls such as checking your deliveries for inventory control, you should analyze alternative products and services to make sure that you are capitalizing on profitability.
Know the players in your market and compare all levels of service, not just price. The advantages of using one dedicated vendor is a relationship beyond just an order taker. If the sales representative is not a good fit, but you like the provider, do not give up on the company, ask for another representative to service your account. Also, be clear in the beginning what your expectations are and never settle for less.
Melanie Warmke, of Holiday Lanes in Bossier City, La., believes the relationship with her sales rep, along with her participation in two national food and beverage programs, has made her restaurant operation’s profitability increase by more than 12 percent over the last few years.
The final aspect of the operation is menu engineering and how do you decide what to put on your menu. You should do market research, look at your competition, ask for customer input, give your staff a sense of ownership and ask them what they feel are the most popular items. Allow them to be creative and have them come up with unique names for some of your offerings. Another source is the expertise of your sales representative. They should have an accurate gauge on what is hot and should have a feel for what items are moving in your area. Ask them for samples and try them as “specials.”
Something that is often overlooked is menu management. Studies have shown the consumer’s eyes will typically look in the middle section of menu first. That area should list your most profitable items. Consider putting the second most profitable item on top and least profitable along with kids’ meals on the bottom.
When reviewing your menu for changes, it seems the ideal time to make adjustments is the end of the summer and prior to the fall leagues getting started. You should take advantage of this time to replace menu items that have not been selling with new items. To get fresh ideas, try to attend food shows for inspiration. In addition to menu changes, it is also the time to make any changes in pricing. While your customers may notice, they will be less likely to complain than if you changed prices in the middle of league play. -