We have received many reader questions about food cost % in a banquet operation. The focus seems to be on benchmarks and peer comparisons.
My work takes me to operations with fantastic event management tools. Most of these operations take a banquet event order (BEO) and distribute the order to the various departments. The kitchen gets a copy of the BEO with specific menu details.
If you take the time to develop a recipe costing and scaling model, it is much easier to answer food cost questions. Management can focus on specific production issues and the most important is a production forecast. There are many factors to take into consideration. What is the contracted guest count? Do we expect fewer guests or more guests than the contracted count? Given the best intelligence, do we expect the particular group to consume more or less than our standard usage? What items will be prepared for the Chef's Choice items? What is our safety factor?
I prefer to focus on the first and last questions. The contracted guest count and the production safety factor will have the greatest impact on the total food cost for the event. While many choose to forecast production for 100% of the contracted guest count with a 10% safety factor, there20is no law which requires this approach. For the purpose of analysis, let's take this approach as the industry standard. For the answer to the "What should our food cost % be for our operation?" question, we can use the 100/10 approach.
Once we have the model calculate our purchasing requirements for this standard, we can tweak the numbers to gain an advantage. I realize no one wants to run out of food during a special event. Do not take a radical production cut from your current model. If you use the 10% safety factor now, try moving to 9% for a couple of months. When you are comfortable with 9%, take it down to 8%. Eventually, many of you will find a safety factor between 5% and 7% is optimal for your company. The move from a safety factor of 10% to 5% could put an extra 1% to 1.5% profit in the bank.
Adjusting your forecast for both the safety factor and the contracted vs. actual guest count simultaneously is complex. Stick with the safety factor adjustments at first. If you are very certain a specific party will likely be far above or below the contracted count, go ahead and use your educated guess for purposes of production forecasts. Use a safety factor 1% higher than your current number for these events. For example, if you expect the count to be 90% of contracted and you use a 8% safety factor, the production adjustment factor will be 97.2%. Take your contract count and multiply by 97.2% to get your guest forecast.
Don't build excess into yo ur recipes. The standard recipes should not be used to adjust for guest count fluctuations. Use your standard recipes to allow accurate scaling for a specific number of guests. The guest count adjustments should be a separate calculation agreed to by the entire management team. If you build safety factors into guest counts, recipe requirements, raw ingredient yields, etc., it is very possible to over produce by as much as 25%. In many catering operations, there is no way to make use of this over production.
Finally, let the Chef choose the Chef's Choice items. Rely on your professionals in the kitchen to find seasonal ingredients and menu items to prepare with these ingredients. You may want to adjust the entire model to adapt to a very popular seasonal menu item. Corn on the cob or autumn pies may attract greater consumption than the standard, year round menu items. This is a gut check adjustment. Take your best shot and study the actual results to improve your visceral accuracy.
Many of you already employ many of these ideas. Hopefully, this focus will help you develop a framework for the future. Many great ideas get shot down in meetings due to normal discussion noise. If you use a straight forward forecasting model, your accuracy will improve.
Joe Dunbar
Dunbar Associates
P.O. Box 579
Fairfax, VA 22038-0579
800-949-3295
http://www.joedunbar.com
jdunbar401@aol.com
Logos, product and company names mentioned are the property of their respective owners.
