Part II of II Extreme Cost Savings & Profitable Business Strategies
Few hospitality professionals can attribute part of their expertise to having “managed earth’s most exclusive resort… Camp David.” Nor can they claim product creation credits with Fortune 25 brands, globally published business plans or achieve 35% client growth levels during an economic downturn. Chef Martin Mongiello can.
In the last post of our two part interview, Chef Mongiello shares his insights on shaving operating costs and thinking outside the box.
You’ve done a variety of consulting work with major brands. What is working with enterprise accounts like?
Brands may come to us when they want to get into a certain country. ‘How do we get to know the chefs there? Get into certain stores?’ If you’re only selling in the U.S. market you’re not making a ton of money. When you get into 70-80 countries…
Large companies want you to get in and out asap. It’s just the opposite of what Mr. Wonderful on Shark Tank says, “everyone wants a royalty” – they don’t want that. We create, and we’re gone. Boca saw me shredding their burgers for chili on TV, and I helped developed crumbles.
We’re ‘famous’ for cost savings. Lots of people are saving grease for sale. We have huge vats and make a deal with a local company that’ll pick it up. In North Carolina, it’s a criminal offense to steal more than $400 of grease. That’s how important it’s become.
Our food costs are at 12.87%, and we’re upset about that because last year they were 11%.
Wow – good is like 28%!
We don’t throw anything out except meat fat into the trash. We also have a massive 40 foot composting operation. You’d be surprised at what chickens eat – they’re like goats. We started our own pineapple farm too, they’re very easy to grow.
One of the simplest things to grow is celery. Cut a celery butt off, place it in a ramekin with a little bit of water and set it by a window. Add a little bit of water in the middle when needed and in about seven days you’ll have stalks. The same principle works with garlic and onions too. We can say the garlic we’re using today is, ‘Generation 49’.
What about city locations? What do you suggest managers do when they don’t have the space for 40 foot composts?
We motivate change. For example, let’s say we challenge a chef to lower food costs from 36 to 30 percent, which translates to $ 800,000 in savings. To do this, they must maintain quality and comment cards at 90%. If they achieve the goal, they get a 90k bonus. When you can save an owner hundreds of thousands of dollars, they aren’t going to be concerned about paying out that kind of incentive. You do this with one chef – it is their mark. It’s a descending scale from there.
Sometimes you also just need someone who can be the bad guy. We [outside consultants] can be the person you can blame who has to say the things that need to be said but can’t be by someone internally.
What are some of the top mistakes being made by resorts and hotels?
We sit on a lot of incubation boards; the marketing managers haven’t figured out how to make money. We are in what I call the ‘coupon economy’ – I’ve seen people drive up in Aston Martins to the Ritz Carlton with coupons for staying there. It’s almost a status symbol now.
They haven’t figured out how to monetize Groupon, etc. There’s no way to make money on these types of dinner deals – $50 dinners for $25. Then there’s a 50/50 split on that cost, so the restaurant makes $12.50 on the sale.
You can’t make a profit on a $50 meal at $12.50 – you have to put limits on the coupon. For example alcohol not included, or no seafood, or dessert, etc. Add ‘reservation required’ and limit it to 20 coupons per night, one coupon per table, etc. Now you can control how many deals you have coming in on any given night.
You also need to talk to the ‘retail manager’ at the promotion source. You need to know how many people your offer will be going out to – is it 35,000 or 356,000? Is your offer about making money or getting people in there? What if your split is only $10 a meal; what else is going on? Is there a gift shop, special attractions or events you want to sell?
What else can restaurants do to trim the fat?
Look at portion control. If you have an 8 oz. Porterhouse on the menu is half of them 7 oz. and the other half 9 oz.? Why not order pre-cut, so it’s always the same? Use your tools instead – like ChefTec – what do you want your food costs to be?
You should be able to ask the chef what an item cost yesterday, today and tomorrow. If you can’t tell me every day what your item on the menu costs, you have money going out the door.
Over 85% of restaurant chef/owners don’t have the time to track receipts – half the time they’re in a plastic bag. Hire someone to type all this info into your system – don’t make chefs do the inventory – their time is better utilized; have an $ 8/hr worker do it.
Stop using menus that aren’t flexible to change, as plastic coated or heavy velour backed types. You have to be able change those menus even if it’s every seven days.
It’s about embracing the 21st century kitchen; you have to use machinery and ingenuity to your advantage. If you read the commodities futures every day, maybe you’ll find you should/could hold back on certain items a while. For example, how about a hand cut beautiful pitcher of apple juice on a breakfast table? We found that 1 out of 3 people chose the apple juice and our orange juice usage dropped 38% when costs were really high.
You have to have the data available to predict what’s coming in.