In non-commercial Food Services operations, most Food Services Directors and Managers are responsible for an operating budget. Even if the purpose of the on-site employee cafe or coffee bar is to serve as a benefit or perk to employees, profitability of the operation is still measured, and the finance department wants to know if the operation is in the red, at break even, or in the black.
There are two ways to improve profitability: increase revenue or reduce operating costs. This article explores the reduction of food service operating costs through the use of tighter cost control in Food Services’ purchasing and receiving activities.
As part of inventory management, food and beverage items should be tracked in an inventory file or database, making it possible to monitor purchasing expenditures and to make informed purchasing decisions. Whether ordering inventory by purchase order or non-purchase order, it is vital to enter the received items into inventory accurately to maintain the integrity of on hand inventory count and cost. To ensure that items arrived exactly how they were ordered, verify the quantity and cost of all items being received against the invoice.
Most cafeterias and coffee bars have many inventory items, such as canned soda, bags of chips, and bottled water, which are always in stock and are then re-ordered when inventory levels reach a defined level. When receiving these items that already exist in inventory, compare the current cost to the previous cost. If the actual cost of the item is different that the cost at which you ordered or previously received it, then enter the new cost into the inventory system.
If the cost has increased, you have an informed decision to make; either absorb the price increase by continuing to sell the item at the current price, and thus accept a reduced profit margin on the item, or maintain your current profit margin, and offset the cost increase with a price increase. For example, if bottled water has been received in the past at a unit cost of $1.00 and is sold at a price of $1.35, then the profit margin is 25.93%. Should the unit cost increase to $1.10, you may decide to continue selling each bottle of water at the $1.35 price at a lower margin of 18.52%, or increase the price to $1.48 offset the cost increase. Either way, you have made an informed decision weighing profitability against what you believe customers are willing to pay for a particulate item.
Daily, monthly, and year to date receiving reports will show you all the items you have received on a selected day or month or during a date range. Use additional reports, such as end of day, stock status, inventory analysis, and sales history reports, to view sales and profitability performance by item, meal service, vendor, department, or user sort. These views give you the ability to manage profitability by department and thus offset low margin items with other higher margin items within the same department or category.
To learn more about what inventory control software can do for your cafe or coffee bar visit ARBA Retail Systems at http://arbapro.com/pos-corporate-cafeteria or http://arbapro.com/products/hospital-food-services.
Author: Kathy de la Torre, ARBA Retail Systems More
Theft is an unfortunate problem that every retail operation deals with, and your café or coffee bar is no exception. In this week’s Blog, we identify the creative and not-so-creative ways customers and employees can steal from you, and take a look at how to prevent or minimize it happening in your operation.
Who is stealing?
Theft comes in many forms. It can be the cashier who doesn’t ring up all the items a friend or colleague has on their tray at the checkout line, or gives an “unauthorized” discount to a coworker. It may be an employee boldly stealing cash out of the register till when they think no one is watching or will notice, or a customer casually walking out the door with unpaid food or beverage items. Whether the intent is to do a friend a favor, a feeling of entitlement or deliberate malice, the financial impact is the same because theft hurts the bottom line of your foodservices operation. Even if you are operating your Café or Coffee Bar as a convenience to your employees, operating costs are still measured and theft is a huge cost.
How do you identify employee theft?
It’s really important to have security measures in place in your operation to identify any problem areas. Your Point of Sale system should be tracking all sales, and allow you to use either shift or transaction security on your registers. The ability to reconcile each cash drawer by cashier is particularly needed in foodservices operations. Always review your system variance reports for discrepancies, and look for patterns in frequent cash shortages to see they map to when a particular employee works. Frequent cash overages may also be a sign of stealing, resulting when an employee stealing cash from the register “light rings” too much to cover for the amount taken. Also look for a high number of “no sale” or “void” transactions during anyone’s shift, as this is a potential red flag for theft activity. To learn about POS solutions for Corporate Dining visit us at http://arbapro.com/pos-corporate-cafeteria or POS solutions for Hospital Food Services at http://arbapro.com/products/hospital-food-services .
The scenario that’s a lot more difficult to identify is when cashier are giving “freebies” to their friends, and not all sales or all items are being rung up at the cash register. Security surveillance helps to control this problem, and serves as a deterrent to theft when employees see surveillance in place. There are many ways to see what is transpiring on the floor, even when you can’t be out there. Be sure to review your sales reports for emerging patterns. Do the average sales of a particular cashier fall below the average sales of other cashiers during the same meal periods and the same days? Is there a higher amount of discounts given during the times a particular cashier is working? These indicate signs of possible employee theft. Find out more about POS solutions at http://arbapro.com
What can you do to prevent or reduce customer theft?
It’s a good idea to train you staff what to look for, and be alert to out of the ordinary customer behavior. Positioning the cash registers in such a way that it’s just not possible to exit the café without paying for food and beverage items is a huge deterrent. Many facilities have installed mirrors and surveillance cameras, and position the most tempting items in a place where taking them is more difficult.
Reduce Cash Management
The Cafes and coffee bars that offer cashless payment options such as employee payroll deductions and credit cards minimize the amount of cash that their staff handles, and as a result experience less cash overages and shortages. Payroll deductions and credit cards are simpler to manage from an accounting standpoint, and their use certainly reduces the amount of cash overages or shortages. To learn more about payroll deductions, visit http://arbapro.com/products/payroll-deductions.
Have you had the unfortunate experience of theft in your foodservices operation? Share your story about how you discovered and dealt with this all-too-common problem. More