Ron's Tip Jar/Insights - Published by Ron Santibanez   

January 23, 2013


In This Issue:

Tips and Things - Why Your Food Costs May Be Too High

Price Point Pricing

Do You Have A Food Cost Problem?

Quick Tip #12 - The Pricing Objective

Restaurant Start Up -  The Process



 Tips and Things

Why Your Food Costs May Be Too High

When I work with clients who have food cost issues, nearly all of them have very poor receiving practices.

When a driver unloads the product and hands over the invoice, on a good day the person does a quick check of the invoice and the delivered product, signs the invoice and the driver is on their way. Rarely is there a purchase order check on quality, price, weights, and a complete inspection on what was just delivered.

I have found that clients with food cost problems, 50 percent or more of their excess food cost is a result of what’s happening, or not happening, at the delivery door.

Receiving is an area where the combination of no system, carelessness and greed can add up to very big losses for your restaurant.

Here is my list of what you can do today to improve your receiving practices:

  1. When making an order, record the product type, quantity, and price quoted. This is your purchase order.
  2. At the time of delivery, count all products, and then verify that count against your purchase order and the invoice.
  3. For products purchased by weight……weigh them and compare the actual weight to what is shown on the invoice. You should not be paying for packaging or ice.
  4. Inspect for quality, consistency, and condition with your standards and specifications. You should have minimum standards and specifications for all of your products.
  5. Verify that the prices charged agree with the prices quoted.
  6. Bring any irregularities to the attention of the driver on the spot. Resolve them, noting adjustments, returns, etc., clearly on the invoice, and have the driver sign and or initial the adjusted invoice.

Delivery drivers notice everything you do (or don’t do) at the backdoor. Don’t make it easy for them to take advantage.


Thought For The Day

Nothing is easy to the unwilling.



The Basic Control Procedure

The basic control procedure consists of setting standards according to criteria, measuring performance against the standard, taking corrective action, and recycling through the process.

Do You Have A Food Cost Problem?

If you are experiencing high food costs, some possible areas of concern may be:

  1. No balance of high and low cost items on your menu.
  2. No consideration of locally obtainable products.
  3. No competitive purchase plan.
  4. Theft in any form.
  5. Purchasing more than needed (spoilage).
  6. No daily check of invoices, quality, and prices.
  7. No rotation procedures.
  8. No perpetual inventory.
  9. No controls on issue items from the storage areas.
  10. Low yields on products.
  11. Over preparing.
  12. Not following or using recipes.
  13. Not following exact portion sizes.
  14. Improper handling (Wrapping, rotating, storing).
  15. No reconciliation of sold vs. used.
  16. Employee theft.


Quick Tip # 12 - The Pricing Objective

Restaurant Start Up - The Process 

  The process of opening your own restaurant can be a daunting task. I have always told my clients that the process of opening a restaurant is just that.....a process. In the next few issue of "Ron's Tip Jar" I will explain some of the necessary steps you must take to open a Successful Restaurant and how the plan to open a restaurant comes together.

Decision to Open a Restaurant

The decision to open a restaurant is a relatively simple first step that may have been your dream for years, or the opportunity may have just presented itself and you want to seize the moment. For whatever reason, you want to develop a restaurant.

Your decision to take action initiates several other activities. You review and expand your notes on concepts, markets, menu, design, operating style, and restaurant details in general. At this time, you begin to share your ideas with trusted friends and potential partners. The energy and excitement grows. You plan a meeting to establish a plan of action.  

The Exploratory Meeting

The exploratory meeting focuses on how you are going to pursue the venture. You discuss concepts, operating style, menus, design, and other aspects of the proposed restaurant. Brainstorming is rampant. The enthusiasm and collection of ideas and activities must be organized and controlled. The development process must be managed.


Researching ideas and how other operators perform becomes a top priority. Perhaps you schedule trips to investigate successful or similar restaurants. Unfortunately, the idea of doing research is regarded as a luxury to many. A budget is established for it, and when funds become tight, it is deleted. Researching ideas and techniques must remain a high priority. The most obvious reason is that you may learn something. Secondly, you may also see how not to do things.

Research is a key element in the development process. Don't skimp on it.

Financing Plan

The financing of your project is a key component. Financing your restaurants development does not usually occur until you have:

  • A solid business plan
  • A termination plan
  • Legal documents for investors/partners
  • A legal business structure/entity
  • Procedures for managing the funds
  • Supporting budgets/documents for equipment needs

It is evident why the development process becomes complex. If funding cannot be completed before other activities are finished, and still other activities cannot begin until financing is in place, your development time schedule begins to expand and individual responsibilities increase.

Operational Plan 

The second critical document of your planning process is also comprised of several components. But you cannot start on this plan until you have completed at least the first draft of your business plan. Keep in mind that as you refine the business plan, changes may occur that will dramatically affect your operations plan.

The draft of the operational plan initiates five key activities:

  • The job descriptions of key management people
  • Staffing needs
  • Preopening plan
  • Design program
  • Menu development

Design Program

The design program is the third critical document in your planning process. The operational requirements established in the operational plan will dictate the physical components of the restaurant. Without a clear understanding of how you plan to operate and function and what spaces and amenities you require, the design team cannot design an effective space in which you can operate.

Continued next week.....


  We are offering a FREE Restaurant Start-Up Checklist. Just send us an email at ProfitLineConsulting@gmail.com and request your copy.

Additional Resources Now Available On Our Web Site:




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 We encourage you to contact us if there are specific subjects you would like to see addressed in "Ron's Tip Jar/Insights".

"Ron's Tip Jar/Insights" is a newsletter discussing issues that affect your restaurants profitability delivered by Ron Santibanez. You may also view past issues of "Ron's Tip Jar/Insights" by clicking here.

Contact us at ProfitLineConsulting@gmail.com

For information regarding our start-up and profit improvement services, call us at 866-903-5875. You may also reach me by email at RonSantibanez@gmail.com



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