7 Small Ways You Could Be Leaking Money

None of these is major, but each week they soak up cash and cut into profits. Part of the fix is showing staff that every cent counts and you do watch the cents! They can be an active part of the solution, not standing on the side watching. Every single member of your staff could point out something that’s ‘leaky’ and wasteful – do they tell you? Do you ask?

  1. Late to Arrive and Early to Leave. You know who they are – the commitment of these employees is questionable. Other staff notice, and watch if you do anything about it. Finger or facial recognition clocking on and off is inexpensive to set up and integrates with payroll – if you haven’t done this already, it’s time.
  2. Dripping Taps and Running Water. In many venues, water down the toilet is more than half of the total consumption. Plus spray arms in the kitchen that use way too much and cleaning routines that use it like it’s free. Work out your water bill per day to show staff the real cost . Energy use consultants can be very useful to check this and other utility costs, and always pay for themselves.
  3. Coffee and Milk Waste. A few grams of lost coffee every time the dose is done – it adds up to big money each week. Plus all the milk that’s been overheated and can’t be used again for coffee – does it go down the sink? Ben Armstrong, the smart operator at Three Bean Espresso in Newcastle collects it to make their own yoghurt – they are now self-sufficient. Clever!
  4. Colour Printers – they’re money pits if you are still using a ‘cheap’ ink-jet printer. Really, do you need to print in colour, or would a low-cost black & white laser printer do for 95% of the printing? Or have both and set the default to the laser printer. Add up your ink cartridge purchases and divide by the number of days – the figures can be scary.
  5. Credit for Goods You Returned – this is one of the first things I look for when I’m doing a ‘costing blitz’ in a business. It’s not uncommon to return goods that are the wrong brand, size or not needed, but has the credit appeared on your statement? What’s the process to ensure this happens every time? Easy to overlook.
  6. Credit Card Fees. What’s the ‘effective rate’ your provider is charging? They create confusion with base rates and extra rates for different types of cards. Add up a month of charges and divide by a month of card sales – if it’s above 1.2% it’s time to talk with the bank manager.
  7. Back Door Dealing. In the rush of deliveries and a busy kitchen, it’s easy for delivery people to be unsupervised and cages left unlocked. Food and alcohol is as good as currency for many people – it needs a range of measures to control this including patient checking (you need the right person for this), cameras, tighter key access and storage routines. When did you last catch a thief?

Dealing With Copycats…

Tell the truth – most restaurant and foodservice ideas are some version of what you’ve seen or eaten before. You could call it ‘creative swiping’ instead of copying or plagiarism, but it’s rare for any chef or restaurateur to create a full set of completely original ideas for a new menu or cocktail list. Remember that trip to Chicago, Bali or Barcelona – tasting, taking photos and dreaming up how you could do an Aussie version for your customers?

And sometimes true originality does happen – a magic combination of sauce, spice, protein and fire. An unusual chocolate cake, upside down ice-cream or lethal cocktail – the stuff that drives word-of-mouth, Instagram and crazy return customers.

What can be copied? A recipe, decoration and furniture ideas, a menu layout, fonts, website design or even a name – how many times have you seen an Aussie concept that copies a US original?

What can be stolen? Your chef, your manager, the best waiter and some of your customers…

READ the rest of my Copycat article on p.24 of this months Hospitality magazine

Bar and restaurant found in Madrid…

It’s World Backup Day – When Did You Do It Last?

March 31 is World Backup Day – and apparently 30% of people have never backed up their data, ever. Or maybe you did it a long, long time ago…which is equal to never. All your employment records, emails, sales data, recipes, booking information, customer lists, tax records, your website… let alone all the personal information and family photos. One in 10 computers is affected by viruses every month.

You need to be backing up to a local hard-drive, and a cloud service. I now use cloud-based service Backblaze, for a measly $50 per year. Very easy to set up, and it quietly backs up my new and changed data every hour, without me noticing. Double security, and highly recommended.

Imagine your laptop, phone, iPad and POS system all stolen or destroyed, or your system hijacked – what would it take to recover?

When You Take Over a Cafe or Restaurant – How to Do It Right

A while back I wrote about the decline of a favourite cafe now under new ownership. I was challenged to give suggestions for how this could be done well, so here’s my To-Do list for the new business owner:

New Faces: own it, and let people know who’s who. Now’s the time for name tags (yes!) and the owner or manager could even add a cheeky label to say ‘Proud New Owner’.  Could you get a ‘best wishes’ message from the old owner? Put it up on the wall for all to see.

This is also time to say goodbye to staff who weren’t adding to the business – the slow and the negative. In most situations, you have a unique opportunity to let go of previous employees without any obligation – the previous owner should be paying them out, or compensating you for any accrued benefits they have (eg long service leave). New owner, new start – talk to your lawyer.

Do More of What Was Done Well: the great cakes, the friendly greeting, excellent coffee (don’t change the blend!) and the special services. Keep buying flowers and providing newspapers.

Fix the Weak System: businesses are rarely sold because they’re making too much money… it’s usually the opposite, no matter what stories you were told by the broker! Audit and start upgrading the ordering systems, stocktaking, recipe costing, booking and customer service procedures. Are staff signing on and off correctly? Assume that there’s been internal theft, and look for system gaps that have allowed this eg stocktaking, POS not being used correctly, cash handling etc. Once you close off these opportunities, the thieves will soon leave.

Dig Into the Numbers: the figures you were given from the old business are probably a bit sketchy, but you will soon find valuable information from your POS and the bills you pay. A well-setup cloud accounting system is essential eg Xero or MYOB, so you can track results day by day – get your accountant onto this immediately. Detailed figures from the POS will soon show best and worst sellers, plus sales by hour and day. A good roster system like Tanda or Deputy let’s you compare wage costs against sales – even a spreadsheet will help to find areas of strength and weakness. Slice and dice all the numbers you can – opportunities will be right there in front of you.

Clean and Repair: businesses for sale often look tired, and cleaning is one of the first things to be neglected. Blitz the floors, and ceilings, plus behind counters and shelves – you’ll be surprised at what you find. Fix the broken appliances, toss out old platters and pots, ditch the broken furniture. Front of house, fix wobbly tables and repair all the dings and scratches on furniture. Paint the toilets and install new toilet seats and amenities.

Don’t Redecorate Just Yet: if you’re launching a whole new concept, go for it. But if you value the concept you bought, minimise the redecoration until you’ve settled in. Once you know more about the customers and service rhythm, you’ll be clearer about new decor.

Leave the Menu Alone: there will be weaknesses that need to be fixed, but in the first few months you are stabilising the ship, sorting out the staff and making friends with customers. You’re also finding out what customers really like, so use the specials board to try new ideas. Ask questions and listen.

Improve the Marketing: another area where the previous owners were probably economising or forgetful. Increase the friendliness and frequency of posts on Facebook and Instagram, including targeted ads. Check that your ‘Google My Business’ listing is up to date and has plenty of photos. The website may need a major improvement – this should be a high priority, with better photos, more relevant information and optimised for mobile phones. If an email newsletters was being send, use it to spread good news – another area where things had probably slipped.

Improve Staff Culture and Conditions: that includes fairer treatment, proper pay, better rostering and good communication channels. There will be times you are told ‘that’s the way we’ve always done it’ – just smile and explain why it needs to change. Don’t be surprised if within 3 months all the old staff have left – it usually happens with new management. Yes, even the ones who say you’re much nicer than the old boss! Staff manuals and policies, job descriptions and a noticeboard – they’re all part of the healthy new broom.

Another day, another story of restaurant fraud…

Trusted, helpful staff given too much responsibility by weary owners, and a lack of systems for proper checking. How many times do operators make ‘trust’ their default mode with employees, instead of ‘check and verify’. When you work with cash, food and alcohol and have haphazard security, the thieves will soon find you. It was a bit sad to go through ‘the facts of life’, again, with a couple of new cafe owners…

Your Point of Sales system can be a key element in taking back control. Watching for error corrections and inaccurate use of PLU keys will soon alert you to problems – here are a few to watch:

Open Key – the one that’s used when you can’t find the one to use. A new menu item that hasn’t been added to the system, or there’s a rush and you can’t find Prawn Salad. Disable this key or make strict rules about who can use it – it’s wide open to abuse, and spoils the accuracy of sales data for stocktaking.

Voids, cancels and errors – all slightly different, and can be used to negate an order that has already been made. The end-of-shift report will show how many of these are done – they should be rare and explained.

Over-ringsOMG I ordered 10 salads instead of just one – I’ll tell the kitchen and fix it later! Maybe it wasn’t corrected, and the end of shift sales totals won’t balance with the till. In the struggle to reconcile, it’s easy for deliberate errors to be missed.

Training key – it’s there for training staff on the POS, so their practice transactions aren’t part of the shift totals. But it can be abused – I’ve been given a bill with a tell-tale letter T beside each transaction, and there was definitely no-one being trained.

More on restaurant security in my podcast interview with the Crime Doctor on How to Reduce Employee Theft in Restaurants.
Trust..and verify.