Caterers urged to keep eye on the ball

Catering outgoings can easily outstrip income, so a full understanding of your company’s costs is vital, Professor David Russell has warned.

Speaking at last week’s National Farmers’ Retail & Markets Association (FARMA) conference, he said: “All the rules of the game have changed. A typical £500,000 turnover food company currently experiencing energy cost hikes of 10 per cent, food price increases of eight per cent and payrolls up by seven per cent could see an adverse impact of £40,000 on its income.”

Russell is managing director of The Russell Partnership, a London-based consultancy specialising within the catering, accommodation, conference and leisure markets, which has developed specific tools for analysing catering businesses.

The firm has successfully introduced menu engineering, a step-by-step process evaluating current and future menu pricing, design and content decisions.

Courses, based on food outlet sales and profit record, are designated into four areas: workhorses, which are popular but less profitable; stars, which are profitable and popular; dogs, which are not profitable but not popular; and puzzles, which could be profitable if the customer buys it.

Possible courses of action are then implemented. For example, workhorses can be located in a low-profile position on the menu and if they are a labour-intensive item, they can be removed entirely.

Stars can be tested at a higher price and located in a highly visible place on the menu and staff can be trained to sell the item as a “house speciality”.

Puzzles can be tested at a lower price, said Russell, aiming to increase sales, providing a reasonable profit. The item can be renamed and placed centrally on the menu, with staff trained to sell it as a speciality. Point-of-sale material and displays could encourage customers to purchase puzzles. Dogs should be taken off the menu or their price increased to achieve puzzle status.

Russell illustrated his company’s system using case studies and told delegates that the system would work well in farm shop restaurants.