First, in each account we have to figure out how best to isolate and evaluate the individual components of spoilage:  waste, over production, and employee meals that seems to be determined by the size of the account staff and the pos/inventory management system.

Next determine that all accounts have up-to-date cost and recipe analysis.  The general methods employed currently are EMS, Quest and Excel.  The other accounts will be directed to the template located at infocenter/accounting/forms/perfect cost worksheet. This will of course give the units the blended ideal costs by category and allow for the GM to manage the variance which in essence is the waste, employee meals or shrinkage.

Recipe & Perfect Cost Template

Once each item/recipe is built we can then look at cost category development and ideal verses actual based on a comparable inventory period or periods.

Formulating each recipe and extracting the number of units per period or year-to-date will reveal an overall ideal or theoretical cost of goods based on units sold from a POS or goods out of stock report.

In almost every case, the unit will struggle with allocation of waste and spoilage if items are utilized in various account categories.  For instance in the example above the inordinately high peanut cost may be from bulk peanuts used both in suite packages and at a peanut portable stand.  Waste should be allocated using a percentage formula of sales to recording the spoilage as it occurs.   Similarly, hotdogs are used in suite packages, Group Sales (Catering) and are transferred in bulk according to predetermined orders.  Items must be credited to the base account each time the product is ordered.

Spoilage & Meal Tracking

For those with integrated systems (EMS example below), they will be able to drill down further and perform a side by side comparison of employee meals and spoilage year-to-date as compared to previous should reveal some trends and opportunities.

Or adjusting for meals and spoilage on an event basis and then comparing the cumulative results at month end is also a valuable analysis.

Quest system physical sales for date range, less spoilage and meals to demonstrate theoretical cost.  

Additional Areas to Review:

• Review employee meal policy. Are policies being adhered to?  Is there an opportunity to sell meals to building staffs that is not currently contemplated?   Are there opportunities to restrict certain higher cost items or to cross-utilize products for catering and concessions?
• Review discounted sales policy. When was the last time a price increase was achieved on “cost” plus sales to client?
• Examine liquor pouring policies and bartender accountability.
• Are units employing production sheets by location and are they being evaluated.
• How is spoilage accounted for? Are supervisors verifying counts?
• Are nonprofits held to standard and maximum allowances for over production?

Utilizing standard production sheets for individual stand locations and commissary can yield better waste results.  Adjustment of template for attendance, weather and promotional considerations should be considered daily.

Beer & Soft Drink Yield Analysis

For concession accounts, certain types of events can have a sales mix of up to 60-70% “Wet” or more.  In most cases this means predominately: Draught Beer and Fountain Soda.  In order to improve our overall cost of goods sold, we need to really focus on improving our controls over the beverage portion of our business.  With the advent of Turbo Tap beer yields have improved dramatically in some cases over 15%.  Still it is important to understand how and why our beer costs fluctuate.

Calculating and critically evaluating your beer and soda yields is a very important management tool. The yield calculation indicates what percentage of product “used” or “out of stock” in a particular accounting period can be explained by the unit sales recorded of those products. Usage in this case means all liquid that has been dispensed whether spilled, wasted, consumed by employees, given away or stolen. It is important that all accounts utilize the same standardized format and procedures in compiling and calculating this information. View Beer and Soda Yield Template.

In order to calculate beverage yields properly it is necessary to first:

1. Accurately log both unit sales and credits by individual cup sizes.
2. Keep accurate records on all soda syrup and keg beer inventories, deliveries and credits.
3. Make sure that all product transfers are properly recorded.
4. Ensure that cup usage properly matches the same period as the inventories for soda syrup, C0₂, nitrogen, cooperage or keg value credit and keg beer.

It is important to pay attention to the units of measure as there are some nuances to be considered:

1. Cups do not always hold what the label might suggest.  The “brim fill” capacity of all cups needs to be tested.  They vary by sizes, cup design and among manufacturers.
2. Soda Bag-in-the box yields 30 finished gallons or 3,840 ounces.  Some flavors yield 15 gallons of finished products from 2.5 gallons of syrup.
3. Soda Yields assume 35% of the soda cup capacity is taken up by ice.
4. Standard domestic keg holds 15.5 gallons or 1,984 ounces.
5. Most English/ European/ Import kegs can hold 13.2 gallons or 1,690 ounces.
6. Beer should be poured with a ½ inch head – assume only 92.5% of the beer cup capacity is taken up by beer.

The procedures that will ensure that your yields are as high as possible are as follows:

1. Properly receive store, issue and Centerplate Logo cups.  Logo cups should be treated as cash and must be kept under strict key control at all times.  The use of non Centerplate logo cups in a concession operation is a serious violation of effective concession inventory reconciliation and control procedures.
2. Such designated controllable Logo cups should only be used for cash transactions.  Logo cups should never be used for employee beverages or catering functions. Instead there should be a designated employee or courtesy cup.
3. A perpetual inventory of Logo/ controllable cups must be maintained at all locations.  All deliveries and transfers out must be logged in as the stock arrives in and is transferred out of the storage areas.
4. No cups should be moved from the storage area unless accompanied by a Transfer Slip.  The Transfer Slip must record the date, the location, the item, the item amount and it must be duly signed for by the person distributing and receiving it.  All products correctly received in the inventory system will utilize the transfer procedure. For manual operations a transfer slip must be sequentially numbered and filled out in ink.  One copy goes with the product and the other copy stays in the warehouse area.
5. Usage records for the period recording cups “out of stock” needs to be compared to the total of cups “Units Sold” plus “Credits”.  Discrepancies need to be researched and explained. Errors in unit sales and credits will distort yield percentages.  The actual yield calculation must be based on the cups “out of stock”.
6. Proper receiving of beer kegs and soda BIB is essential.  Match the delivery invoice against the Purchase Order.
7. Be sure to see and verify the entire delivery before anybody signs for anything.  Make sure that only specifically authorized personnel sign for any deliveries.
8. Draught beer lines and Turbo Tap heads need to be cleaned regularly (every two weeks) and the refrigeration and cooling systems properly maintained. Beer coolers should be no warmer than 38 degrees.
9. Soda dispensers need to be “brixed” properly. The location management needs to randomly test soda brixes. Make sure that ice machines are working properly.
10. Soda machines with cold plates will not pour properly unless the cold plate is kept covered with ice.  During busier events be sure to “knock down” the ice machines the previous night and fill ice bins and ice caddies at the same time allowing the ice machines to continue making ice over night. Pre-bag ice as necessary. Make sure that the concession stands and bars are kept stocked with ice at all times.
11. Maintain an ongoing training program for concession and bar employees to instruct in the proper techniques for pouring beverages.

Conclusions and Strategies

So ultimately we get to a recognizable gap percentage or delta for each unit to manage hold and each GM accountable to that level.  Comparing that difference by period or previous on a seasonal or event basis can give each operator a true indication of how the waste is being managed.  Each Hub VP and Gm can then set targets for improvement.

Some additional review and analysis of EV by lines of business can be helpful in establishing targets or baselines, especially in convention center accounts where there is limited opportunity to track spoilage on a day-to-day basis.

Strategies

• Item Recipe/Food Cost – Each unit updates on system Quest/EMS or Excel when prices or cost of goods change.  Ensure recipes/productions specifications are being followed.
• Continually monitor by location waste/spoilage reports.  Are policies effective?  Are they enforced?  Guide employees for production amounts and maximum quality/holding times.  Continually evaluate and find tune. Is nightly spoilage being scrutinized?  Give production requirements by period and inning or before intermissions.
• Evaluate all paper usage and programs.  Are napkins specifications compliant?  Is there a structured program for carry outs and pop up trays to minimize loss?  Can bulk condiments be used in certain areas?  Examine produce loss after each event cycle.  Can an additional delivery be instituted to allow for more timely usage predictions?
• Seek additional add-on revenue opportunities, e.g.  sales of client food at reduced commissions.
• Encourage conscientious donation of un-sellable products to local charities and food banks.
• Look for increase value/price options for saleable items.  Upgrade packaging, presentation and sizing for pricing opportunities.
• Employ regular yield analysis.  Start small, isolate a problem stand or portable, then expand by category to include draft beer and soft drinks, nachos, etc.  Determine acceptable yield parameters.  As a larger percentage of our business is based on the sale of liquids, concentrate on getting the full benefit from our beverage sales.