Food Cost 101 Training Module

Demystifying

Food Cost

Simplifying Inventory Management

Start

Objectives

To understand what makes up food cost, the key terms, how we measure food cost success, and what affects BTA%

How we can control inventory management, the issues that affect our stock efficiency, and how we can influence them

How you can improve your inventory levels, from communicating with your supply planner, to base stocks, and even utilising your counts

How to implement change, the power of effective internal comms, competitions and using key crew to drive change and embed procedures

What is BTA?

What is BTA?

• 'Base to Actual' is a measurement of stock management efficiency

• It's the difference between how much our inventory system thinks it should have cost to produce the food we've sold (Base cost)
• And how much it actually cost (Actual cost)
• The smaller the difference, the better controlled our stock is. (the less money we lost)

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Base Food COst

• Every product on our menu has a Base (recipe) cost.
• This is the minimum potential amount that it will cost to produce that item. Based on the cost of all the items used to make it.

• You can see the base cost of each menu item on the Historic Product Mix report on My Store.
• and easily compare high profit items by looking at the actual cost %, which is the profit margin after production cost.

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Actual Food COst

• This is the actual amount it cost the restaurant to produce the food it sold in a given period.
• It takes into account all the operational costs of producing the food we sell, and figures out how much it actually cost to produce.

i.e. transfers, yields, waste

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Actual Food COst

• In order to work out Base to Actual, we need to convert the Actual food from £'s cost to a percentage.
• This is done by dividing the cost of the food used by the net sales

Luckily the operations report does all the math for us :)

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What is BTA?

Your BTA is

In other words

• (What you spent on food) - (what the recipes cost)

• The more tightly you control your stock
• The lower your BTA% is
• and the more efficiently your stock has been controlled
• Meaning the more money you save

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So where can inventory control go wrong?

Controllables

• We can't directly control our base food cost, because we can’t adjust our recipes or stock prices.

• All our products cost a set amount to make. And those prices are currently going up.

• But what we can do is prevent excess cost. By controlling the factors that affect our actual food cost.

• This is why BTA is an effective measure of our stock control.

It measures how well we are controlling our controllables.

Controllables

• We can fully influence our
• Waste
• Promo
• Non product
• Losses
• Yields
• Delivery acceptance procedures
• Quality feedback - Non-conformances

• All of which help reduce the actual cost of our food production, and prevent avoidable losses, reducing our BTA%.

Waste

• We will never be able to achieve 0% waste.
• Essential food safety and maintenance procedures like calibrations and destructive tests require us to waste some products in order to operate.

• We will always have to waste some products.

• However there is a huge amount we can do to control both our raw and full waste to help minimise it as much as possible

Raw Waste

• Proactively checking correct Rotation following FIFO
• Following BLC charts correctly
• Ensuring all counts are accurate - as these directly effect delivery proposals
• Proactive stock swapping between stores
• Correct UHC holding procedures and running down products at changeovers
• And effective calibration completion to prevent over use and avoidable waste (As Inventory lead, talk to your PDM manager and try to help support them)

These simple procedures will all help to prevent excessive raw waste p

Full waste

• Coaching production accuracy (in kitchen and the beverage cell)
• Looking at Order taker accuracy, and making sure your order takers are asking cars to check the screens
• Monitoring present accuracy, and ensuring all runners are checking grill slips
• Quality control checks

Are just some of the things we can do to minimise excessive full waste

Promo

• Employee meals are a huge opportunity to improve inventory control.
• Even though we put orders through on the kiosk, they don't get accountned for on My Store until they are promoed off via a till.
• They also don't stay on the system forever, disappearing off the system if unpromed after 20 minutes.

• Some simple procedures can help to prevent this potential loss
• Making sure all employee meals are promoed on the tills within 20 minutes
• Having a promo sheet for replacement items
• Or even better only replacing a grill if they been promoed through the till - which will also cut down confusion and pressure in kitchen

These simple procedures will again minimise losses and account for where your products are going

Non product

• These are the raw item costs that aren't directly part of the product recipe but used to make it i.e.

• Shortening
• Co2
• Butter
• Sauce BIBs
• Dips
• Bulk salt
• Souffle cups

(There usage can be seen on the last page of the Ops Report)

• Again controlling how much of these items are used, particularly when producing items will have a huge impact on your BTA.
• Especially oil which is particularly expensive

Shortening

• Sharpening up your shortening procedures will have a huge payoff.

• Auto Filtering when prompted
• Skimming the vats (especially after hash browns)
• Polishing each vat properly during the maintenance filter
• Waiting 5-10 seconds to transfer products
• Never basketing products over the vats
• And putting on the vat lids when quiet

• Will have a massive effect on your oil quality/life

Losses

• Any unaccounted for products become a loss / deviation.

• Simple causes include
• Unentered or inaccurate waste
• Un-promoed meals
• Missing items on delivery
• Poor yields due to overuse

Think of My Store Inventory like a calculator. It accounts for every thing that we input as coming into or going out of the store. Anything that isn't entered in some format will simply go missing on inventory. Having a big impact on your BTA%

Unentered waste

Unentered waste = ££££ in the bin

• It is therefore incredibly important to ensure all waste is accurately counted and entered via My Store.
• Some simple things we can do to help ensure this happens include:-
• Making Waste books - Simply take the pages out of the shift book and keep it somewhere easily accessible like next to the ISP.

• Using a Waste Tracker - to help remind each shift to enter a waste count for every day part.
• Creating a Waste Space - with waste count guides. (Try to pick somewhere on camera to help encourage accuracy)

Unentered waste

• To help improve waste count accuracy
• Only allow Crew trainers and above to count waste
• Coach all items being laid out on cardboard first then counted to ensure accuracy.
• Put up a waste count guide both by the waste count area, and ISP to help ensure full and raw waste are entered correctly

• Post praise on the crew trainer page for reduced losses and improved accuraccy.

employee meals

• These can be tracked easily via:-
• The Electronic Journal (for a shift by shift analysis)
• And quickly on the Promo/Emeal section on Reparc.
• This allows you to see the daily promo amount
• and dial into the daily items by clicking on the information icon
• looking at medium fries or hash bowns can be a quick indicator of promo% accuracy when compared to the number of crew scheduled

employee meals

• Some ways to help improve promo % include
• Getting crew to help with police order promoing
• Coach Runners - not to hand out 'to be paid' orders
• Put key crew in charge of ensuring orders are promoed

• Remember the orders don’t stay on the system forever
• Once you reach the maximum number - they actually prevent crew from recalling customers orders.

Delivery acceptance

• In the same way that we struggle with order accuracy, particually during peak and difficult hours. So to do our suppliers.
• Don't assume that your deliveries are accurate.

• You cant control a food item that never came into the store

• Some simple procedures to follow to reduce delivery accuracy issues include:-
• Only floor managers or above to accept deliveries

• Have a Delivery Tracker to communicate issues
• Ensure all missing items are actioned that day

Delivery acceptance

Missing items ?

• Follow the delivery acceptance guide.

• Adjust the delivery in the orders section on MBSync
• Submit before 2 pm the next day or customer services wont investigate it
• Once submitted this will Re-book the delviery on My Store
• Correcting Inventory Cards automatically

• and automatically starting the investigation process with customer services

Non-conformances

• These are quality complaints for poor quality or incorrect products
• Anything that isn't gold standard /that cant be used correctly/ or served to a customer - is a potential non-conformance.
• these can be Food, Paper, and even Ops
• We shouldn't accept absorbing the cost of defective products at store level
• So we need to communicate these issues to our suppliers via MBSync.

Non-conformance Examples

Non-conformances

- Follow Non-conformance guide- Challenge crew and managers to find them

Non-conformances

• If justified you'll get a credits back
• These can be seen by checking quality feedback ticket, or in the credits category of the financials on MBSync

Coaching

• Don't walk past a problem!
• Key things to look out for as a team

• Unpromoed meals
• Poor Yields - dressings, ice in drinks, calibrations
• UHC Management - particularly at changeovers
• Filtering procedures
• Droppages

Working through your store teams really helps

• You cant see every opportunity, but as a team we can tackle issues together i.e.
• Training team - waste procedures, coaching
• Key crew members - promoing orders
• Delivery acceptance crew - missing items
• Filtering crew - polishing

Refining Your Inventory Levels

Refining Inventory Levels

• The last few years have been extremely challenging for almost every aspect of our jobs

• The Pandemic
• Protesters
• Chicken Mac

• Have managed to bring McDonalds to a standstill. And even close stores.

Refining Inventory Levels

Some of the new nightmares for weblog include

• Slow moving items
• Locked inventory items
• Product shortages and removals

However there are plenty of tactics you can use to offset stock level challenges.

Refining Inventory Levels

Refining your inventory level is a fine balancing act

• We don't want to run out of products - and cap potential sales
• But we also want to be proactive and reduce potential excess stock and avoidable waste

• Communicate with your supply planner can really help.
• Tell them about issues in your store like:-
• Broken equipment
• Product mix
• Yield issues
• Regular transfers

• You are not your supply planners only store. They wont be dialing into your usage, or looking at your stock issues unless you highlight then to them.
• The more you share, the more they understand adjustments, and can offer suggestions or help

Talk to your supply planner

• Always comment on weblog adjustments

• This will highlight amendments to your planner and help them to look into issues.

• With all the inventory challenges at the moment there are several things your supply planner can do that we cant. For example:-

• Look at historic / recent usage
• Adjust your base stock levels
• Freeze proposals for products
• Adjust items even when locked

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Stock issues

• Always running low or out of something?

• Try a Stock Issues sheet

• This can highlight trouble items for weblog
• Shows issues with base stock levels
• Suggests items to put on higher frequency counts to monitor and feed back usage for weblog
• This really helped me with paper stock issues / fruit bags/ happy meal milk/ and bags

• Try putting one up in the office and asking managers to communicate issues on it.

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Base Stocks

• You can request through supply planner.

• Regularly holding to much/little?
• Seeing regular losses? (i.e. cold lids for delivery)
• Often transferring in?
• Delivery team feedback?

• Then your base stock levels may be to high/low.

• Simply ask your supply planner for your base stock levels.
• They will email them to you in an excel document via the MBSync message center.

• Alternatively if just one item is an issue, you can ask for the base stock to be increased or decreased by a case via the weblog adjustment comments.
• Your planner will normally respond with a time frame for the change to take effect.

Count frequency

• Higher frequency counts can help reveal deviations sooner.
• Your delivery proposals are directly based of of your submitted inventory counts and expected usage.
• The more information you feedback, the more accurate your delivery proposals will be. As they take into account your usage and losses.
• Try putting troublesome paper stock on weekly count
• Straws, Napkins, Lids, Bags

• Struggling with heavily varying product mix?
• Regularly over/understocked on a particular item?
• fruit bags, happy meal milk, syrups, deli sauces...
• Try adding it to the daily count
• this will feedback a more accurate stock position, and help improve your proposals

Driving change

Driving change

• There are plenty of ways to implement positive change for any goal

• Communication
• Competitions
• Praise

• They all help to drive buy-in, and embed positive procedures
• Also helping to drive the 3 C's
• communication
• co-ordination
• co-operation

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Communication

• Use your internal comms to your advantage

• Feedback via Facebook pages, Posters, encouraging your teams to talk about food cost on the shop floor
• The aim is to increase awareness of potential problems and how to avoid them

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Communication

Crew Page

• Try using station specific procedures like filtering, correct dressings
• Or generalised food cost procedures like promoing meals

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Communication

Training Team

• Try role specific posts like correct waste count procedures, or calibratons

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Communication

Management Team

• These should be management specific posts i.e. transfers procedures
• Or general weekly food cost posts, communicating how the goal is going and feeding back on progress

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Competitions

• Most people love a challenge
• They help to embed and reinforce positive procedures
• And help track and drive improvement

• Nugget-mon-go - coached red bins
• A non-conformance box
• Upselling pies
• Order taker bingo

• When developing a competition you can try to
• Train a procedure
• Solve a problem
• Or even drive improvement - i.e. increasing the Average check/sales

Competitions

Nugget-mon-go

• This competition really coached the importance of using red bins, ensuring accurate waste counts and production accuracy (putting the right number in a box)

Competitions

Non-conformances

• I simply brought a plastic box and challenged crew to find any non-conformances
• Ensuring they were logged via MBSync, rather than chucked in a waste bin (and the cost absorbed by us).

Competitions

Pies Pies Pies

• This was all about pushing upselling low % cost items.
• Specifically pies during the winter months, since there such a low cost / high profit item they have a big influence on the overall cost of sales and so bring your BTA down, by increasing your % profit. And there easy to upsell when its cold.
• Hash Browns are another fantastic opportunity during breakfast.

Competitions

Order Taker Bingo

• All about boosting the Average check and targeting low cost items, but on a bigger scale.

• The first time before covid I targeted general upselling
• Post covid I just tried to target our Large Extra Value Meal %, by challenging order takers to just ask "Is that Large?"

Competitions

Penny Increase Power

• Helps with BTA and Labour

Praise

• Some people are driven by recognition and feedback.
• Be valued
• Facebook posts
• Are all free, effective, and help to positively reinforce behavior

• They signposts it as role model behavior, and help encourage it

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I hope this helped. -Any questions? -Want help with a specific issues Feel free to drop me an email - Charlie Martin - 00897@uk.mcd.com I'm always happy to help

:)