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Good Planning, Creative Thinking Build Profit In Leisure Foodservice

Posted On: 10/25/2001

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LAS VEGAS - "Profitable foodservice boils down to three things: come up with a concept, create a menu, then design the facility," said Michael J. Holtzman, Profitable Food Facilities (San Diego, CA). Leading a seminar at Fun Expo here, Holtzman explained that the operator must analyze the total location before building a foodservice area.

A former operator, Holtzman now is a designer of foodservice facilities and a consultant. He has worked on 70 concession installations in "captive" markets. He told the Fun Expo audience that the size, layout and clientele of the site determines the constraints within which the foodservice installation must be planned. The principal budget item is the kitchen, he emphasized; and the kitchen's design starts with the proposed menu.

In addition to equipment, he said, the actual food preparation facility involves costs for utilities, and for compliance with health, safety and building codes. It also requires the most attention to "fit and finish." Factoring in all these expense items, only about 40% of the cost of a kitchen is for the equipment, Holtzman reported.

"Developing a well-functioning foodservice operation as an independent operator starts with an efficient kitchen design and a good set of operating systems," the speaker said. "And the design must be tailored to sales and menu objectives."


Any kitchen facility that you're building starts with the menu direction, or at least the overall menu concept, Holtzman explained. "Make sure the design is very versatile; add two or three extra utility connections before you build, in case you decide to expand," he recommended.

The first part of design involves matching the layout to the menu. "If you're having hot dogs, where are the points of purchase? The grilling machine? The tray storage area?" Knowing where and how the food will be served is critical to determining the systems and procedures for preparing it.

The menu also dictates the type and capacity of on-site storage facilities. When Disney, or any major recreational operator, designs a new foodservice facility, he added, the planners anticipate storage needs by going down the menu, measuring projected throughput, item by item.

The next step is to "front-load" the design, building the counter like a bartender would. "Have everything in front of you and accessible. Use the back area for storage," he continued. "If you can, even keep the hood system or cooking pieces up front, so you can run the station with one person during slower periods , which are 70% of the serving time."

The speaker urged operators to check equipment specifications before installation, and again when it's being installed. "I warn you that this can be a very challenging business," he advised.


Within the facility, make it easy and convenient to get to the foodservice facility, Holtzman urged. "Be sure it's in a good, 'captive' location. It can't be on the outskirts or down the road, it's got to be in front of their faces."

Holtzman then displayed "before and after" photographs of different kitchens for which he'd been a consultant, and discussed how repositioning of appliances improved flow, productivity and income in each location.

The first example was a facility in a water park. Prior to redesign, there was inadequate freezer space, and it was poorly located and hard to access. The solution was to split the frozen storage into two separate areas, installing double doors then necessary to improve workflow.

"A foodservice area has a concept, a direction for the food and how it's going to flow," he said. This particular facility served 1,200 people daily with three service windows.

"If they got a rush at lunch of 400 or 500 people, they would not be able to expedite this," he pointed out. "It looks as though they just took an empty room and installed some equipment. We see this a lot," Holtzman said.

"After we were finished with it, our layout had five windows instead of three, and a centralized kitchen area," he noted. The photos showed the manner in which output from the fryer, the broiler and other cooking equipment efficiently feeds the serving-stations. Freezers support one side, and a combination of frozen and refrigerated storage supports the other.

Storage must be laid out with an eye to easy access from the specific food preparation area that requires the products to be stored. This, among many other things, is why the menu is the starting-point for facilities design, Holtzman reiterated.

The nature and scope of the foodservice also must be taken into account when designing facilities. For example, a fun center that plans to cater special events must plan for this activity when laying out the food preparation facilities.

"Have a separate catering area and keep it out of the kitchen so you don't interrupt the flow. It doesn't take much space; if you have only one pizza oven, that's the one piece that's going to cross over," he explained. "If you're going to do birthday parties, try to have a separate catering area."

The next example was a small concession operation with two points of sale (windows). "The Americans with Disabilities Act says we have to have a 3-ft. walkway," Holtzman said. "When we have to redesign something, they won't let us move walls."

Attention to efficient use of space permits the experienced facilities designer to work around these constraints, the speaker said. He explained how close analysis of the available floorspace permitted adding a third service window, creation of a separate food prep area, and installation of enough refrigerated and frozen storage to support the kitchen. The layout was "front-loaded," so everything that was necessary is positioned within 12 ft. of the cashiers.

Efficient use of space also means matching the structural elements of the facility to the shape of the equipment. Since most foodservice appliances are angular, not curvilinear, "Curves and stainless steel don't match and they increase your cost," he admonished. Curves may be nicer aesthetically, but they're not functional in most cases.

When the menu and the type of service have been determined, it's time to find an experienced facilities designer, Holtzman said. There are many options here, and care in choosing the right one in the particular area for the specific job can save a good deal of money, time and annoyance.

Consultants are available to do the layout and specifications; some of them also are manufacturers' representatives for foodservice equipment producers. If they are, they naturally are predisposed to specify lines they represent, and it's worthwhile for the operator to do such homework as is necessary to determine whether those lines always are the best choice for the particular application.

Similarly, many suppliers of restaurant equipment will do the layout at no cost, as long as they get to provide the equipment. Once again, this can work very well, if that equipment is a good choice for the operation; and it is the operator's business to determine this.

Whatever the choice may be, it should be based on successful experience, as evidenced by good references. "Check some references of facilities that they've done," he urged. "And do find out what the equipment will cost before you commit."

There are two parts to each design. "Even if you've got a great design, installation is a challenge sometimes, so see how other installations have gone," Holtzman recommended. "Talk to the operators of the reference facilities and listen to what they say about them," he advised.

When choosing equipment, he said, it is important to know exactly what is being ordered. For example, all kitchen tables are not created equal. "If you're going to do sandwiches, get what's called a raised-rail pizza table, so the cutting surface is contained," he instanced. And a common mistake is not installing enough refrigeration tables. "When you're going through your menu, make sure you have enough refrigeration space on your lines," he recommended.


Holtzman then explained the ins and outs of equipment purchasing. "A standard Panasonic 900W. microwave oven has a list price of $1130. The dealer's cost, if he buys just one, is $450. If he buys more than four, it's $425 each. If he moves more than $250,000 worth of Panasonic microwave ovens, he will get 10% back from the manufacturer, making his final cost $380 each.

"When the dealer is designing your kitchen, at no charge, guess what kind of microwave you're going to get?" he suggested. When equipment specifications are broken down, ask for 50% off the list price, the speaker advised; it's a good starting-point for discussion. Dealers have the manufacturers' catalogues in house, and can show a purchaser the book prices, he said. "It's worth a couple of hours of your time to learn a little bit about what you're buying, and see what the dealer is really paying for it."

Some dealers can get better prices on different pieces depending on the relationships they have with their vendors, he continued. There is a wide variety of equipment available, and the choices that the dealer prefers to sell may or may not be the best choices for the purchaser.

Specifications are public materials, and readily available to any interested party. Another good way is to call the dealer directly.

"What's the difference between brands? You've got to go with what you need," the speaker emphasized. "Do you need the top-end equipment? Probably not. Be careful that items aren't substituted," he cautioned.

"On a back counter, millwork is much more expensive per running foot than stainless steel. And if you take a knife to millwork, you'll cut it, but you can't cut stainless steel," the speaker observed. Here again, aesthetics can work against practicality and efficiency.

"Make sure you bid what you need; trust somebody to help you out with that." He displayed two 12-in. blade slicers from two different manufacturers. The first slicer lists for $1500, list; the second one has a $4500 list price. The more expensive one can slice anything, Holtzman said, because of the type of steel it slides down.

"You can probably do just fine with the less expensive one. Make sure the equipment meets your needs; make sure it's what you're looking for."

Vigilance is essential throughout the process. For example, when purchasing stainless steel tables, there are different gauges of steel. "You may pay for one thing and they may give you another. Does anybody really know? To find out, you need a measuring tool that costs you $3," Holtzman said.

And there often are several ways to attain the same result, but at widely varying costs. For example, he instanced, a 3-ft. table costs $825, list price. A 6-ft. table costs $993.

"Some people will send you four 3-ft. tables to increase the price. On the other hand, if you have a 12-ft. space, two 6-ft. tables may be less expensive," he observed. Again, attention to detail can save the operator a good deal of money, and yield better results as well.

This attention must extend beyond the specification and ordering phase of the installation. Even if the operator successfully negotiates for the desired equipment at the right price, it's important to keep checking to make sure that what is delivered and installed is what was promised, Holtzman advised.

At the same time, operators must remember that there is a reason why commercial foodservice equipment is much more expensive than apparently similar home appliances, the speaker emphasized. "Have you ever priced a commercial toaster?" he asked. An NSF-certified model costs about $700. "Why not go to Wal-Mart where a toaster costs $30?" The reason to buy the $700 model is because of health codes and insurance.

Compliance with applicable health and safety regulations is essential. "If you slack off even with just a toaster, then they can get nosy. They can shut down any restaurant any time they want to, so let's not give them a reason. Don't make yourself an example for the community," Holtzman urged.

Buying used equipment is like buying a used car, he added. "You may let someone use $10,000 worth of a car's life and buy a $27,000 model for $17,000," he instanced. "What matters is what the previous owner did with that car."


The other principal concern in adding a foodservice operation is management and staffing, Holtzman continued. Here again, good planning early in the process pays off.

"Hire your food and beverage director early," he began. It's very desirable for the individual who will be responsible for managing the foodservice operation to participate in the planning process for the facility, and in menu development.

Thus, when interviewing for this position, it's valuable to explain the food and beverage concept in detail, then to ask each candidate to develop an opening timeline for the facility. The proposed plans can be reviewed during the second interview.

"This approach will probably cost you a month's extra salary, but it's not easy to get someone to develop an opening procedure for your place," the speaker pointed out. And having the individual who worked up the plan aboard to implement it can be extremely efficient.

When opening a facility, as in life generally, one does not get a second chance to make a good first impression. However, Holtzman pointed out, if the foodservice operation is part of a seasonal facility, "no one's going to remember what you did last year, what the portion sizes were, or whether the price went up a dime. You get a new chance to do it every year, to fix what you've done wrong and clean it up for the next time," he pointed out.

Nearly all recreational foodservice operations experience peaks and valleys, the speaker added. Sometimes there are three employees working and sometimes there are 30. "Take advantage of that slow time to develop and get ready for those busy times," the foodservice veteran advised. Developing the staff and getting everything in place is no simple task.

Good restaurant personnel are unique, and finding them is even harder, Holtzman explained. The typical fun center foodservice operation offers some attractive "perks" to young workers. The hours are fairly decent and game play may be discounted for employees. The speaker offered some helpful tips for hiring.

"Kids drop off applications. Look through applications based on handwriting skills, experience, and maybe what school they go to." Whoever receives the application should make a mental note of the applicant, too.

"Teach your staff what you want and what you're looking for. Hire for a smile, and energy. We need personality. We're a people business, so we need amiable people," Holtzman said.

He advised operators to look for applicants who have never worked in foodservice before, or even those who are seeking their very first job. "One of the most motivated teams I've worked with was composed of 14-and 15-year-olds and an 18 year old," he said.

When orienting new employees, sit down for five minutes and clearly lay out everything that's expected of them. "When you go to work at Disney, first thing, everyone has to watch a video on expectations of dress code and appearance.

"What are your 'have to's'? Are they as simple as, 'show up and don't steal?' Be flexible with young employees," Holtzman recommended. "Help them find coverage for each other when they need time off, and they'll learn to work better with you."

"In terms of benefits, I want everyone to visit an In And Out Burger. They sell six items on the menu. They keep their staff for an average of two years."

The visit may help a prospective foodservice operator deal with the tremendous turnover in personnel that imposes a heavy cost on feeding. "The average restaurant employee stays for six months , but In And Out Burger workers are making $8.50 an hour. And they're making French fries by hand with a potato masher. How do they do it?" Holtzman wondered.

"The general manager makes over $100,000 a year. He's also working the grill until 2:00 AM on Friday and Saturday nights; it's in his contract. They stay," he explained, because the company has created a working culture and environment in which people are treated very well.

"What if you could get the same output with one fewer employee?" he asked. "If you have four people working, run it with three. Don't jump the wage, just set higher expectations.

"Sit your best employee down and tell her you want three of her friends to come work at your facility; and when they've worked for 30 days, you'll give her $30," he suggested. We've got to do things a little differently."

Other incentives might include offering each person $5 cash at the end of the day if the percentage of cheeseburgers sold rises. Do it randomly, he advised; this makes it more fun.

The speaker asked whether anyone in the audience had ever received a thank-you card from an employer. One person's hand went up.

"The first year [at a seasonal operation], I called [the previous summer's employees] and got a third of them back," he said. "The next year, I sent them thank-you cards, and I got two-thirds of them back for the following summer season. The year after that, I sent them money, and by making them a part of a durable team, I got them all back."

When designing (or redesigning) the menu, make sure every item is profitable, Holtzman advised. "Feature items you think will be the best sellers based on profitability, speed of service and price points. And remember that good display drives sales; people buy with their eyes.

"Have a paper menu, too. The customer backs up to look at the menu board. Have a little tri-fold available so customers can carry a menu with them, especially during special events."


No concession wants to sell one item; "we want to sell three items. Cost is what it's all about," the speaker pointed out. "So bundle it."

Beverage revenues increase with a greater variety of portion sizes. "No adult will buy a kid's drink," Holtzman observed. "When child, small, medium and large sizes are offered, price-per-drink can increase up to 17¢ each," the speaker explained.

Constantly analyzing sales is essential to maintaining a profitable operation, so it's important to track revenues and historical sales data. This process also can make the ordering process more efficient as time goes by; remembering how many watermelons were used last July 4th for 1,000 people is hard to do.

Water fountains should always be placed farther from the foodservice, the speaker said. Additionally, soft-drink vending machines should be placed on the outskirts of an operation; arrangements should be made with the bottler so location personnel fill the machines, to maximize profits.

"Is your menu going to make money?" Holtzman asked. "Do you have a signature item that everyone says is the best?"

Stand outside the door on a Friday night and give away free samples, he advised. If there is a long line in the facility, begin at the back of the line and give out samples, to make sure the people back there don't leave. Each person standing in line for food potentially is a $5-$6 customer, so effective sampling is well worth the effort.

An ancient foodservice fallacy, unfortunately still commonplace, is the idea that the more food is cooked, the more it costs.

"Customers expect more than a frozen piece of cardboard stuck in the microwave and served as pizza. Young employees can put together really good pizza. You don't have to go with frozen," the speaker asserted.

Holtzman also advised fun center operators not to attempt full-service restaurants. If a step beyond the prepay concept is desired, food can be brought to customers, as sometimes is done in fast-food establishments.

The speaker is a believer in putting the fountain in the front of the house, right behind the counter. "People buy with their eyes, and fountain drinks provide 50% of your profit," Holtzman declared. "The other 50% comes from all the other menu items combined."

Large bottling companies frequently offer to install refrigerated reach-in display cases for free, if the location will agree to stock "47 of their drinks" rather than using a fountain system, the speaker said. He regards this as a bad idea. "If you prepare any food, then you do not want a refrigerated display case. The more we sell bottles, the greater the cost of goods.

"If you're a C-store selling only prepared foods that require no cooking, and staffed by one or two employees, then it's okay. But most of us aren't doing that. We're preparing and serving product."

Fountain beverages offer low product cost and high margins, because most of the profit derives from "finishing" the drink, adding value by preparing a product for sale. Packaged beverages return most of the profit to the bottler, who added most of the value.

Guests in a location are a captive market, he continued. The location decides what it's going to serve. "The only reason to change something is if people actually leave because you don't have what they demand," Holtzman said.

Some things to think about when developing a menu include simplicity. The object should be to favor items that are simpler to make, such as Caesar salad rather than Cobb salad, Holtzman said. A concession may offer nachos, but should not serve several multi-ingredient dishes.

Once the menu is designed, it can be used as the basis for making sure adequate refrigeration and freezer space is available, he added. This is as important as having the right food preparation and serving equipment.

"And think about designing the systems for your worst employee, or for a 7-year-old child," he urged. "We can think about efficient systems, but we need to do things like pre-portioning the meat, rather than giving employees the opportunity to add an extra two oz. of meat so you lose 10¢ for every dollar you earn." Accurate portion control is the basis of accurate food cost determination, as well as the cornerstone of consistent product quality.

It's also important to focus on line speed, especially during busy periods. "If you have two windows serving one order per minute with an average cost of $4 per order, that's 120 customers per hour, and $480 maximum income per hour.

"With 3 windows," Holtzman said, you can do 11D2 orders per minute. Thats 90 customers per hour. By upselling, you can increase order average, customers per hour and revenue, he explained.

In high-volume establishments, and during peak periods almost everywhere, line speed becomes very critical. The way to move the line is by taking orders in line. That way customers don't have to interact with register people, who need only read and ring up the orders.

The speaker reported that at Wolf Creek, a golf course not far from Las Vegas, there is a golf cart drive-through concession at both the 5th and 14th holes. Because of the drive-through sign, and the innovative nature of the operation, the stand has been very profitable.

"The difference between a successful person and others is not a difference of strength, but rather a difference in will," Holtzman summed up. "If we continue to do what we've always done, then our sales of food and beverages will remain the same.

"Maybe every customer gets a 50¢ game token [with food purchase]. What's the cost to you? It doesn't cost you 50¢. You can write off 35¢. And that's great; that 35¢ can help with labor costs." That type of innovation can generate lots of volume, he continued.

"Take each item and see if there's a better way to do it: better quality, better taste, a different way to market. The customers are captive, inside our walls," he reminded the audience. "But at least half of them never order from your stand. At some locations, people are paying a dollar or two to park; in return, they get a $1 token toward food and beverage purchases. That generates a lot of food and beverage revenue, because every guest now has a dollar , and those dollars must be spent one at a time. Be a little innovative," he urged in conclusion.