Catering operations are generally one of the more complex components of a venue’s activities. It is estimated that only 15% to 30% of restaurant, hotel and club catering operations are profitable. A successful catering department requires the effective management of everything from price and portion size to marketing and HR. The benefit of a successful catering operation is that it not only brings in profits from the catering department, it also serves to enhance other areas of the business.

While the following information on catering operations has been carefully selected to to give a breif outline of a well run catering operation, it should be noted that this information is a "drop in the ocean" in terms of what hospitality managers need to know to run a profitable one.

Market research

There is a certain amount of market research that needs to be undertaken to be sure that your organisation has an understanding of what it is that your clientele want. It is no good operating expensive fine dining in an area where pub food is what is demanded. Information that should be obtained from local area research is listed below.

• Demographics: what are the population characteristics of the local area (ie; families, retirees, income levels, age structures etc)

• Portion Size: what preferences do local area residents place on portion size, food quality and price?

• What are your customers willing to pay?

• What popular items are on competitor menu’s?

• How much variety is needed on the menu?

Menu Composition

It is important to realise the marketing importance of a venues menu. A menu is one of the most commonly read documents in catering operations and yet quite often is neglected. Keep in mind the menu is a key marketing tool for the business and should be treated as such.

Menu management is an ongoing task; menus should be reviewed and changed regularly. There are certain tools that can greatly assist catering mangers in analysing a menu. Two of these are the product life cycle and the menu profitability matrix.

The product life cycle is more of a tool to explain and anticipate a particular menu items popularity. It is useful in predicting and assessing when to change certain aspects of the menu. The product life cycle (see diagram below) suggests that when items are first introduced to a menu they tend to undertake an introductory period of slow sales growth, this is generally followed a sustained growth phase which see sales of the item rise to profitable levels. Menu items eventually reach a maturity stage where they continue to sell well, they exhibit no sales growth. Finally a menu item enters into the decline stage of the product life cycle. The decline stage of the cycle is characterised by progressively lower sales until the menu item may become no longer profitable.

It is important to note that not all menu items follow this exact cycle. Some menu items remain popular indefinitely, while others may skip stages of the product life cycle. The task of the catering manager is to keep the consistent performers on the menu while replacing the menu items which have entered into the decline stage of the product life cycle.

Menu Pricing Calculator

When composing a menu it is essential that all meals are costed with strict adherence to portion control. When pricing a meal it is necessary to determine the quantity of each ingredient, the cost per unit of that ingredient and the cost per meal/cover.

To assist hospitality managers to price their menu items DWS has produced a menu price calculator.

To download the DWS menu price calculator, please click here

Recipe Cards

Recipe cards would have to be one of the most import documents in a commercial kitchen. Menu cards assist chefs and management to cost menu items, they ensure food presentation and quantity remain consistent and they serve as a reference for all kitchen staff reducing the need for verbal questions thus saving time. Well operated venues often bind recipe card to produce a “kitchen handbook” which is displayed in an accessible location. Creating menu cards requires a substantial time investment so it is important that they not sit unused in a draw somewhere.

There are several key pieces of information that a menu card should convey, these are:

• The ingredient type, quantity and cost required for each cover item: This allows kitchen staff to easily identify what is required, in what quantity and perhaps most importantly at what cost. Indicating cost prices for food allows gives staff an understanding of the real costs involved. This can act to encourage staff to reduce wastage.

• The gross profit required on the cover: Recipe cards are not just instruction manuals for cooks and food preparation staff. They are a means for chefs and managers to calculate costs and project menu prices required in order to generate a profit. Specifying on the menu card the gross profit that the menu item must generate allows chefs and managers to work out what they must charge to achieve this particular gross profit.

• The Estimated labour costs: It is important to estimate labour costs on menu cards for two reasons. Firstly it guides kitchen staff in terms of preparation and cooking time expectations. Secondly it enables the better costing of a menu item. This is especially important for menu items with time intensive preparation and cooking requirements.

• A reference picture: Keeping meals consistent in size and appearance will keep customers happy and your costings accurate. A reference picture will help with this.

• The menu sale price including GST: Remember to factor GST in to your menu item selling price. Forgetting GST will substantially erode profits.

• A preparation method: A brief preparation method will help your junior kitchen staff and reduce the need for verbal questions to other staff members.

Chefs and managers need to be aware of wastage and usable food percentages. For example, if a kitchen purchases whole fish for a particular dish, approximately 35% of that fish will never be used in any dish and will be thrown out. The effect is the effective cost of the fish has risen. Therefore item prices should be adjusted for wastage.

Remember it is also important that your recipe cards are kept up to date. The price of kitchen inputs change fairly regularly. Generating your recipe cards electronically will enable chefs and managers to make changes quickly and reprint cards.

Inventory management

Inventory management is critical to successful catering operations. Having too much inventory on hand can harm your business in two distinct ways. The most obvious is that food will spoil and will need to be thrown out adding to wastage, which is usually already a major cost in catering operations and a cost which is notoriously hard to manage and control.

The other potentially harmful effect is the possibility of bad food being served to customers; this can severely damage the businesses reputation in the community. Through word of mouth and sometimes media reports, a severe food poisoning outbreak can be terminal for a venue.

When determining adequate inventory levels, a key tool is the inventory turnover ratio. The inventory turnover ratio indicates how many times an organisation turns over its inventory generally over a period of one year. The inventory turnover ratio is calculated by dividing the catering cost of goods sold of the period by the amount of inventory held at the end of the period (this method assumes that the inventory held at the end of the period is similar throughout the entire period).

The result of this calculation is a number which indicates how many times per year a venue turns over its inventory. Alternatively the number can indicate the length of time it takes to sell all inventory on hand at a particular time. It is generally accepted that catering operators should not hold more than 1 weeks worth of inventory at any one time. Individual inventory items will differ, for example dry stores may only be turned over 12 times per year (one months supply), however perishable goods might be turned over 120 times per year (3 days supply).

Front of House

Front of house staff are very important part of any catering operation. The floor staff are sales representatives for the menu. To sell the menu affectively it is vital that wait staff have the following qualities;

• Act as a host to customers greeting them warmly, and making them feel valued

• Displaying an in-depth knowledge of the menu items

• Know and understand "up selling", particularly in relation to wine

• Have a friendly, approachable and professional attitude

• Be proactive to the needs of your customers

The ability to effectively communicate is very important for front of house employees, not just with customers but with back of house staff too. Back of house staff can only meet the customer requests when information is delivered in a clear and timely manner from the floor staff. It is common for conflict to occur between the front and back of house. It can sometimes be beneficial for front of house staff to be educated in the functions and conditions in the kitchen and vice versa with back of house staff in regards to front of house operations.

Financial Management

Financial management and record keeping gives management the ability to accurately assess the performance of a venues catering operation and determine areas that may or may not be functioning correctly.

Some of the more important areas to keep accurate records for in the catering department include the following:

• Catering Revenues

• Catering Cost of Goods Sold

• Catering Gross profit

• Direct costs associated with the catering department

• Inventory on Hand (requires regular stock takes)

• Catering Wages and Personal ongoing Costs

• Catering Surplus/Deficit

• Number of covers (meals) per meal period
  

• Spend per customer

Using a combination of these measures it is possible for catering managers to gain a timely and accurate appreciation of the financial situation in their venues.

It is worth noting that specialised point of sales systems can greatly increase the ease and accuracy of financial record keeping.

One of the additional benefits of keeping accurate financial records is that it also reduces the opportunity for staff theft.

Layout & Design

The design of the facilities that support the catering operation are vital. A well design catering venue will incorporate a work/service area that facilitates maximum efficiency thus keeping wages, power, energy and wastage to a minimum.

Venue layout considerations can include the following:

• Menu considerations: these factors will dictate what types of equipment will be needed in the kitchen, size and locations of preparation areas and storage requirements

• Table size and mix: what is your stereotypical customer and what is your customer group mix

• Spacing between tables: how much privacy and comfort do customers require

• Entry and waiting area: is the venue layout designed so that when customers enter the catering area, front of house staff are ready to greet them and allocate a table

• Access to restrooms: are bathroom facilities within walking distance, and is their size adequate to cater for the number of patrons. Department of Health requirements must be satisfied

• Layout Efficiency: A catering operation can be simplifed down to a eight step process. 1. Delivery/receipt of food and beverage; 2. Storage of materials; 3. Pre-service preparation; 6. Order receipt; 5. Cooking; 6. Serving food to customers; 7. Removal of materials from tables/ dishwashing; 8. Removal of waste. Each of these processes needs to be taken into account when designing a catering venue. Consideration should be given to cross traffic, potenial bottlenecks, clearances between benchs and tables and equipment congestion.