Increase Sales in F&B

7/30/2019 Increase Sales in F&B

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IncreaseF&B

SalesSecrets to Boost Profits(Targeted at F&B Operators and Managers)

By

Eric Alagan

Micro Mouse Business Series

LCA Consultants Pte Ltd

Singapore


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First Published April 2011

Published by:LCA Consultants Pte Ltd

(Company Registration No. 201008768Z)No1, Jalan Ulu SembawangThe Sensoria, # 05-11Singapore 758930

WWW.LCABOOKS.COM

ISBN 978-981-08-7714-9

Copyright @ 2011 by Eric AlaganCover artwork @ 2011 by Eric AlaganTypeset and Cover design by : Rank BooksPrinted in Singapore

This book is an original work by the author. All Rights Reserved. No part of thispublication may be reproduced, stored in a retrieval system, or transmitted, inany form or by any means, electronic, mechanical, photocopying, recording orotherwise, without the prior written permission of the copyright owner.

Condition of SaleThis book is sold subject to the condition that it shall not, by way of trade orotherwise, be lent, resold, hired out or otherwise circulated without the copyrightholders prior consent in any form of binding or cover other than that in which it ispublished and without a similar condition including this condition being imposedon the subsequent purchaser.

DisclaimerThe author and publisher disclaim all liability and responsibility for loss caused to

any person and/or organisation by any act or omission to act directly or indirectlyas a result of material contained in this book.

A CIP catalogue record for this book is available from the National Library Boardof Singapore

National Library Board, Singapore Cataloguing-in-Publication Data

Alagan, Eric,1955

Increase F&B sales :secrets to boost prots / by Eric Alagan. Singapore : LCA Consultants, 2011.

p. cm. (Micro mouse business series)

ISBN : 978-981-08-7714-9 (pbk.)1. Food service management. 2. Cafeterias Management.

3. Restaurant management. 4. Small business Management. I. Title. II. Series: Micro mouse business

series.

TX911.3.M27

647.95068 -- dc22 OCN702567438


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To My Children

Alicia

AdamsonAmelia

Dedication


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About the author

ERIC ALAGAN has more than 35 years of international businessexperience in the areas of aerospace MRO, security consultancy andservices, trading and logistics and supply chain. He has held severalprogressive positions in multinational corporations and last held theposition of managing director, Asia Pacic for a European aerospacecompany. He has been involved in several green eld start-ups,mergers and acquisitions.

Eric has managed companies in Singapore and Australia withextensive experience in ASEAN, the Indian sub-continent and thePacic islands.

He holds several engineering qualications, a business degree fromRoyal Melbourne Institute of Technology and a masters degree inlogistics and supply chain from University South Australia.

He currently undertakes business consultancy work, writes novelsand self-help books for entrepreneurs under the Micro MouseBusiness Series.

The rst two titles released in 2011 are:

1. Staff Selection Secrets to Employ the Best PeopleThis book targets micro businesses, entrepreneurs and thoseinterested in Human Resource.

2. Increase F&B Sales Secrets to Boost ProtsThis book targets existing cafes, restaurants and F&B start-ups.

Eric has also written a novel, COFFEE SHOP, A Business Thriller Set inSingapore. Weaved into the plot is a business plan based on detailedresearch that Eric undertook. Coffee Shop is available in all majorbookstores in Singapore.

Eric is married to Lisa Chew and they have three adult childrenpursuing business and medicine.


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prefaceIncrease F&B Sales targets cafes, restaurants and other micro enterprises in

the Food and Beverage (F&B) sector.

There are various denitions for micro enterprises but the commonlyaccepted is any business that has 2 to 9 people with a turnover of under$2 million.

Hence, many of the ideas and concepts are also applicable to food courts,coffee shops and even hawker stalls.

Micro Mouse Business Series a play of words based on the famous MightyMouse, an animation superhero created by Terrytoons for 20th Century

Fox. In that cartoon a mouse beats all the big boys, normally portrayed ascats. Therefore, this series of self-help management books hopes microenterprises can hold their own against the fat cats of industry.

The Series draws on the experiences and observations of the author andpresents suggestions on increasing sales in F&B outlets without raisingprices, reducing portions or lowering quality. This book provides a seriesof simple steps to achieve measureable targets.

However, you should always rely on your own independent professionaladvice, judgment and preferences. No warranties, assurances, guaranteesor representations about the accuracy, reliability, timeliness or otherwise ofthe information contained in this book can be given or to be construed.

To the full extent permitted by law, LCA Consultants Pte Ltd and/or theauthor shall not be liable (including liability for any form of negligence,errors or omissions) for any loss or damage arising out of your use of this

book.

You must always consider the appropriateness of the information in this

book (as expressed explicitly or implicitly) to your relevant circumstances.By buying this book, you have agreed to the above terms.


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A PHOTO FINISH WIN

I once played a video clip of a closely run 100 meters dash to a

group of executives and asked if they could identify the winner.

They could not, so I replayed that video and this time some of

them made a few guesses but there was no consensus about who

actually nosed the tape rst. I replayed it but this time took it

frame-by-frame and everyone saw the winner.

Competing in the business world is like that. You do not have to

win by a mile. Put another way, you do not need a 100 great ideas

because most of that 100 had already been thought of, practiced

by your competitors. You too probably know most of them.

What you need is one or two ideas no one else had thought of or

exploited.

I hope and wish you could nd one or two such ideas from the

dozens contained in this book.

All you need is a fraction of a second that nose length to win.

Eric Alagan

For the sake of expedience, throughout the book, the author

uses male/female genders interchangeably and where he

mentions a male, it refers to a female and vice versa.


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Employee Capability Factor Do you know what that means?

How do you identify an employees Capability Factor, How do youdetermine your teams Capability Factor, How do you maintain or

better still improve your teams Capability Factor.

These are some of the questions that Staff Selection addresses.

The book assumes no prior knowledge or training in Human Resourceand takes you by the hand to develop your very own Human ResourceManual in the process of Staff Recruitment, Selection, InterviewTechniques and Probation.

The book is lled with dozens of worked examples, samples formsand letters that all you have to do is to simply insert your companyletterhead and use.

There are models and tables that help to identify and evaluate notonly the Hard Skills, but the elusive Soft Skills.

Whats more, the models allow you to incorporate your opinions,values and views about whats important to you the employer.

Get the best people but what do you mean by best? How do youdecide between loyalty and diligence, between punctuality andproduct knowledge, between a person who has great customerrelations but makes many mistakes? The book allows you to comparedurians with rambutans your denition of best.

DEBUT SELF HELP BOOK BY ERIC ALAGAN


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Consistency how do you ensure that a person employed today isgood as or better than someone you employed 6 months ago? Thebook shows you how using simple, numeric models.

Return on Investment and Cash Flow Budgets. How do you determinethe ROI when employing additional head count?

Staff Selections contains simple models to develop Cash Flow Budgetsand Return on Investment. For those HR people and entrepreneurswho do not have a nancial background.

These are some of the hard, hands on and practical questions thatbefuddle some of us. These are exactly the type of questions StaffSelection addresses.

How much do you need to invest in this book? Much less thanemploying a Consultant much less than engaging an EmploymentAgency, even much less than a dinner.

I guarantee that youll not regret it. You see, Ill be releasing up to 12business books over the next few years. If I disappoint with this rst

book wholl buy my subsequent 11?Why waste money creating opportunities seize opportunities whenthey appear Sun Tze, Chapter 4,

Retail Price $49.50

Buy Direct from Publisher LCA Consultants Pte Ltd

Call: 9786 1964, 6365 1464

SMS: Staff Selection space 9786 1964

Email: [email protected]

Price $29.50Includes Free Delivery Within Singapore

C.O.DNo GST

(Price subject to change w/o notice)


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A NOVEL BY ERIC ALAGAN(pen name Daniel Ellsworth)

This business thriller set in Singapore provides insights of theAsian corporate world behind the squeaky-clean image of

Singapore.

Roy, scion of a well-connected family, rapes and kills Edwins

teenage sweetheart. Edwin, son of a domestic help, hides

his pain, grows up and starts anew with Lucy. Roy stalks,engineers Edwins dismissal. At age fty-four, Edwin, now

unemployable in a country that worships youth, establishes

a coffee shop chain. Roy engineers a hostile takeover of the

chain. Read how Edwin prevails.

At another level, the novel alludes to how suspected Thaksin

money ows into Singapore and is subsequently cleanedwhen a large investor steps in. The author draws on his

international business experiences and portrays the business

practices, cultural norms and negotiating styles of Thai,


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Indian and Singaporean business people. He captures the

casual vibrancy of the Indian businessmen that belies their

sharp business acumen. In contrast, the Thais are formal and

courteous but no less ruthless. It also highlights how localfamily owned businesses subordinate optimal decisions in

deference to family interests.

Whether you are a casual reader, a romantic, an experienced

professional, a seasoned entrepreneur or a politician

accustomed to deals and double crosses, Coffee Shop willnot disappoint you.

COFFEE SHOP - A Business Thriller set in Singapore

Paperback, 429 pages, LCA Books

Call: 9786 1964, 6365 1464

SMS: Coffee Shop space 9786 1964

Email: [email protected]

Price $25.00C.O.D

No GST

Includes Free Delivery Within Singapore


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contentsChapter 1 Introduction1.1 F&B Manual1.2 Life Cycle of Business1.3 Anecdotal Overview1.4 Start with Basics not End with Basics

1.5 Time Required to Recover Your Current Situation1.6 The Givens1.7 The Key, Mothers Cooking

Chapter 2 Evaluate Current Situation2.1 Quality of Location2.2 Rental Cost2.3 Prot & Loss Statement

Chapter 3 Determine Which Item Generates the Most Prot3.1 Unit Cost and Prot3.2 Cost of Labour and Leasehold

Chapter 4 Factors that Limit Sales/Prot Growth4.1 Limiting Factors Overview4.2 Limiting Factor Operating Times4.3 Limiting Factor Meal Times & Table Sales4.4 Limiting Factor Dining Area & Furniture

4.5 Limiting Factor Kitchen Area

Chapter 5 Determine Current Sales vs. Potential Sales

Chapter 6 Kitchen Loading & Waiting Time6.1 Shortest Waiting Time & First-Come-First6.2 On-the-Spot Promotions6.3 First Start First6.4 Longest Start First

6.5 First Start First vs. Longest Start First Methods6.6 Why Meals Have To Arrive Together

Chapter 7 Communication7.1 STAFF SELECTION by Eric Alagan7.2 Verbal & Non-Verbal Communication

12355

678

11111416

212123

2930313536

4245

53545964646771

757576


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7.3 Presentation Dressing & Mannerism

Chapter 8 Mistakes & Accidents Recovery8.1 The Key

8.2 Possible Recovery Actions8.3 Determine Root Cause8.4 Scenario Chart

Chapter 9 Stafng9.1 Part Timers9.2 Financial Benets of Employing Part-Timers9.3 Other Benets of Employing Part-Timers9.4 Multi-Tasking

9.5 Staff Retention and Sales9.6 Pairing Waitstaff and Customers9.7 Determine Potential Number of Regular Customers

Chapter 10 Sales Strategy10.1 Sun Tzes Strategy10.2 Review of Preparations to Date10.3 Overview of Method10.4 Preliminary Budget for 6-Week Period

10.5 Sales Target10.6 Target Market

Chapter 11 Action Plan11.1 The Ten Action Plan11.2 Controls on the Ten-Action Plan11.3 Walk-In Customers

Chapter 12 Budget and Controls

12.1 Recover the Promotion Cost12.2 Recover Advertisement Cost and Calculate BEP12.3 Scenario with 1-for-4 Promotion12.4 Tweaking Advertisement Cost12.5 Growing the Business12.6 Monitor and Control

Chapter 13 Conclusion & Review

List of ExamplesList Tables

Abbreviations

82

8788

888998

101101103105107

108111114

119119121122122

124126

129129138138

143

143145148151153154

157

160161

162


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Chapter 1: Introduction

Introduction

Chapter

One report says that more than 90% of all businesses inSingapore are one-man-operations (OMO) and/or micro

enterprises (dened as one with 2 to 9 people with a turnoverof less than $2 million per annum).

Many micro businesses are in the food and beverage (F&B)industry, though the nature of the F&B operations makes itunlikely to be an OMO.

This book targets the retail level of the F&B industry,encompassing small cafes, coffee shops and evenrestaurants. Much of the information will also be useful forhawker stalls. Therefore, the term F&B used in this book refersprimarily to cafes, coffee shops and boutique restaurants.Nevertheless, larger organizations and even restaurant chainsmight nd some of the snippets useful.

This book addresses the all-consuming issue How toincrease sales?


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Increase F&B Sales

The market is ooded with thick academic booksexpounding theories behind marketing and sales. Thesebooks have their uses, but quite useless for the humble

operator of a coffee shop or even a boutique restaurant.

There are also many self-help books but these usually skewtowards small and medium enterprises (SME) businesseswith xed assets not exceeding $15 million, a workforce ofless than 200 people and a turnover of $2 million and more.Moreover many of the books available in the local bookstores

are foreign publications and of limited value to the localentrepreneur operating in Singapores unique environment,opportunities and challenges.

This book hopes to ll that void. It presents an easy to readformat with a systematic process that points you towardsincreasing sales. It also allows leeway to accommodate your

personal preferences and situation.

1.1 F&B Manual

This book will help you to develop a comprehensive manualtailored for your particular operation. Henceforth, we shall

refer to it as F&B Manual in bold.

This F&B Manual will contain all the nancial computations,tables, forms and samples you would ordinarily require foryour business.

This F&B Manual would be exible enough for you to modify

and expand as your business grows. This will also help in thetraining and orientation of your employees. It would form asolid foundation to build up your procedures and policies.


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This book will take you through the steps to develop yourvery own F&B Manual. Please pay attention wheneveryou come across the icon . It means you need to add

another piece of the jig saw to completing your very own in-house F&B manual.

But there is one major challenge for you. It calls for a radicalchange in your mind-set. For one very simple reason: Howdo you stand out if you insist on following the herd?

1.2 Life Cycle of Business

The above is a typical life cycle graph used to chart salesand product life cycles. It is my believe that all businesses,products, sales and even the performance of staff can beshadowed by the life cycle graph.

Briey, product or business life cycles go through four

phases:

1. Introduction business start-up (sorting out problems,create market awareness)

1 2 3 4

0F&B

Manual


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2. Growth phenomenal growth in sales (Phase 2 above)3. Maturity sales attens out (doing more of the same) and

competition bites in

4. Decline unless new products/services introduced andbusiness re-invented

You know best, which phase your business is in. As notedabove, if you are in the Growth Phase, you probably do notneed this book.

It is impossible to replicate a specic situation that tsany one operation, unless of course we study/evaluate thatparticular F&B operation. Therefore, throughout this book,I shall use basic examples and draw ctitious scenarios. Thepurpose is to provide you with ideas and models you canadapt to your particular situation.

For example, I had used a seating capacity of ten tables (asin table & chairs) as a guide but your establishment mightaccommodate twenty; four chefs but you might have twochefs, ten operating hours versus your twelve hours and soforth.

In Chapter 12, Budgets & Control, the examples show a

break-even-point (BEP) of ve weeks but your situation mightthrow up longer or shorter BEP.

In the tables and examples provided, simply plug in yournumbers.

One nal word though this book points out a systematicmethod for generating sales, no book can guarantee success.Success, as you know, depends on many ingredients themethod contain herein provides one condiment.


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1.3 Anecdotal Overview

I recently enjoyed my best Christmas lunch ever in a 5-star

hotel restaurant. The food and presentation was excellent,the ambiance enchanting and the waitstaff attentive. Eventhe crockery and cutlery were exquisite. To top it all off, theprice was extremely reasonable with a bottle of Champagne,the 5-course lunch for two was about $230.00.

But even with a full time marketing department, the 150-

seater restaurant had only seven diners!

So, for those of you F&B operators lamenting the empty seatsin your outlets take heart as even the professionals get itwrong!

1.4 Start with Basics not End with BasicsMany people plunge into the F&B industry with scarcely anythought about marketing and sales. They think

(i) They (or their partners) are good cooks as all their friendsand relatives have commented favourably;

(ii) The location is great because they know or a friend inmarketing has told them that location is the key;(iii) The rent seems reasonable; and(iv) The list goes on.

So when people (even executives) lose their jobs; do not wantto work for others; do not want to drive taxis or nd other

alternative employment they think hawking or food stalls isa convenient fall back option. They are convinced they cando better than the hawkers and caf operators. Occasionallythe media reports that professionals, managers, executives


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Increase F&B Sales

and technicians (PMET) who had taken the plunge and seemto be doing very well.

It is a cinch! On the other hand, is it?

More than 80% of new businesses collapse within 5 years. Ibelieve more than 80% of new F&B businesses fold up within2 years if not sooner.

There may be another group of F&B people: those already

doing well and seeking tips to improve; those simply carryingon the family F&B business and want to do better; and yetothers (the cleverer or more cautious ones) who are toyingwith the idea of taking the plunge but want to learn as muchas possible upfront.

1.5 Time Required to Recover Your CurrentSituation

Whichever category you fall under, there is time to addressthe situation.

Obviously, the more time and staying power you have the

better your chances. Each businesspersons situation variesand this book will help you to determine the time.

For a given situation, it could be anything up to 3 months torealize the ideas contained in this book, provided you startnow.

In the ctitious F&B outlet we use in all the examples in thisbook, it takes 10 weeks. How long it actually takes dependson several criteria:


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1. How good your record keeping is this is key.

2. How motivated and hardworking the owners/operators

of the target F&B are.

3. What the current situation is in the target F&B.

0F&BManualStep 1 to build F&B Manual Generate a simpleGantt Chart (Target Week 1)

The top row gives the weeks 1, 2, 3 and so forth. The cross

in week 1 indicates you should carry out Step 1 in week one.

1.6 The Givens

First, let us catch the real reason most F&B outlets fail.

Contrary to what your friends and relatives said about yourexcellent cooking and what your marketing friend said aboutlocation mind you they are all right it is about not only thefood, location or even affordability of the rental expenses.These are all givens.

What do I mean by givens?

To put it simply, if you are racing in F1 it is a given that youhave a fast car, a technical team and lots of money; if youare operating a taxi it is a given you have a vocational (taxi)license and so forth.

Step One: Simple Gantt Chart to Plan Target Dates 1 2 3 4 5 6 7 8 9

Step 1 - Generate a simple Gantt Chart x

Step 2 -

Step 3 -

10


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Having all the givens such as good food, excellent service,convenient location and etcetera does not guarantee success.

1.7 The Key Mothers Cooking

It has everything to do with your customer and moreaccurately the customers needs, wants, habits and comfortzones.

Nice words but what does all this mean and moreimportantly what is the relationship and relevance to yourbusiness?

That is a good question. Perhaps we can approach it anotherway.

Do you like your mothers cooking?

Chances are most people will say yes. Do you realize almosteveryones mother cooks the best food?

I have visited friends, relatives and frankly, some of theirmothers cooking sucks but their families swear by it. Sowhat do you do? You compliment your friend or relativesmother/wife on her cooking. The myth propagates perhaps.

But the husband and children are not simply beingnice to their wife/mother. They are sincere with theircompliments.

Why is this?

Because the style of cooking you adore is an acquiredtaste. Taste is habit forming and it creates needs, wantsand most importantly evokes comfort zones.


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To increase your sales you need to create these emotions(needs, wants, habits and comfort zones) within yourcustomers so they keep coming back and more importantly

bring their friends along, widening your net.

Repeat visits help build habits and comfort zones makesyour food taste like mothers cooking.

How do you accomplish this?

Well that is what this book shall attempt to address.

Step 2 to build F&B Manual Grade the Givens(Target Week 1)

Determine the current situation of the Givens this is highlysubjective and a start point for you. Place this table in a folder

your F&B Manual.

0F&BManual

Graded by: Date:

Excellent V Good Good Fair Poor

Quality of Food

Quality of Beverages

Presentation of Meals

Service Quality

Covenience of Location


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SummaryQuality food and service, good location andaffordable costs are givens and do not bythemselves provide any unique competitiveadvantage.

The key is to help the customer acquire a taste foryour offerings and build habits and comfort zones.You do this by enticing repeat visits until thecustomers love your food as much as their motherscooking.

This sounds simple and the rest of the book

takes you step-by-step on how to attain this, thusgenerating higher sales.

Documents

Increase Sales in F&B