Culinary School Confidential

Legal / Financials

2009-07-15T13:19:00.001-07:00

Again, felt a bit zoned out in school today. Only a few sessions left. We opened with a dry discussion of legal issues. In summary, do not discriminate in the hiring or servicing of protected classes. Also, most lawsuits against food establishments are nuisance suits, but cost a lot in time and money if they aren't settled out of court. There was some talk of natural vs foreign rulings (a piece of spatula in lasagna is foreign, a small bone in a fish fillet is natural), and the parsings of various courts.

Class was interrupted by a talk from a eco-conscious caterer named Mary Cleaver, who was not the most compelling speaker. I thought it was just me, but most of my fellow students found her wandering story of her wandering business both unfocused and hard to follow.

The rest of the class was a review of the financial spreadsheets we will have to present in our business plans.

Odds n' Ends / Restaurant Design / Business Plan Review

2009-07-13T10:44:00.000-07:00

To be perfectly honest, I spaced out for most of this class. This is the last week. Monday and Wednesday of next week are business plan presentations, and Wednesday afternoon is graduation. Then we're dun, sun. There is a chance I may be TEACHING a once-a-week culinary class to high school students come Fall, and if that happens, with permission of the organization will be blogging about it here.

Anyway, odds n' ends was dedicated to discussing what we saw at Blue Smoke. Richard levelled with us, saying every time he's eaten there he thought the food was lacking. Once, he brought a management class there for their school dinner and the service and food was so over-the-top poor, the restaurant comped the whole meal and invited them to come back.

It IS a Danny Meyers restaurant, and there is a level of service and precision not expected in other restaurants, especially in a casual concept like Blue Smoke. Still, the employees who work in a place like this are different than one who would work in, say, Union Square Cafe -- Blue Smoke has the highest staff turnover of all of Meyer's restaurants.

Richard also went into a few details of the smokers we saw -- these pieces of equipment are so large and unwieldy, they had to be craned over the entire 15 story building and dropped into the backyard and slid into place. The 15-story exhaust flues that are tacked on to the side of the building needed a number of variances from the Department of Health, Department of Buildings, the condo board and on and on. Regardless, the cost and inconveniences of the smokers were built into the the idea of the restaurant from day 1. Literally, the whole concept is built around these very difficult-to-obtain fixtures.

Most of the day was comparing floor plans, casual versus luxury, and the flow. The story that is told when you first walk in is designed. If the first thing you see is a host and monster bar, that's different that a long hallway that opens up on a maitre'd station and a baby grand piano. The experience is designed.

We reviewed some ADA guidelines (a wheel chair must be able to turn in a 5 foot radius in a rest room) and logic of placement of different stations in a working kitchen. Class wrapped up with Richard showing us his CAD drawings of the coffee shop he once owned and ran, and a review of the excel spread sheets that we will fill in for our business plan finals.

In the evening, the majority of us met up at Peryali in the Flat Iron District for our final meal. It was good, with an obscene amount of wine. Funny how well you get to know people without even being aware of it.

Blue Smoke / In the News

2009-07-09T11:10:00.000-07:00

Today we met in class briefly, before heading out to Blue Smoke for a tour. The dining section this week in the NY Times was remarkably thin, and content-wise filler like what to do with left-overs were disturbingly dumb. However, Bruni's big piece on pizza was pretty cool. Richard thought he was too hasty in deciding to write about just post 2004 pizzerias (the year Franny's and Una Pizza Napoleatana hit), but I kinda agree with Bruni: the pizza restaurants that have opened up since then are by all accounts place pizza in a different kind of light that the older, classical places do. Maybe it's not totally fair to not compare them (as some older joints are simply better than the new joints), but the pretense of 'fancy pizza' is not really shared by any older places.

We briefly looked at a kitchen layout, a before and after of a real working restaurant, to point out the logics of flow and traffic in an industrial kitchen. Then we all picked up and walked over to Blue Smoke, on 27th between Park and Lex. It's part of Danny Meyer's Union Square hospitality group, which includes a lot of good and very varied places, from Union Square Cafe to Tabla to Shake Shack. We arrived around 9, and were met by the managing partner who was, simply put, seemed to have his shit together and all together happy with what he's doing with his life. He told us of his 17 years with the company, helping to open up the restaurant in the week right after 9/11, the adjustments to the concept and the systems as they started up.

He handed us off to the head of front of house, 13 years with the company, who started as a bus boy and worked his way up. He showed us the premises, the jazz club below, the prep kitchen. Then the chef showed us the main kitchen, all the stations, and the two huge smokers. Gas-fired, wood-fueled, with large flues in the back of the building that rose all the way up 15 stories to vent the smoke. The pork butts and ribs looked spectacular, I must say.

The common thread among the three people were that they started with the company many years ago at a low level position, stuck with it and rose, worked insane hours, now get paid and have benefits, with the first one actually sharing in an ownership stake. All three are clearly hard working, and get a buzz from the intensity that comes with working in a restaurant. I understand that -- when you work 6 14 hour shifts in a row, it's actually cool if it speeds by with constant action and you actually save money by not doing anything else. -sigh-

Leases / Wine Tasting

2009-07-08T16:05:00.000-07:00

I missed class on Monday, due to the extended weekend, a baby who endlessly fascinates, and an upended sleep schedule. The two subjects were restaurant design, including an exercise in putting the pieces together on a sheet of graph paper, and business structure. The former, I'm not too upset about missing, as I feel I have a handle on design and the logic of flow, but think I may have to go into the book and see just what kind of company I want to run in the future and why -- a Limited Liability Company? A sole proprietorship? Etc?

Today, we reviewed leases, briefly looked at layout, and then tasted a wide variety of red wines. Leases: you gotta read 'em before you sign 'em. Residential leases have lots of government regulation -- even if you don't read it carefully, you're relatively protected. With a commercial lease, however, what you sign is what you're in for, with some reasonable exceptions.

Never sign a commercial lease without professional oversight. Not necessarily an attorney, but someone with experience who ca tell you how a lease will effect you -- effect you with what is there, and effect you with what is NOT there.

If the business owns it's building, that obviously is an asset that can be sold along with the business. In the case of renting a space, length of lease determines the value of a business. You can have the most fabulously successful restaurant, but if you have 1 year left on your lease, no one in their right mind would buy it from you until a new lease is negotiated. If you're rocking and you have 15 years left on your lease, then you're in the money.

Landlords tend not to like restaurants -- it's not uncommon to see available storefronts with a sign that says, "no restaurants". Though restaurants close pretty much as often as any other kind of business -- but there is the perception of volatility. Then there is the garbage, the smells, the pests, drunk customers, late hours, fire hazards, etc.

The lease is made up of clauses. Though not exhaustive, these are the big guns:

Rent Structure: How you pay. Typically a fixed lease, where rent is determined by a schedule or formula, increasing from beginning to end. There are percentage leases, where rent is a percentage of gross sales, which means it will be in the interest of the landlord to drive traffic to the business, like in a mall. A Consumer Price Index lease ties rent to inflation (or, as the case may be nowadays, deflation.)
Taxes: Percent of real estate taxes that the tenant is responsible door. This is pretty straightforward, but what if the government reassess the real estate tax and doubles it? Could be a business killer. In the lease, the clause could establish a sliding scale over time for whatever increase (or decrease) happens.
Conditional Liquor License: Lease is only valid if a liquor license can be procured. If you sign a lease to open a bar, then the bureaucracy denies you a license, well...
Construction: Will you be allowed to do what you want to do? Landlord may require specific approvals, or his own approvals, Time frame: typically there is a rent abatement period for construction. Access: while building out, you and your crew needs to be able to get in. Also, ownership -- who will own what is constructed, that is attached to the building?
Utilities: You want individual metering, so you pay for only what you use. However, if there are common areas, a percentage based on traffic projections may be in order.
Quality Standards: If you propose a pizzeria, a landlord can write into the lease that you will be a pizzeria, going so far as to define how much you sell of what. On the other hand, the leasee can get 'exclusivity' -- if in a mall, here you can assure that the landlord will not open another pizzeria in the complex.
Time Standards: Times the operation is required to be open or closed. In a mall situation, this is pretty stringent.
Insurance: Liability. Landlord will want you to carry some.
Duties of Repair: Who is responsible for fixing what, in what time frame?
Demolition / Eminent Domain: What if the government clears the land and forces the landlord to sell? This clause can assure that the renter gets a cut.
Union: If the building is unionized, it'll probably require the business that come in to also be unionized.
Code Violation: If the building is not up to code, who is responsible? The codes change all the time...
Assignment/Sublease: The right to either assign the lease to another party, removing your own name from the lease. Or subleasing, where you are still on the lease and bear responsibility, and the subleasee pays you. With assignment, the onus is on you to find someone to take over your lease. At the same time, the landlord can restrict who you can assign to.
Personal Guarantee: You promise to pay, no matter what.

The last couple of hours of class were dedicated to tasting eight red wines, sniffing, discussing what fruits it smells like, food matching, etc. I'm still of the belief that wine by itself is not very appealing, but when drank with rich food, it comes into it's own, becoming a flavor enhancer. As with every class, I'm amazed how gross the thick sweet stuff like port tastes, but when matched with something savory or stinky, the layers of squiggly flavors race across each other making the most wonderful new flavors. But to serve a flight of 8 dishes for eight wines would probably push the school's budget.

In the News / Costing Beverage / Architect

2009-07-02T05:47:00.000-07:00

Class started with a short In the News. The NY Times had a stunningly boring article detailing the details of a superior hamburger, but didn't really add much to the canon.

There was a cool article, however, on the recent state of NYC food carts. Up until the downturn in the economy, there was peace upon the streets of NYC. Food cart permits were cheap and few and far between. They were handed down within families, as well as locations and street corners. The city was not much involved -- it only gave out 3000 licenses, and the licenses can be renewed by mail every two years, forever and ever. Because of lax enforcement, many carts are not inspected, or have expired licenses, or no licenses at all.

Now people who are being laid off from white-collar jobs and speak English as a first language are investing in food carts to deliver a different level of food to the streets. They get their permits, and then go wherever they are legally allowed to go...and into direct conflict with the underground economy of the long established immigrant class. When a new truck rolls up on a corner that has been claimed by a cart family without challenge for 20 years, there is going to be conflict. Used to be when two vendors got into a tiff, one would call the cops anonymously because everyone undoubtedly were doing something illegal. These food cart trucks tend to be on the up and up, and the old economic model is turning to intimidation and violence as leverage.

The sad thing is, because of the inadequate bureaucracy, the city is losing a ton of money and has little real power over the food carts. A vendor of a new fancy ice cream cart is quoted as scoffing that he pays a few hundred dollars for a permit, when his business model would allow him to pay $5000 a month during the warm season and still be profitable.

There were small pieces on the food shows -- the Fancy Food Show had a 25% rise in attendance, while the tone of the piece on the Unfancy Food Show as equal parts snobby and dorky -- why the NY Times sucks.

Next up was an exercise in costing out a mixed drink. Unlike a recipe card, each cost card is per drink, not a batch of drinks. Most booze is in liters and recipes in ounces, which is annoying, but even more annoying is perusing the price sheets for booze vendors. For a bottle of Bombay Gin, you have about 10 different prices. Half are for NYC and half for NYS (different tax and control procedures), and within each category different prices on different size bottles and discounts depending on how many cases you purchase.

The second half of the class was a field trip to an architect's office to talk about how we, as restaurateurs, would communicate and deal with an architectural firm, from initial concept up through plans detailed enough for a contractor to build from with precision. The architect went around the room and asked each of us our concept, and teased out some details that would help a design firm get on track.

Some of us had pretty clear ideas of what we were going for, and when one didn't, the architect was pretty concise in trying to get clarity. One student kind of scattershot mentioned a lot of different things she liked that she would like to see in her operation (mosiac! bar in middle of room! stage! fountain!) and the architect basically asked what is the focus? Do you want a candyshop vibe, a restaurant vibe or something else?

I had a pretty concise statement of what I wanted (Jewish Italian Grandma style filtered through an Eames lense) and didn't get any appreciable feedback. Guess I can skip hiring a design firm and just get some hacks to have the plans drawn up and approved by the city?

Richard, a few students and I went to a pizzeria nearby the archictect's office afterwards, not very good pizza but fun to be snarky about the menu, decor and oddly-pacing owner with some like-minded fellows and fellowettes.

Fancy Food Show Recap / Restaurant Design / Wine Tasting

2009-07-01T14:33:00.000-07:00

Class started with a discussion of the Fancy Food Show. The main issue attendees have is that it's really two shows in one. Some of the vendors there are showing off a product to sell to restaurants and food services right now, while others are there to find a distributor so they can sell at some point down the line. One of my classmates, who helps run a large family restaurant, spent a lot of time sampling wines, and when he found one that blew his mind, it turned out the wine is not available in this country yet, that they need a distributor to get them through the extensive legal hurdle of importation.

While the restaurant show during the winter was more about equipment, hardware and stuff, this show was all about the look, taste and marketability of food stuffs. Fellow students marvelled at sheer quantity in certain food categories -- how many soy-based vinaigrettes do people need? Why are there so many flavored cheddars? And how often does one have a craving for lemongrass water? The person working the booth for an Austrian sports drink (BIG on taurine, which rhymes with urine for a reason) admitted, when confronted, that it indeed did taste like ass.

We introduced ourselves to restaurant design. One has to take into consideration level of concept (fast food/pub, casual, luxury) and location (urban, non-urban) to really determine how many square feet per customer one will need to provide. Urban fast food, 8squft no prob, non-urban luxury, you can start at 25 sqft and go up. Based on the size and concept, one can work out budgets for monthly rent as well as how much it will cost to build out.

Building out a restaurant depends on a variety of factors, whether it's a raw space or an old restaurant, depends on what equipment is needed to cook everything on the menu, and, well, real estate markets.

At the restaurant I've been working at, the build out was from raw space, and quite ornate. As time has gone on, the corners cut came into strong contrast. For example, there is a stage for a piano and there has been live music played...but no more. The neighbors in the condo upstairs complained. Why did they hear it enough to complain? Because no sound proofing was installed between the ceiling and the bottom of the floor foundation of the apartments directly above. To install sound proofing after the fact would be a huge job that would shut the restaurant down, so the music is out.

The final part of the class was a wine tasting, preceded by a short documentary about the history of Burgundy, home of the vineyards that make the most expensive wines in the world. The monks of the medieval ages owned all the land and studied it, tailoring the wine to the soil. When Napoleon came in and took the land away, it got broken up into many different plots with many different owners. Unlike some regions, the local government decided instead of trying to make a standardized, blended product to stand in for the region, in Burgundy only one grape would be planted everywhere (pinot noir), and each vineyard would have a product which reflected it's own soil. Now the wines of the region can be priced out practically by where the vineyard lays in the valley. Towards the top, the good whites, the middle the good reds, and the bottom the 2ndary reds where the drainage isn't too hot.

The tasting was a wide variety of whites, from a tepid young pinot grigio to a sweet, thick Sauternes. Richard clearly gets off on this stuff, and the class ran 30 minutes long for the first time.

Fancy Food Show

2009-06-29T15:09:00.000-07:00

What I ate, between 10-11:30am this morning: various chocolates, cookies, small moz and tomato panini, brownies, 5 shots of various Manhattan Special products, 2 little cheese cake cups, a bit of duck sausage, 2 little wedges of Batali pizza, some things I forget...

Spent the morning at the Fancy Food Show at Jacob Javits, officially on school business for the second year, but I hope to be able to swing this every year -- all the new products, some established products, different countries showing off their culture, all on overload, most wanting you to taste a sample or talk about what they do.

Highlights: Manhattan Special had a booth, a company really hard to wrangle as a product buyer at the restaurant. I had some words with them, they promise to make some calls. Low and behold they have a whole line of different sodas, but I would of never known because no one ever tried to sell me on them.

Then there was the Metromint people from last year, which was quite shocking -- various mint-flavored mildly-sweetened waters. I almost barfed last year when I tried it, because I thought I was drinking someones toothpaste backwash. I was sure they would be out of business by now.

Batali's brand was hawking a new pizza sauce, which tasted exactly like a thousand other jarred sauces. They were making pizzas on soft pita-like shells and baking them in a toaster oven. The only good thing about the sample is that it was heavy on the sauce, usually shitty pizza is heavy on the cheese.

In other pizza-related things there, there was a booth for a horrible nightmare some company is trying to bring to the freezer aisle:

Pizza in a cone, baked in your microwave in a box that keeps it upright. In the literature, one of the selling points is "acceptable taste and aroma", I kid you not. Yikes!

It was nice to see a booth/pavilion for Fage yogurt, what I call the "good" yogurt. I was happy to see it, and felt compelled to take a picture not because I'm a huge fan, but because it's one of the few foods me and B eat and love (though she eats the crappy fat-free version), and I remember when I was wooing her, we'd go food shopping in her neighborhood, like a trial run as a real couple. When ever we'd go, we'd always end up buying some Fage, and also talking about the prices of the stuff in various markets in the neighborhood. The foundation of my marriage was cemented thanks to Fage!

In the News / Break Even / Cash Flow Statement

2009-06-25T16:04:00.000-07:00

In the news rolled along nicely. Dave was excited about this French restaurant, Relais de Venise, famous for a menu that has only one dish - steak frites (which reminds me of the original concept of Kentucky Fried Chicken) They're opening a new location in NYC, and we're all a bit skeptical that it will make it here. How often do you have 4 people going out to dinner together who ALL want steak frites?

L.I. Jenni was featured in this week's LI Newsday in a feature about the best places in L.I. to get iced coffee. Spice Market, a monstrous and pretentious restaurant in the Meat Packing district, went from 3 to 1 star in a recent review in the NY Times. In optimistic news, in the "Off the Menu" section of Dining in the paper, there were no closings listed.

Since the bebe, I grabbed one quick meal at McDonalds and one quick meal at Burger King, and was impressed by how superior the former one was (but still not that good over all.) Unsurprisingly, fo the best half decade, McD's has been clobbering King, and the horrible ad campaigns that BK has been waging has not helped. Recently, a smutty BK ad from the Hong Kong market has been making it's way around the internet, which certainly doesn't help their case.

As bizarre as the gross burgers of McD's and BK are, you can always get stranger over seas. Most beverages don't involve meat and animal product, but it doesn't have to be like that....Swine placenta soda from Japan, Eel essence flavored beverages, garnishes of penis, etc...

The next part of class was working out a P&L statement and calculating various cost percents and break even points.

Dave, while working on his business plan, tracked down a quote from a contractor who is installing a restaurant kitchen from scratch. Going through the $400K item by item comparing to prices on the internet, the whole thing was outrageously padded. If one were to just buy the stuff themselves, it would probably knock a solid $100K off the bill.

The last thing we looked at was a cash flow statement: where the cash comes from, and where it goes. Pre-opening, cash comes from personal funds, loans, investors, etc, because there is no income from the business. As you move across time across the statement, business income is accounted for, but the outflow is, too. It shows in stark detail why many restaurants fail: the outflow overwhelms the inflow early on because it takes a few months minimum to get to a point where you can start paying off the debts. If you don't have a reserve to get you through the opening months, don't bother.

Break Even Point / Bar Design

2009-06-24T17:39:00.000-07:00

To be perfectly honest, I wasn't very awake in class today. The first part of the day was spent manipulating the break even point, to see what information can be gleaned out of the equation.

A straight break-even statement will show you how much business you need to do to neither lose or make money, but if you have investors who want a return on investment (ROI), you can do a break-even calculation that doesn't go for zero, but goes for a dollar amount that would be an attractive ROI for investors.

The second part of the class was a discussion of the physical design and equipment needs of a bar. Behind the bar you need a lot more than just booze. Storage both dry and cold, compartment sinks, ice (various forms depending on the biz), glassware, tap systems, beverage guns, trash areas, all arranged in a way for maximum flow and hygiene. Various equipment, from blenders and mixers to bar spoons and muddlers all make up the specialized tool of the bartender, which in a serious bar can be regarded as a "liquid chef".

We spent some time looking at business plans of past classes, which all had a wide variety in the choices of information given and level of design, but all the competent ones had a minimum level of financial reports .

Break Even Point, Budget, Spirits

2009-06-22T15:55:00.000-07:00

We started the morning off with odds n' ends. Dave visited a new restaurant in his neighborhood in New Jersey. An 8000 square foot casual Italian eatery took 5 years to open, spent 600K for it's liquor license. There are only 7 liquor licenses in the whole town, so while the disadvantage of the license is the price, it also limits the competition.

Maria's bar and restaurant in Queens had an unruly table on Father's Day, with a group of 3 kids at a 6-top running wild, upsetting many customers in the room. Thing is, the adults at the table were regulars of the last 15 years, Maria had gone to the woman's wedding, and other customers were yelling at them to control their kids. Not an easy spot.

Val and her husband went to Blue Hill and experienced some extremely over the top good service. When a piece of beet skin on a salad appeared to maybe be a bug, they took the salad back and brought out another app on the house. Then the waiter asked if the chef could change the vegetable component of their entree to match their wine, and THEN gave the a complimentary desert to smooth out the beet incident at the beginning of the meal.

On the other hand, Liz is working in a large Italian eatery by Yankee Stadium. A customer and his girlfriend/mother left their table after paying and the bussers cleaned the table, but then returned because he left his grillz (gold teeth) in a napkin. The manager basically said tough titties, but feel free to go through out garbage. The guy proceeded to pick through a few barrels of trash for an hour until he found the grills, but cursing and being loud and disorderly the entire time.

We looked at wine and beer last week, and today was a brief discussion of distilled spirits. Start with a sugar or starch and ferment. Something sugary like grapes becomes wine, grain becomes beer. Then distill by heating, which makes the alcohol evaporate first. It's captured, cooled, and collected.

No matter the source, at this point all distilled spirits are clear and neutral. They can be blended to make the product the same over large runs, or left to be unique. The spirit can now be aged in something like wood barrels for color and flavor (whiskey), or left alone (vodka), or infused with flavors (gin) or infused and sweetened (liqueur).

Next up was a practice example of a profit and loss statement with some predictions of the coming year, and we had to make the budget based on those predictions. A budget, after all, is just a profit & loss statement that is projected into the the future.

The balance of the class was dedicated to reviewing the concept of the break-even point, where you leave the land of loss and enter the utopia of profit. Remember there are two kinds of costs: fixed and variable. A fixed cost like rent is paid and then it is done -- it is independent of sales. A variable cost is incurred by sales. If there are no sales, there are no variable costs. But if you sell a burger, and it costs $2 to make, if you sell one or 10,000, it's still $2 a burger. So if you reach your break even point and you sell a burger for $5, your profit ain't $5. Sure, your fixed costs are done, but your variable costs are with you. So that first $5 burger after your break even point means a profit of $3.

Balance Sheet / Beer

2009-06-18T10:31:00.000-07:00

Class started with In the News, beginning with a classmate who never speaks, was totally unprepared, and makes one wonder why she bothers. The New York Times had an interesting article on how the recession is making stupid people with too much money "down-scale" their weddings, though they're still spending a whole hell of a lot, just on burgers n' shit instead of canapes and caviar. Another good article on the Shinn Estate of the Northfork -- only 8 years old and producing good quality wine, the fact of which runs counter to Richard's outline of setting up a new vineyard (which seems near to impossible to get a good wine out of a vineyard within 8 years).

So two gals dined and dashed from an IHOP, then promptly crashed their car into said restaurant. The father of one of the girls were befuddled, due to the fact she had $200 in her pocket...

Next up, we were given some numbers and we constructed a balance sheet, slotting items into current or fixed assets, short or long term liabilities, then figuring out the owner equity, no biggie. I can see the appeal of being an accountant -- figures are both reassuring facts, but at the same time by the way you arrange and make them interact, you can make them tell very different stories. And by the same measure, figures that seem to say very little can say a whole heck of a lot with a little bit of poking and prodding. What I'm learning: I'm definitely going to have to hire an accountant when I have my own biz.

Back into alcohol today's topic was liquid bread, a.k.a. beer. We reviewed the steps of brewing beer, then watched a film clip f a show I actually watch at home - the "Making Beer" episode of Modern Marvels. Malt is barley soaked in water to slightly sprout it, before roasting. Only in the U.S. are "adjuncts" allowed in addition to malt: corn, rice and cheaper grains that give a lighter product....and a different taste. In Europe, add these grains and you can't call it beer legally.

Funny, sake is called rice wine here in the U.S.....for tax reasons related to it's alcohol content. In truth, it is technically rice beer, as it is brewed, but without malt, with rice taking on the starring role.

The Balance Sheet / Wine History

2009-06-17T21:18:00.000-07:00

Back to school! Everyone was very sweet and curious about Ediebird, and I get the impression I didn't miss too much. The rest of the class gave menu presentations (I do regret missing Zach's "Cheesequake" concept...), Marc Murphy gave a lecture, and Richard went into details of a financial statement.

Today we looked at the basics of the balance sheet. A profit & loss statement is a summary of the past. A budget is a prediction of the future. A balance sheet is a snap shot of where a business is at at a singular moment in time. Typically done at the end of the fiscal year, the balance sheet has two main categories: Assets and Liabilities. Assets can be current (cash or easily turned into cash) and fixed (things that typically last longer than a year, like equipment and furniture.) Liabilities are either short term (need to be paid soon, like pay roll, rent, inventory invoices) and long term (loans and mortgages)

A third category is owner equity -- what the biz owns outright. Assets = Liability + Owner Equity. The total value of a business, everything that it is, is adding up everything that is owned by the business and everything that is owned by the bank or lenders.

Richard, whose passion is wine, got into the nitty gritty of wine history, much of which I had already heard when I took a 7-class wine course with him last year. The first wine is thought to have been made in what is now Georgia (in Eastern Europe). The grape varieties of Europe have always made better wine than American grapes, but a mite in the American soil killed off most European grapes in the 1850s, only saved by grafting old world vines to new world root stock. The U.S. had it's own natural disaster with Prohibition, with many old, mature vineyards being torn up for other crops. Richard ran through all the steps and choices it takes to start a vineyard -- not a simple or cheap task. It could easily be 10 years before the first bottle of wine can be brought to market from a new vineyard. That's a pretty steep entry cost!

We watched a film from the 1980s about the origins of wine. They showed an old Georgian farmer who still makes wine like they did 1000s of years ago. Pluck grapes, step on them, put them in clay cisterns, put them in the cold ground with a cover and let 'em ferment. After a month or so, take out and drink, that's it. Looked dirty-funky, but probably fun.

Interruption

2009-06-11T08:40:00.000-07:00

Due to the lil' critter above, I am missing class this week. Will be back on it Monday.

BTW, that's Edie Bird, about 36 hours old, and she loves to drink milk straight from the source, raw and unhomogenized.

In the News / Student Concept Presenations

2009-06-04T14:50:00.000-07:00

We began with in the news. After seeing a few documentaries about prohibition, it was pretty funny to see an article in the New York Times about the recent trend in new bars to be stylized after Prohibition-era speak-easies. The problem? Since the supply was illegal the quality of the booze was low and a lot of drinks had to be mixed with strong, sweet stuff to mask the flavor. I think this new trend should involve poor-quality bathtub gin, a total lack of licensing, and incorporate other illegal activities -- drugs, prostitution, and dancing without a cabaret license! Now THAT would be authentic.

Time Out New York had a pretty typical spread hyping a handful of new pizzerias in NYC, but more interesting was the recent article in Newsweek, which questioned the viability of all these new trendy pizzerias -- what about the old school slice joints that are getting squeezed out? I think the argument is specious -- the old school places have never had it so good, and the new places are riding their coattails. At some point the new places will shake out, but the places that have been around for years and years will survive.

The Times had a pretty ridiculous opinion piece about the U.K. judiciary that just ruled that Pringles are, for tax purposes, potato chips, unlike what Proctor & Gamble were calling them, "savory snacks," to get out of paying millions of pounds in VAT taxes.

Most of the day was dedicated to Jenni, Guytano, and Niko giving presentations on their concept menus. Both Jenni and Guytano's concepts were expansions to the restaurants where they are currently working. Jenni's restaurant owners are opening up a cafe and gelato shop, where they will roast their own beans and make their own ice creams, out in the North Fork of Long Island. Guytano's pizzeria is opening an attached wine bar with a small trattoria-style menu, out in Long Island. Niko gave a long and rambling talk about a Georgian wine & jazz bar, but with his thickly accented low monotone, he literally made me fall asleep.

Class concluded with a short P&L statement, working out the variance and variance percentages between years by costs and profits.

No class Monday, talk to ya Wednesday!

P and L Statements / Concept Presentation / Bar Design

2009-06-03T16:58:00.000-07:00

Today began with a passioned discussion over why people go to bars. There are different kinds of customers. Though some people fit more than one description, they are broken down thusly:

Diners at restaurants which have drinks
Drop-in customers on their way elsewhere
Meet-and-go customers
Entertainment seekers looking for relaxation or stimulation
Sports fans
Regular patrons of a neighborhood establishment

"Meet-and-go customers" was perhaps the corniest euphemism for people looking to get laid; the textbook description is kinda hilarious, so here ya go:

Meet-and-go customers. These individuals are looking for a relationship connection, whether a date for the evening or a longer-term plan. They go to singles-bars or "meet bars" that are attractive to others like themselves. They stay long enough to meet someone whom they would like to spend the evening with, and the tow may or may not move on to a place where the food and/or the entertainment is more suitable for leisurely conversation and an evening together. Today most singles bars include dancing and very-late-night hours.

Yeah, another place where the food and/or entertainment is more suitable....like mah pants!!

Anyway, as with any restaurant, the needs and wants of a bar's customers determine the concept, which breaks down into three fundamentals that reinforce each other: Design & Decor, Service, and Food & Beverage. Each group of bar customers, as listed above, has its own needs that must be catered to in these three areas.

There are certain standards that all bar customers expect in the U.S. Number one is a large variety of alcohol. Unless you desire something esoteric, chances are a typically stocked bar will offer you hundreds, if not thousands, of combinations and concoctions. The other main expectation among customers is that the quality of the drink matches the quality of the establishment. For example, one who orders a gin and tonic at a local dive bar can expect well gin and tonic out of a soda gun. From a 4-star restaurant bar? An expensive brand gin and house-made tonic with a juniper berry garnish.

We looked at the space requirements of a properly designed bar. Between the back bar, the space for people inside, the front bar, the rails, the space in front and behind a stool, the total space for ONE bar customer is 28 square feet (2 feet wide by 14 feet deep). That's a hell of a lot of space to dedicate to one seat. We also looked at layouts: How one places the bar in relation to the seating, dance floor, and restaurant will influence flow and either work with or fight against the concept (and the kind of customer that's being served). An airport bar will be long and skinny with an open front so that people can get in and out quickly to make their plane. A pick-up joint will have a central bar where people can congregate in 360 degrees and check each other out from all angles.

Mid-class, Maria and I gave presentations on our concept. Maria's idea centered around a very straight-ahead tavern with an extensive American bar menu. I used a PowerPoint presentation to give some details of a neighborhood pizzeria and pasta shop, about 30 seats, maybe in Brooklyn, named after my mom's maiden name (with my mom's image as a young hipster all over it -- see enclosed).

The last part of the class was an exercise in reading and understanding a profit & loss statement. It looks like a big scary sheet of numbers flying out in all directions, but when looked at part by part, it's actually quite simple. First part is the money you take in, broken down by food and bev, then added up. The second part is what you spent just on food and bev, and the third part is what you spent on everything else. The money you made on food and bev after paying for the food and bev is the contribution margin, and that margin should cover all expenses AND give a profit to the owner. And man, the expenses just go on and on. By analyzing cost percents (cost of an item divided by total sales) across different years, one can figure out what's efficient and what's slacking. Really, there are multiple ways to read the numbers, all true but all suggest different actions to be taken. Accounting, it's a hell of a game.

Monitoring Various Costs / Responsible Alcohol Service

2009-06-01T17:51:00.000-07:00

Class started with a brief odds n' ends. I described the odd experience on Saturday of being in Coney Island at 10:30 in the morning meeting friends coming off a half marathon, and finding mobs and mobs of healthy runners lined up to buy hot dogs at Nathan's. Health freaks! Dave described a restaurant where he was there with a few people for dessert, it was empty, 1 of the four deserts they ordered was out, were charged for it anyway AND all the prices on the bill were higher than on the menu. Richard described a time when the bill for a glass of wine was higher than the menu price, and when called on it, the waiter returned to say that the menu was wrong and the bill correct. To which Richard replied, well, I'm going to pay the advertised price. Which is also the legally binding price. Liz was in Las Vegas over the weekend and was surprised how empty every single restaurant was, even the big names. Overbuilt, over hyped, overextended, goodbye to the last gilded age of over consumption.

Anyway, we continued talking about the other expenses of a restaurant, outside of food and labor. There is rent. There are three ways to pay.

Fixed: simple, the same every month, just like residential rent. Whether the business is crap or your raking it in hand over fist, it's the same.
Variable: The landlord gets a percentage of gross income. This in effect makes the landlord a partner, where its in his interest to generate customers for you. Mall and hotel situations see this. Makes most sense in a seasonal operation, like in a summer community.
Mixed: Fixed fee with a variable percentage on top. Most common. As with variable, has to be an element of trust between both parties.

We spent some time on a few examples, showing how the Cost % ratio can be applied to anything in a restaurant. Cost % = Cost /Sales, so Linen Cost % = Linen Cost / Sales or Linen Cost per guest = Linen Cost / # of Customers. By comparing these number from day to day, month to month, an idea of how efficiently they're being used can emerge.

Class finished with a discussion of alcohol. Until prohibition, the law's attitude was from the medieval period. If you were an able-bodied adult, you were responsible for your own actions. If you went to a bar and got drunk, then went out and killed someone with your car, you and you alone were responsible for the harm your caused. Since prohibition, there are what are called "dram shop laws", which assign different percentages of responsibility to 3rd parties who provided alcohol to the 1st party who harmed the 2nd party.

The big no-no with 100% liability is selling alcohol to a minor, which in the U.S. is anyone under the age of 21. It's odd to regard someone who is 20 years old, who can vote, be drafted and die in the military, drive, have sex with whoever, run for elected office, work for a living, sign legally binding contracts, BUT can't drink alcohol.

Another big no-no is causing a person to become intoxicated by providing alcohol. In the U.S., the legal definition of intoxicated is .08% blood alcohol, which is 1 drink per hour for a small person and 2 drinks per hour for a medium sized person. Most bars and booze-serving establishments pretty much break this law regularly. Related to this, it is illegal to provide alcohol to someone who is already intoxicated.

We saw part two of the video about prohibition, and what a cluster-f@ck all that was. Like marijuana today, drinking alcohol became so commonplace under the ban that it eroded respect for the rule of law. Three groups were helped: criminals got a market to themselves, corrupt police and politicians buddied up to the criminals for a huge payday, and...women were now drinking in social establishments alongside men, drinking, smoking, dancing and generally getting jiggy with it like never before. Basically, everything the Prudes wanted to happen, the opposite happened. Within 4 years of the laws going into effect, city and state-level authorities gave up and handed over the responsibility and HUGE cost of enforcing prohibition to the Feds. The Feds, understaffed, underpaid and overwhelmed, became even more corrupt than the smaller bureaucracies, with Herbert Hoover's (who was a drinker himself) cabinet notorious for being totally on the take. As the criminals got sharper and more organized, it's leadership amassed so much wealth they were able to spread around their cash enough to enter the legit world. Bronfman brought Seagram's from a bootlegging operation to a multinational conglomeration, and a man named Joseph Kennedy was known as a Prohibition-era alcohol middle man who never quite got tagged for it, though his clan certainly benefited from the dirty money.

In the News / Labor Cost / Misc. Expenses / Benefits o' Booze

2009-05-28T14:17:00.000-07:00

During today's In the News segment, I defended pizza: in the $25 and under section of the NY Times dining section, they reviewed Roberta's of Bushwick. They said it was good pizza, but despite that they offered some good interesting dishes. Hrumph!

A good portion of the class was dedicated to labor cost. Based on how busy a dinner shift was, we scheduled servers, bussers, hosts and bartenders, taking into account how much they were paid, expected number of covers and average check. I don't like exercises like this because the feedback you get from it can be guesstimated from just vibing the business of a room. In the resto biz, when things are slow, it's acceptable to send extra staff home, and it's also normal to call up people who are on informal call. Filling us students with formulas and numbers...I don't know, there needs to be a balance, an expectation that we will learn when things really need to be calculated, written and statistically analyzed, and when things can just be winged.

Up to this point, we studied cost control in terms of food and in terms of labor. Today we looked at "other expenses". While a restaurant only has one primary source of income, there are plenty of sources of expenses aside from labor and food.

Operating expenses (linen, uniforms, china & glass, kitchen utensils, cleaning, decoration)
Music and entertainment (live or mechanical, ASCAP, booking agents, meals to musicians)
Marketing (mail, phone, internet, comped food, ads, signs, copies, public relations, agents)
Administrative (data processing, office supplies, postage, cash over or under, bank fees)
Facility maintenance (fixtures, equipment, air conditioning, refrigeration, electrical, floors and carpets)
Occupancy (rent or mortgage, equipment lease, real estate tax, insurance, depreciation, licenses)

This is a very annotated list. If I was working up my business plan, I'd be tearing my short hairs right now...

To control costs like this, there are two key ways to categorize them. The first way is by fixed, variable or mixed. Ask this question: If no one comes to the restaurant one night, will the expense cost less? If people come, will the expense cost more?

Whether people come in or not, rent and salaries will remain the same -- fixed. If no one comes in, I can send lower level salaried people home and the food can be served tomorrow -- variable. If no one comes in, I still have to pay for air conditioning and side towels, but if people come in, I'll have to crank up the air and use more side towels -- mixed.

The other way to categorize costs is by controllable or uncontrollable. Hourly wages are controllable -- if the biz starts to go south, I can cut people's pay or lay people off to adjust in the short term. Rent for a restaurant is usually determined by a multi-year lease -- if the biz is tanking, it could be years to a lease renegotiation, therefore it is uncontrollable.

The last part of the class was more talk of our friend alcohol, which is leading to Monday's discussion on liability issues. Alcohol has beneficial qualities. The wine industry had to sue the FDA to go public with scientifically proven evidence that alcohol can be a positive influence, but still the government insists that bars post signs warning pregnant women away from booze, despite the fact that all the studies from the 80s that claimed alcohol hurts fetuses have all been disproven. It's been shown that moderate alcohol consumption through out pregnancy does NOT hurt babies, and it's been shown that alcohol abuse in the 2nd and 3rd trimesters also does not hurt unborn children. Only alcohol abuse in the 1st trimester, a time when many women don't know they are pregnant, has been shown to cause all sorts of developmental issues.

There's the whole French paradox thing, where despite eating much more animal fats than the U.S., the consumption of red wine keeps down cholesterol. In fact, in recent years the French have had an anti-alcohol (oh, excuse me, anti drunk driving) move that has directly lead to a spike in heart disease. Alcohol thins blood, letting less stuff clump up -- the same rason docs recommend an aspirin a day, only this is so much more tasty and pleasurable. Moderate (2 glasses or less for the averaged size person) on a daily basis has health benefits, but 14 glasses one day a week would lead to all the alcohol problems reviewed yesterday.

Labor / Trends / Alcohol Physiology

2009-05-27T12:30:00.000-07:00

Class started with an odds n' ends. Jennilee was at a Mexican restaurant where an old-school piercing fire alarm went off for a solid half hour. She was one f the few people in the establishment, and no one ever came over to explain what was happening, the staff just sat around dumbly, neither moving or calming. What basically had a negative outcome could have been spun positive by just a little human touch, or perhaps a free drink. I told the tale of the miserable meal I had with B at Kelly & Ping in Soho (who the hell fills a shumai with tuna fish and doesn't warn the customer?) Liz and her boyfriend ordered food from Dominos, and had a good time following along on the site as they informed her that her pizza was being prepped, in the oven, packaging for delivery, on the way, etc. Richard suspects it's all a bit of bullshittery, but ya never know.

We crunched numbers on labor costs. Spinning for the # of guests served, labor hours used, average wage and average guest check amount, all sorts of statistics were spun out: labor dollar per guest served, guest served per labor hour, labor cost percentage, etc. A restaurant can be broken down into parts, whether it's simply back of house and front of house or by station, and a sales per labor hour can be calculated for each person. If one part is over or understaffed for whatever reason, these stats will tease it out.

We had a guest speaker from an ad agency who specialized in restaurants and food retail, and was pretty underwhelming. A one-dimensional PowerPoint listed trends this year, some a little interesting, some self-evident, some totally inane. Maybe part of it was the speaker, a lower level rep who was stepping in for someone who got badly bitten by a pit bull. But part of it was their list of current trends: Food as pop culture (with a pic of Rachel Ray in a bikini top licking a fudgy wooden spoon while gazing at the camera with wide dumb cow eyes) is a gimme, as is the local-seasonal-green-community angle. But "blind dining", the trendlette to eat a meal while in the dark or blindfolded? Do I need to pay an ad agency to tell me that comfort food, cheap food and international street food are trendy?

Even more egregious were the tips for guerrilla marketing. First, if I'm going to pay an ad agency, aren't I committing right there to mainstream traditional marketing? Isn't the point of guerrilla marketing so I DON'T have to pay an ad agency? The list of tactics kind of reached this conclusion for me: website, social networking, reach out to food blogs, etc -- all stuff that can be done free or on the cheap.

The only trends that caught my ear was tea -- as an ingredient. People tend to think of tea as 'healthy', and the flavor profiles of different teas could be kinda cool, Another was 'micro-size'. Portions have always been either too huge, or back in the 80s ridiculously small. Reducing portion size to reflect a healthier way of eating AND reduce prices (while maintaining a good food cost percent) kind of turns me on. But for these two cool trends, the agency person spouted silliness like "underground dining", informal food clubs and hosted dinners where instead of being with friends, you pay strangers to enter their homes and eat their food. I think people are doing that to totally escape the reach of douche bag trend marketers....

Class concluded with a look at the physiological effects of alcohol....or more precisely, alcohol abuse. A drink of booze is not such a bad thing. Drinking too much will destroy you. As is the modus operandi of most fear-mongering absolutists (hello, MADD!), what is defined as 'abuse' is never really made clear, but the results of abuse abundantly so.

From a drink, a small amount of alcohol can be absorbed in the mouth. So even if you taste and spit, you can theoretically get drunk, Down the throat, alcohol is toxic to the lining of the esophagus, and abuse will increase the chances of cancer here. In the heart, abuse will raise blood pressure and increase heart size due to increased fat. Most alcohol is metabolized in the liver, where abuse will turn it into foie gras -- fatty and enlarged, a.k.a. cirrhosis. Twenty percent of alcohol enters the bloodstream through the stomach, where too much will tear up stomach walls and have all sorts of pleasant symptoms. Most alcohol enters the blood through the small intestine, which is why a vodka enema is so dangerous. Inflammation, pain, bleeding, I need not write more.

And the kicker to this is what the U.S.A. now defines as abuse: the legal definition of alcohol intoxication. A blood alcohol level of .08% makes it illegal to drive. That's one drink for a petite woman, 2 drinks for the majority of the population within one hour. If that is 'abuse', then we are a world of abusers. Who says prohibition can't happen again?

Introduction to Beverage Management

2009-05-21T18:58:00.000-07:00

The day kicked off with a long missing in the news segment. According to daily freebie AMNY, food stylists actually take pictures of inedible things that look edible! Shocker! Down where the old Fulton fish market used to live on the old southern tip of Manhattan, a new foodie market is emerging. After seeing the new fish market up in Hunts Point, which is literally the middle of nowhere, it's nice to see a real market pop up where the people are.

Richard covered the history of the beverage -- from the dawn of man to its presence on today's college campuses -- in a few hours with enough time to spare to show a documentary about the U.S.'s 13 years of Prohibition. In the beginning, there was water, and it was good. Juice from fruit and extracts, too. About six to eight thousand years ago, alcohol was not so much discovered so much as stumbled upon. When a sugar or starch is introduced to yeast in a properly moist environment, fermentation occurs. Yeast eats the food and produces CO2, heat, and alcohol. The first naturally occurring alcohols to be consumed by man were most likely fruit-based, as the grain-based fermentation take a bit of processing of the grain.

In early history, alcoholic beverages became the go-to daily drinks for health and hydration because it was safer. No one knew why relieving one's self in the same river from which you drink was a bad idea, and they didn't know why that water made you sick (while the beer and mead made from the water did not). It was a short step to steeping healing herbs and berries in alcohol to create tonics and elixirs that also happened to get you messed up. Gin, that's simply distilled alcohol steeped with juniper berries.

Distillation was introduced by the Moors, most likely for the purpose of making perfume, not drinkin'. Distillation is simply cooking the fermented beverage, collecting the evaporated alcohol, and re-condensing it. This process lead to stronger, condensed alcoholic beverages that could travel longer than an unpasteurized beer. Ahoy, pirates and brandy! Colonists ditched the boats at Plymouth Rock because they were out of beer. There was nothing else safe to drink unless they went inland.

All major religions at one point or another embraced alcohol in ceremonies, as alcohol was revered for its safety and pleasure-giving qualities before the establishment of religion as we know it. That said, due to alcohol's ability to be transcendental and give relief, it was also in conflict with certain aspects of religious practice, and has been suppressed by all sorts ever since.

The young United States found that towns tended to have two social centers: the church and the saloon. In the Church, you sat there and got spoken to. In the saloon, you socialized, you pleasured yourself, and the business of the day got done. Politics were at the bar. The problem with this formula was that saloons were all male (unless you were a certain kind of lady); it was this imbalance of power that lead to the original women's movement being focused on temperance.

We watched a documentary on Prohibition, during which the United States basically destroyed all the foodways that anchored society to a healthy perspective on alcohol. The ban served to do exactly the opposite of what the banners hoped: alcohol consumption rose, a large criminal underground swelled, people drank more for the pleasure of being naughty, respect for law and government was eroded, and in the end one group emerged as drinkers where they never drank before: women.

To this day, the United States is under the yoke of the aftershocks of Prohibition. When Prohibition was lifted, a lot of the controls on booze that were introduced remain n effect today. Why? Because the government can closely track -- and tax -- all alcohol being produced. Food consumption is easy to fudge; not so with booze, from a restaurant's liquor license down to a distributor's tight controls on inventory. It's just too profitable for the government to let go of. Now imagine if the government did to marijuana and prostitution what it does to booze and ciggies! We'd fuck and bong our way out of the recession...

There is a mini-Prohibition going on in college campuses today. It's a weird situation in which part of the social community is under 21, another over, and they both hang out. Underage drinking is the standard, and lately college presidents have called for a review of the drinking laws....after which they were mercilessly attacked by Mothers Against Drunk Driving (among other naysayers) who don't appreciate that history repeats itself: ban booze, and people flout the law, drink more, and do more damage than if it was not banned. -sigh-

It's nice not to fall asleep in class!

Labor

2009-05-20T17:26:00.000-07:00

After the last few days I've had (with my wife going into false labor), the subject of the class gave me a sore giggle. The food cost of a hamburger is pretty straight ahead: add up what the meat patty cost, what the bun cost, what the bits of topping costs, add 'em up, and you got your food cost. But adding up the labor cost isn't that easy: if a cook is earning $8 an hour and turns out one burger a minute, it's $1/burger, but what if he's cooking up 1 burger at a time when it's slow, and 20 at a time when it's slamming? And what about what it costs for the server to bring it from kitchen to table?

The rest of class was dedicated to discussing the pros and cons of fixed pay (salaries) versus variable pay (hourly wages), and a lot of different formulas to figure out ratios and percentages which which I doubt any restaurant with less than 100 seats ever really concern themselves. I'd go into it more in detail here, but to be honest, I'm suffering a bit from baby fever, and the baby that is soon to be upon us....

But one formula did catch my eye, because I wish I could plug in the numbers and show it to my current boss. Turnover rate = # employees separated / work force. If a place has 50 employees and loses 50 employees over one year, that's a turnover rate of 100 percent. Some places, particularly fast food joints, are notorious for having turnover rates of 200 to 300 percent (i.e., the whole staff turns over 2 to 3 times a year). The cost of turnover is in expending the resources to find new employees, train them, and all the mistakes they're going to make by being new. The main ways to reduce turnover rates: TREAT YOUR EMPLOYEES WELL, pay them fairly, schedule to their needs, benefits, etc. -sigh-

Pork and Poultry Fabrication

2009-05-14T21:19:00.000-07:00

Today's class was again up in a kitchen, with Chef Ted fabricating a side of pork and a few birds. This would be pretty exciting to see this demonstration, except for the fact I spent a few weeks fabricating pork and poultry first hand in c-arts. Watching some one else do it, and talk about it, is, well, unsatisfying. I did like Ted's brief lecture. It seems there are three general classes of pork in the U.S.: Western, Southern and "Metropolitan" or "Swirl", which are defined by where they are raised and the feed they are given. Western pork get a diet that is composed around chestnuts and apples, while Southern centers on peanuts and soy. "Metropolitan" tends to be raised outside of cities, and are primarily fed....denatured food garbage. Mmmm. Because pigs can pop out of a litter of 50-60 piglets every 6 months, pork has always been cheaper than other meats. Too bad about that kosher/halal business.

Yield & Purchasing / Menu Pricing / More Yield Tests

2009-05-13T15:31:00.000-07:00

We began class with a review of yield and how it influences product purchasing. Vegetable scraps can be saved and used in vegetable stock. But if you're making beef stock at a steak house, the cost of bones can be significant. So your meat purchasing will be influences. The cost of buying subprimals (parts of the animal, bones and fat and all) and the cost of buying fabricated meat (deboned, trimmed of fat, cut to edible portions) change when you have a use for the bones that would be missing in a fabricated cut.

We spent a few hours discussing product pricing. This is determined first by the kind of menu the establishment has. For a cycle menu: one with a fixed daily menu (like in a corporate cafeteria or prison -- what's the dif?) prices will be determined to an extent by the limitations that the host has determined. The law firm where I worked, for instance, had a cheap-ass caf with good food, undoubtedly restricted by a contract the food service had with the firm. Also, because the menu changes every day, the uses for carry-over (a.k.a. left overs) are more limited, thereby raising food costs. In a school cafeteria, today's hamburgers can become tomorrow's chili, but a corporate cafeteria's clams casino is a little bit more tricky.

A restaurant's menu that changes completely everyday is tricky because of the carry-over issue, but gives the flexibility of going to market every day and getting what is fresh and cheap, though in smaller more expensive quantities. A standard menu can have specials, which can use up what's in excess or what's cheap at the moment. Specials have to be thought through, or a "creative" chef can drive up the food cost of a special into unprofitability.

Factors that influence menu pricing:

Local competition
Service level -- table vs. counter service makes a perception of quality, and determines turn time of the tables
Guest type -- what are the customers willing to spend?
Product quality
Portion size
Ambiance
Meal Period -- a.k.a. dayparts. Weekends can get a premium over weekdays, dinners get more cash than lunches,
Location, location, location
Sales mix -- different menu items will be more profitable than other.

There are different ways to assign a menu price, and a lot of places use the dumb cudgel of the food cost percent. You can assign a 20% food cost to everything (if a dish costs $4, you charge $10) but if the food cost of a steak is $25, the cost of a pasta dish is $3 and a glass of lemonade is $.03, the perception of a $125 steak and a 15 cent glass of lemonade will seem a bit crazy to a customer.

The desired cost percent can be determined by looking at what the other expenses of the restaurant are. If sales = 100% of income, fixed costs like labor, occupancy, desired profit and operating expenses can be subtracted to find what % of the income can be dedicated to the cost of the food.

The number that is much more important than the food cost percent is the number where the money is: the Contribution Margin.

Contribution Margin = Sales Price - Cost

Also known as the Gross Profit, the CM is not a percent, it's the MONEY. Alternately, the Sale Price = Cost + Contribution Margin. A steak house typically has a huge food cost and a tiny profit margin, but because steaks go for hundreds a throw, the contribution margin is going to mean big profits regardless.

For the remainder of the class, we revisited the butcher test card and theoretically broke down a whole chicken, which had a lot of parts: drumstick, thigh, wing, back and neck, giblets, waste, and breasteses. Each part has a different value per pound. Literally, the value of the whole chicken is not necessarily the sum of the value of its parts. Hence, supermarkets love to sell chicken parts because the perceived value is a lot higher than the perceived value of the whole carcass. Mmmmm, carcass.

Odds n' Ends / Production Cost Control / Guest Speaker

2009-05-11T20:14:00.000-07:00

Back from the weekend, we shared some odds n' ends. Some Japanese fellows got a machine to detect flavor, and determined that humans taste like...bacon. Someone popped a snake head into a dish at TGIFridays in hopes of landing a big ol' lawsuit. I told a story from my weekend, how L fired the hostess between lunch and dinner services, forcing me to step in to help, wearing a kilt, wet shoes, and a t-shirt a few sizes too small. It was an experience.

We got into cost control in food production. Turning the "as purchased" portion into an "edible portion" is an ordeal with a lot of opportunity for waste. If the minimum-wage prep cook is not monitored, for instance, he may cut an onion and toss out too much usable trim. It's not unusual for head chefs to pick around the garbage to inspect what is being thrown out.

Overcooking is another problem -- cook a piece of meat too long and it shrinks. Over the course of a year, one can lose 100s of pounds of meat And of course there is over serving: a bartender free-pours too big a glass, steak that's not weighed could go too big or small.

Inventory control: Without proper rotation, a lot can be wasted. "Carry over," the restaurant term for left-overs, is a big potential source of loss if not managed correctly.

The choice to make or buy something is tricky. Ice cream can be purchased, but the ingredients are relatively cheap. However, a proper batch freezer, electricity to run it, and the talent to run it are not. It's a balance that his to be determined from case to case.

Of course there are the twin buggaboos of pilferage and stealing: stealing is cut-and-dried taking stuff out of the store, either booze or cash or sides o' beef; pilfering is more casual, such as the hungry prep cook popping a few cucumbers into his mouth while getting the salad station together. Then there are the employee meals -- are they expensive to make or made with food that would go to waste otherwise?

This list killed me, as I see how the restaurant I'm at now is just being so wasteful, preventing us from getting on the goodfoot financially.

At 10pm, we had a guest lecturer, Anne Saxelby of Saxelby Cheese, a cool little cheese counter on the Lower East Side. She sounded really interesting, pretty much inventing herself as a cheese monger, but I was overtired and fell asleep.

Food Cost / Yield Test

2009-05-07T21:23:00.000-07:00

Class was again Chef Ted breaking down proteins. This time, he had a two sides of beef, and we did a yield test on them -- weighed before, then the trim was weighed, then calculated the real price of the edible portions. It was pretty straightforward stuff, but had it been intended for a full menu with many moving parts and recipes embedded within recipes, it would be quite a bug bear. I would have been more involved in the discussion, but I was sleepily checking in and out.

The waste on a large tenderloin of beef is amazing. We started with 9 pounds, and after the fat was cut off, the different muscles that didn't belong to the tender portion, the silver skin and connective tissues, we were left with less than 5 pounds. I asked Chef Ted out of an entire cow, how much is usable. There is relatively little prime meat on a cow, but everything is usable. From the skin into leather, the bones into gelatin, the organs and offal to vendors overseas, to stomach bile for cheese making and paint, it's all used. The meat, the steaks and burgers, are really a very very small part of the cow that we use. And the meat that is graded "prime" is only 1% of all meat produced.

Fish Fabrication / Training

2009-05-06T19:22:00.000-07:00

Today was an odd day. Chef Ted came in and basically fabricated a large variety of fish in front of our eyes -- round and flat fish, a salmon, 2 lobsters, shellfish, bivalves and a squid -- things that we took several weeks to work through in culinary arts, here we were shown in 3 hours. The point was to illustrate how in the end, a whole fish is only 45 to 50% usable, and the rest is garbage. Makes one appreciate how valuable fresh proteins are. Chef also lectured a bit about how expensive some species are today that were considered garbage fish 30 to 40 years ago: skate, yellow fin tuna, cod. Back in the day, it was just salmon and Dove Sole. 99% of all shrimp in the U.S. is both farm raised and imported.

The last hour of the class was the finishing of a topic that I missed on Monday, due to the James Beard Awards. It seemed pretty self evident, but Richard presented a flowchart of sorts for job training. Determine the duties, show the duties, let the employee practice the duties, evaluate and go from there. Have written descriptions of responsibilities, blah blah blah. All very nice in an ideal world, but in the real world, you hope your staff knows what's up, and try not to give them too much rope to hang themselves with. The staff a manager hires is a reflection on how good the manager is -- it will never be better than the manager who assembles and directs them. I understand that; still, it grates on me a bit whenRichard presents this stuff like it's a formula. Real life seems so much more complicated and compromised.