Efficient management of gastronomic companies
The world of business has changed. The businessman who did not understand it that way is surely in trouble, since the dynamics is so strong that if he does not have enough information to make decisionYes, you may lose your business.
In this work, the one developed by Dr. Norma H. Iacomucci (CP) analyzes four concepts that she considers basic in the management of gastronomic activity, which a professional in economics, in his role as advisor, has to use to achieve the desired objectives (be profitable and stay in the market).
The information comes from an efficient management of the organization, be it a small one-person venture or a chain of restaurants. Today it is not enough to have a good product. There are no captive customers, and to obtain or retain them, a number of issues must be considered, ranging from marketing, quality, price and service, to the location of the premises. That is why it is necessary to "manage" this activity efficiently, in order to be profitable and remain in the market. These tools consist of:
- Carry out a business plan before starting the gastronomic undertaking, in order to analyze its feasibility and budget for its development and start-up;
- Once the establishment is operational, use management that allow entrepreneurs to know the management of their business and monitor it;
- Adopt quality as an essential requirement in all customer service, and
- Analyze the human resources used in the business, permanently auditing its efficiency.
Next, a brief description will be made of these four points that are considered elementary to achieve an efficient management.
It is very common to observe how people with little or no knowledge of the activity launch a gastronomic business without having made the corresponding evaluation of the project in all its magnitude, by preparing a business plan to determine its viability.
Before starting any activity and especially the gastronomic one, with its very particular characteristics, a very in-depth study of all the variables to take into account must be carried out, to know if it will be successful. Professionals in economics have all the skills to organize, put together and plan that business plan, which will help the entrepreneur to make strategic correct so as not to regret it in the future. According to Brian Cooper, Brian Floody and Gina McNeill (1):
“A well-researched and documented plan is a prerequisite for business success and must be presented in a very professional manner… The feasibility study is used to see what the relationship will be between the business and the existing market… The financial plan is a part of the business plan, and generally consists of the following parts:
- Capital budget.
- Investment plan.
- Profit and loss.
- Analysis balance point.
- Pro forma balance.
- Analysis of cash flow. "
If we analyze each point in particular, we can say the following:
2.1. The capital budget consists precisely in considering the money that will be needed to carry out the project that is in mind, so that the entrepreneur is self-financed or has to go out looking for partners. It is essential to make this budget based on the study of all the expenditures that will be made to fine-tune the establishment, such as buying or renting a premises, making spare parts, acquiring furniture and supplies, facilities, dishes, hiring personnel, hiring advertising, etc.
2.2. The investment plan consists of allocating the capital that was set aside for the installation of the business to the different expenditures required, taking into account the funding requirements that will be demanded at different times of the project. This is very important if the entrepreneur plans to finance himself through partners or with a financial institution. Having a detailed investment plan provides an image of responsibility for getting things right, and contributes to better financing.
2.3. The projected profit and loss statement is essential.
2.4. It is necessary to know if the business will be profitable and if the expected income will cover the expenses that will have to be faced. As it is a business that is just starting, it will be essential to have all the studies that have been previously carried out on the area in which it is going to be installed, what type of public will be the customers, what menu and therefore what prices will be set to analyze if the costs. Many times a miscalculation of the income and cost structure fails the business.
2.5. The Insights The equilibrium point is developed later in this work. For now we want to point out that in a business plan, the knowledge of the break-even point is very important, because by doing it you will know how much you have to sell, in what values to cover the fixed costs and then from there start generating profits. East Insights Initial exhibits the guideline on its viability, since the equilibrium point is probably achieved with a number of diners that cannot be determined, or for various reasons such as a reduced space or high prices, among many other factors.
2.6. The pro forma balance is also a projected balance, such as the state that we saw in the previous point, and serves to show in advance, according to the budgets made, what the net worth status will be at the closing date. This balance, together with the information previously commented, is very useful for investors and for banks.
2.7. The analysis of the cash flow is essential, since in gastronomy practically everything is worked in cash (cash or card) and the control of the daily flow must be taken into account to avoid any of the multiple problems that may exist with the handling of the cash: theft, shortage to deal with purchases and payments, handling of cash and card coupons in terms of the control that must exist, cross-checks between orders and invoiced, between invoiced and entered, etc.
As we see after this planning, we will proceed with more security in achieving the business.
3. Basic tools for business management
The product to be sold has a series of characteristics, all of which are important, that must be properly analyzed: its conformation, presentation, quality, freshness, and price. It is very common in this activity to establish prices without having an exact knowledge of what the cost of the product is -in our opinion, the main element to take into account-, since beyond that the price will be tied to the market, the area, regular customers, and others, if their unit cost is not known, that is, how much does each of the dishes sold in the establishment cost, you cannot obtain management information that allows you to know how the business is going and, above all, if It is profitable. Among the indispensable tools that every activity should have are the following:
3.1. Cost system
It is essential to implement a cost system that allows knowing the unit cost of each dish on the chart or menu. In service companies, human resources are a very important cost within the total costs and they must be adequately trained. In the gastronomic activity, they are the architects of the sale of the product, since the waiter has to capture the will of the client and the "chef" has to reach the taste of it with a well-prepared dish (to give a few examples).
In addition, the activity is characterized by the short life cycle of the product -as it is highly perishable- with which, if we add to this characteristic the losses that occur due to wastage, cooking of food, cleaning, and others, not Having an exhaustive analysis of the unit cost that considers all these variables to include them as one more cost, will obtain distorted profit margins.
Within a gastronomic establishment, however small it may be, there are a number of important fixed costs, which occur beyond the sale or not of the products, simply by having the place open to the public. Therefore, if there is not an adequate flow of demand, it becomes difficult to cover these costs; situation in which many businessmen in the sector are tempted to raise the prices of the menu, which may be even more counterproductive.
Hence the importance of knowing the unit costs preparing recipes for all the products to be sold, whose costs (variable + fixed) will allow you to manage the prices per product making a mix of increases that does not make the whole menu more expensive and is attractive to the customer .
It is also very important to know what the level of activity is and what the fixed cost structure is, since the capacity of covers that can be done in shifts has a limit and many times the calculation of the appropriate structure is not carried out; Thus, even if it has a reasonable shift rotation and the maximum covered capacity, if the structure of fixed costs is inadequate, the final price will be high to cover them and the market may be lost. Many companies in the sector carry out "delivery" to increase sales outside the premises, thereby covering part of their fixed costs.
But only the exact knowledge of the unit cost of each dish will allow the entrepreneur to set reasonable prices and obtain profitability or, where appropriate, rethink their fixed cost structure to adapt it to their demand and obtain better profitability. For the implementation of a cost system, the main points must be taken into account:
3.1.1. Survey of the organization
Before implementing any cost system in an establishment, an information survey must be carried out, which will cover both the administrative and organizational structure.
If a company is organized under a corporate form (SA or SRL), in a certain way, the documentation is registered under legal regulations and in a certain way, which paves the way a lot, since in sole proprietorships or de facto companies, where there is an obligation to keep commercial books, the information can be (and generally happens) very dispersed and, in order to be able to calculate the costs, it is necessary to order it in the same way as if it had a legal company; This situation can be complex in some small places, with few staff, where the owner himself performs multiple tasks, but without this arrangement, no cost system can be implemented. It is necessary to explain to the employer that this order will result in a better management, where you can obtain information that you do not have today.
3.1.2. Preparation of procedure manuals
When considering procedural manuals, one should not always think of lengthy, complex, difficult to understand writings that no one reads, but rather written rules for each procedure, so that each person who must carry it out knows exactly how and when you have to do it. This is of utmost importance, especially in the early days, where staff may be disoriented and written procedures are invaluable help. The size, detail and quantity will depend on each particular structure. It is obvious that a restaurant with a significant infrastructure, even with chains of premises, you will need something more complete than a restaurant neighborhood, with a smaller and less personal structure.
3.1.3. Preparation of the accounting chart of accounts
We know that the chart of accounts is the soul of accounting. Whether we achieve a correct registration depends on how open the chart of accounts is, according to the needs of each establishment. It must be flexible enough to allow for checking in accounts as we go about business. In establishments that do not have an obligation to keep books, as I said previously, an accounting scheme must be carried out in order to implement the cost system.
3.1.4. Permanent inventory
In an activity as special as gastronomy, it is essential to keep a permanent inventory control, which will result in multiple benefits, among which the most important are:
- Control of entry and exit of merchandise.
- Decrease in losses due to losses, thefts, expiration of products (many are perishable).
- Have the purchasing function programmed, being able to establish order points for some products.
- Allows you to monitor prices in the face of increases that occur, to change the costs of prescriptions.
Following the author Clement Ojugo (2):
“Determining the exact value of the inventoried product is of great importance. The periodic physical inventories help to achieve both the financial report and the cost control ”.
3.1.5. Cost system design
Once all the aforementioned has been carried out, you are in a position to design a cost system according to each particular establishment, that responds to the needs of that establishment, the organizational culture of its employees and the management capacity of its owners, without whose conviction nothing can be done.
By Dra. Norma H. Iacomucci (CP).
Consultant, specialist in costs, management and tax issues. teacher
Source: “Errepar - D&G Professional and Business - Nº 83 - AUGUST / 06 - T. VII, p. 812 ".