The Wall Street Journal posted a great article on the rise of employee theft as a result of the recession.  You can read the entire article on MSN’s Money page here.  The article reports that ‘New research shows that employers are seeing an increase in internal crimes, ranging from fictitious sales transactions and illegal kickbacks to the theft of office equipment and retail products meant for sale to customers.’  The article also mentions that ‘To many employers’ chagrin, the workers guilty of the most grandiose theft frequently turn out to be those deemed to be highly trustworthy’.   

We have seen a dramatic increase in internal theft while in the field and expect to see a continued increase in 2009, especially in employees who rely on tips for a large part of their salary.  Many hotels have been forced to dramatically reduce the number of hours as occupancy declines and many of the hotel restaurants have slowed down.  Many employees are now really struggling to make what they made in the past and most cannot afford to take a pay cut and still pay their monthly expenses.     (more…)

Are rising food costs decreasing your restaurant’s profits?  You better act now!  We anticipate the cost of food, especially the staples, to continue to rise.  Food and Beverage Departments for hotels are typically low profit areas and can easily turn into no profit areas if you do not react quickly.  Here are some things that you can do: 

Know Your Food Costs – It is surprising how little hotels actually know about their food costs.  Most hotels have a breakfast buffet, however, few hotels have any idea what their food cost is on the buffet.  Most just assume they are making a high profit because they were taught that buffets were always high profit.  Not true.  Spend the time to calculate your buffet cost.  You may be surprised to find out that your buffet food cost is 40 or 50 percent! 

Here is a simple way to find out the food cost for your buffet:  Have the kitchen log every single item that is used on the buffet during a 7 day period (10 cases of bacon, 22 cases of eggs, etc).  At the end of the week, add up the total food expense and divide it by the amount of revenue you posted for those days.  Be sure to do it for a whole week because you will find that your weekend food cost is very different than your weekday food cost.  Also, be sure to add in all items included with the buffet such as juice and coffee.

Re-engineer Your Menu – Hopefully, you are using a spreadsheet or computer program to monitor your menu engineering.  Be sure to re-evaluate your menu every single month.  For additional menu engineering help, check out this article.

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Our new training video on Perpetual Beverage Inventory is now available for free.  You can also download the excel template as well as written instructions. 

To visit our new Perpetual Beverage Inventory How-To Video Page, click here.

Surprisingly, many people that are in food and beverage management positions and even general management positions do not know how to calculate beverage costs, one of the most important costs in every hotel’s budget.  Don’t worry, we won’t tell!  We will help you keep that secret by showing you how beverage cost is calculated.  It is really quite simple.

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Perpetual Beverage Inventory How-To Video

Training Video Goal: Successful implementation of perpetual beverage inventory by providing instructions and necessary tools

Training Video Length: Approximately 10 Minutes, Video can be paused and replayed at viewer’s chosen speed

Training Video Audience: All Food and Beverage Managers implementing a perpetual beverage inventory system

This video takes approximately 1 minute to load and will automatically play once loaded. For your convenience, all templates and instructions that are mentioned in the video are available free for download on this page below the video.

To download the Perpetual Beverage Inventory Template in Excel Format, click here.

To download the Perpetual Beverage Inventory Template instructions in PDF format, click here.

To read an article on Perpetual Beverage Inventory, click here.

To download the free Banquet Bar Requisition Template in Excel format, click here

To download the Banquet Bar Requisition Template instructions in PDF format, click here

Anyone who has ever worked with Five Diamond Hospitality will tell you that one of the biggest things we preach is proper selling and up-selling techniques.  We have to give a tip of the hat to a restaurant that really nails the art of selling.  Here is our story:

Three of our team members went to the Hard Rock Cafe for a quick lunch.  Because the Hard Rock is a tourist destination, they really had a lot to sell.  The host sat us at a table, handed us menus and said that our server would be over in just a minute.  A minute later, the server arrived and greeted us.  She asked for our drink order.  Instead of just asking ‘what would you like to drink’, she also recommended three beverage selections including their specialty iced tea.  When one of us ordered a soda, she casually tried to up-sell him on the souvenir cup.  It probably would have added another $4 or $5 to the tab.

After taking the beverage orders, the server offered us an appetizer.  Instead of just asking ‘what can I get for you’, she recommended an appetizer sampler platter for us to share.  The appetizer platter was $19.

When she came back to take the entree order, she came up with creative ways to up-sell.  She offered different side order choices (at a premium price of course) and extra toppings on the sandwiches (add another buck for bacon, etc.).

While we were waiting for our food, she brought over a miniature catalog of Hard Rock stuff from the gift shop.  She said that if we wanted to purchase a t-shirt or something, she could get it and add it to our bill. 

After the meal, she attempted to sell us on some deserts.  The desert menu was cleverly placed inside of the check presenter so you would be forced to look at it. 

The server was great at selling and had a lot of opportunity.  She was very casual about everything that she offered.  It would have been very easy to say ‘yes’ to many of her choices.  She probably does very well with her tips and her average check is probably well over $20, even though most entrees are only around $10.

It turns out that hotels are not the only victims of crafty employee theft.  Here is the fast food version of the breakfast buffet scam:

I was  in West LA last weekend and had time to get a quick bite to eat with some friends.  Most convenient, of course, was a major fast food restaurant down the street.  Some of us were not very hungry, so the ones who were ordered first.  Everything was normal at first; we ordered food that the cooks in the back had to make, the cashier entered the transaction into the computer, processed the payments, gave a receipt, etc.

Then the ones that just wanted small items came to place their orders.  As I waited for my food to the side, I noticed that she started to use a small calculator instead of the register that she had used with me to add up the cost of each order.  One of my friends ordered a drink and large fries (both items the cashier could retrieve herself).  She punched the amounts into the small calulator, and asked for $2.79.  My friend payed with cash, the cashier put the money in the drawer, did not present a receipt, and provided the drink cup and fries.  Another one of my friends ordered a specialty coffee drink.  The cashier listened to the order, then asked, “That’s it?”  Once my friend nodded his head, she then recalled the price from memory and asked for $2.19.  She then did the same with the money as the previous transaction.

There was a good flow of people coming in to order food and as I waited for my food, I could not help but laugh.  Every transaction that she did not have to send to the cooks or have to process a credit card, she would not ring the transaction into the register.  One can only imagine how much money this cashier was making, but even worse, how much more money the fast food restaurant was losing.  She obviously had been doing this for some time and because the restaurant was in a very high volume area, the managers or owners probably do not even notice.

Take it from me, she was being so obvious because she knows that she probably won’t get caught.  These things happen often in places I go.  Managers and owners just need to take a closer look at their operation.

Got a McStory to share?  Post it in our comment section.

When I am not in a hotel, I swing by the occasional chain restaurant for a good meal.  There is one chain that I really like because they have awesome baby back ribs.  The problem is that my wife will only eat one thing on the entire menu.  Here is our experience and a good lesson in how to lose a regular customer.

 The server came by to take our orders.  I ordered the baby back ribs that I love and my wife ordered the fish (the only thing on the menu that she really likes).  The server took down the order and left for the kitchen.  My wife and I enjoyed our beverages and a little conversation.  About 15 minutes later, we were wondering where our food was when one of the restaurant managers came over and said ‘I’ve got some good news and some bad news.  The bad news is that we are out of the fish.  The good news is that we have everything else on the menu available.’ 

 I have no idea why they took 15 minutes to tell us that they were out of the fish.  Did they not know this when we ordered?  Maybe they were fishing out back and the fish just weren’t biting.  Who knows.  Anyway, we were annoyed but willing to move on.  My wife requested a menu so she could choose another entree. 

Not even one minute later, the server brought on my baby back ribs and held them in front of my face while asking ‘would you like these now or would you like me to bring them back when your wife’s food is up?’  Apparently, the server wanted to see me get a divorce!  I told the server that I would wait and eat with my wife so that I don’t have to sleep on the couch tonight. 

The server came back and took my wife’s second order.  A few minutes after that, a different manager came over to tell me that the restaurant was out of fish.  It was almost like they were rubbing it in at this point.  We told him that we already ordered something else. 

About 10 minutes later, the server brings my wife’s entree along with my ribs that were sitting under the heat lamp.  They had a nice twice baked taste to them.  I also enjoyed the twice baked potato that was now a three times baked potato. 

The restaurant kindly offered to give us a free dessert for our trouble.  We rarely get a chance to go out to eat; a free dessert was not worth the ruined meal.  Needless to say, we have not been back.

Got a bad service story to share?  Add it to our comments section!

Controlling your beverage cost is about much more than hiring the right bartenders and being hopeful that they are honest.  Whether your hotel just opened a brand new bar or have had one for many years, make sure that you have these 12 basic internal control standards in place to protect your bottom line.

1.  Position the POS terminal so that customers can see transactions rung up. Most bars have the POS screen positioned towards the bar so that the bartender must turn their backs to use the register. This helps on two fronts; first, all guests can see their transactions rung up and second, it is tougher for the bartender to see who is watching him or her ring up the transaction, making it less likely that they will risk using POS manipulation. If your bar design does not allow the terminal to be placed this way, consider installing a display arm that can be positioned to face the guest similar to ones in retail stores.

2.  Ensure that it is your bar’s standard to have alcohol poured first when preparing mixed beverages. Pouring the mixer into the glass before the alcohol can only mean one thing; your bartender is attempting to adjust the perceived alcoholic strength of the beverage. This is a good indicator that your bartender may be pouring less per drink to steal so that it will not throw inventory levels off.

3.  Require the bartender to give a receipt after each transaction. This is one of the simplest standards to use yet many bars obviously do not require the bartender to give one. Make sure that your bartender knows that if a guest pays cash, it is not some secret code for, “I do not want a receipt.” Even if most of the guests throw the receipts away, at least your bartender gave them one and hopefully rang up the transaction.  Check out our article on how bartenders split and re-present checks with the POS.

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In our last article, we told you how to perfect your hotel’s in room dining service.  If you have mastered your service, you should be ready to increase your room service revenues (and tips) up to 50 percent!  In room service, your team has an incredible opportunity to sell.  Room service guests are typically not price sensitive and often want to splurge.  Here are the secrets of selling and increasing your revenue:

Before we talk about suggestive selling, the first thing we have to talk about is how to ask the right questions.  The most important thing to keep in mind is to never ask open ended questions.  When I call room service, the room service operator typically asks, ‘what can I get for you?’ or, ‘what would you like this evening?’  If you ask either of those questions, you have lost all opportunity to sell.  At that point you are only an order taker.  Your questions have to be specific and lead the guest to buy. 

The first question you should ask the guest is, ‘how many guests should I set the tray for?’  Almost nobody ever asks this question.  They usually just guess based on the number of entrees ordered or just assume that the order is for one person.  Without knowing how many guests the meal is for, you cannot set up the tray properly… but more importantly, you cannot sell correctly!

Once you know how many guests to prepare for, you can start selling.  Selling is simple.  It is about anticipating the guest’s needs and making recommendations to match. 

The next question you ask is to take guest’s appetizer order.  With all of the questions that you will ask the guest, keep the following in mind: (more…)