Five Key Ways to Improve Your Food and Beverage Operation – Part V


By Brett L. Magnan, Raving Partner, Hospitality

In this series, we have covered SERVICE, LABOR, MENU & FOOD PRESENTATION, COSTING & WASTE as areas of focus by Food & Beverage Directors and professionals determined to improve or fine-tune their operation. The last in this series is the FINANCIAL REVIEW.

The monthly financial review is often the most dreaded by F&B management; having to explain to the executives their performance compared to gaming. The food and beverage business is by nature very difficult to perform very profitably – if at all. The expectation is that each outlet will run a 30% cost of goods (blended), 30% labor cost, other expenses in the 30% and leaving a healthy 10% gross operating profit.

Realistically, cost of goods is now in the 40% range as the cost of products has increased due to global economic changes and delivery costs by suppliers. Labor is 45% at the low end and in some cases closer to 55% to 60% depending on the market and service levels required. The variable costs of “Other” are the areas that get more and more value engineered down or eliminated where possible, but also affects service, ambiance, and efficiencies of the staff. With 100% being the full pie, the sliver of GOP is greatly reduced or upside down.

Panic sets in and CFOs, casino leadership, and “owners” begin to ask about closing restaurants, extreme management shifts in F&B, or the question of bringing in outside operators. Although those questions are logical, F&B Directors armed with the right data and understanding of their P&L will be able to steer the conversation more effectively.

Important points to remember:

  • Food and Beverage, although an amenity to the casino, should be considered both a marketing benefit and a significant contributor to the overall destination.
  • Percentages cannot be taken to the bank. Costing percentages are an analytical tool to follow trends and base intelligent decisions. Contribution margins - or the profit of the sale of the item - can be taken to the bank, and proper menu analysis will assist in making the best decision in this area.
  • Transparency and understanding of goals and metrics create more security, not less. Once the leadership team agrees upon statistical targets, moving towards those goals should be positive and enriching.
  • Occasionally, the outside review of your financials by a reputable accounting firm, such as Finley & Cook, will allow you to have a comparison of industry trends and may also reveal errors or fine-tuning that internal teams miss.

Through this series of articles on improving your food and beverage operation, I hope you have found a few questions to ask yourself and a few solutions that are new approaches to the way you are currently running F&B. Raving can provide all of these services and beyond, should you need a more in-depth analysis or have a unique situation that needs some creative outside perspective. Please contact [email protected] / 775-329-7864 for more information.

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About the author

Brett L. Magnan

Brett brings a wealth of experience operating high-quality hotels, casino resorts, spas, and food and beverage facilities. He is known for his planning and opening of new properties and is a trusted resource in the gaming industry with his reputation for hard work, innovation, teamwork, honesty, and integrity. Email Amy to schedule a call with Brett today.

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