Practices of Consultancy at the Restaurant Industry - Case Study Example

Establish Trust For Best Results: Good Practices in Independent Consultancy 26 August 2005 Compiled by: BenWhite, Restaurant Consultant For: Consultants Seminar Report Status: Completed TABLE OF CONTENTS Page 1) Executive Summary Page 2) Introduction Pages 3 - 4) Content and Procedures Of Investigation for Caf Antonio Pasta & Seafood, Tor Quay, Devon Page 5 - 8) Discussion and Conclusions Page 9 - 10) Appendix A, Sources and References Executive Summary The problem in this establishment was a loss of profit due to sudden increases in food (especially dairy) prices and a fairly small but steady decline in profits. After an analysis of profit and loss, along with examination of sales statistics over a one-year period, it was discovered that the source of the problem was in overstaffing and waste of product. After submitting my suggestions to the owner, he called a staff meeting to implement the recommended changes. In one month the profit margin was again at the desired level. This case required diplomacy and empathy in addition to the raw data, emphasizing the need to establish the client's trust. Introduction Gaining the trust of our clients is essential to the continuance of business. As consultants, there are some key issues regarding our conduct, methodology and skills. The restaurant industry is notorious for high overhead and meeting customers' expectations. With continually fluctuating food prices it is difficult to maintain a good profit margin for a small business in this industry. Many restaurant owners are not formally trained in business practices, and do not know how to weigh and balance cost versus income. It is essential for the business that the owner or manager understands how to employ 'total utilization' as well as train their staff in multitasking. The consultant's approach to such matters is critical in maintaining effective communication with the client to encourage good results from the advice that the client paid for. A good working knowledge of the industry is also critical for the consultant, as well as a proven track record of past successes with previous clients. For this, the consultant must be updated on current trends and forecasts in the industry. Although this report focuses on my own field of expertise, you will see that the practices and ethics apply to all forms of consultancy and are based upon good human relations, the wherewithal to analyze accurately, expediency and prompt delivery of results. It is also imperative respond to reasonable client contacts promptly. What will make or break a consultancy is the quality of communication between the consultant and the client. Ultimately, the client's well being must be the first priority (Garrison, Tim K, 2004). Content and Procedures Of Investigation I was contacted by the owner of CafAntonio, a popular small restaurant in Tor Quay, Devon. Over the phone, he told me that he was very concerned about the amount of increase in his expenditures due to high fuel prices and an increase in dairy prices. He didn't see how he could avoid raising prices and wished to explore other options. In the initial contact we discussed my skills, background and fees. Upon his verbal agreement to my fee (Caldwell, Mark), I made an appointment to visit the establishment the following afternoon at 14.30. The site was visited on 13 June 2005 at 14.30. The owner was interviewed about his bookkeeping practices as well as his menu content, staff, and equipment. He provided his records for the previous year as well as the current year. The site was then toured to observe the work of staff, food preparation and disposal, and current inventory of food, beverages, place settings, serviettes and non-perishables. The owner was questioned regarding utilization of extra portions and unused perishable ingredients, as well as an estimation of average daily sales. The owner was asked for and provided inventory records for a three-month period of time. After the initial visit, it was arranged that the site would again be visited during the dinner hours on the same day. Please note that during this first interview, the business owner is often nervous, not knowing what to expect. The consultant is the 'authority figure' and must be calm and objective. Obtaining a feeling of the establishment's culture is a plus (Rickman, Cheryl), since it will be easier to present findings, constructive criticisms and options for solutions. The site was again visited from 19.00 until 22.00, and observations were made of methods of preparation, tasks of staff, time utilized in actual work and fluidity of service. Dishwashing practices were observed as well as customer load and the amount of time customers waited for seating. Notes were taken regarding the observations made for later reference. At 22.00 another brief meeting occurred with the owner and he was given a questionnaire and queried on whether he could complete the questionnaire in two days. This request method is successfully used by time-management experts (Taylor, Harold). Another appointment was made to meet again in two days' time. The financial records of the restaurant were examined; an analysis was made based upon the current wholesale costs of food and beverages against the current menu prices and comparison to similar restaurants of this particular genre was made. Labor and supply costs were examined as well as the inventory/order history covering a six month period in order to gain a better perspective on seasonal sales. When the questionnaire was returned during the next site visit, options were discussed and the restaurant owner agreed to follow advisement based on the findings. Discussion and Conclusions Since the aim of this report is to relate the methods of achieving the best results by focusing on the consultant/client relationship, it is here that the logistics and methods will be discussed whilst revealing the process of solving the problem. Some points will be emphasized, which apply to all practices of consultancy. A personal appointment as soon as possible after the initial contact is important to establish a good base of communication with the client. Punctuality is also critical in taking the first steps to establish an initial trust (Friedl, Stephen J.). This particular owner was fairly new to the business of owning a restaurant. A long desire to cook professionally and a natural flair for Italian cuisine led the owner to open his own business. His research for operating a restaurant were friends who owned restaurants and pubs. Over the first year of business, he learned by trial and error. In this situation, the owner is likely to be quite emotionally attached to the business, and reluctant to make changes in staff or protocol even though they have hired a consultant to advise them (Hickton , Maren L.) In order to establish a good working relationship with such a client, the consultant must be diplomatic and empathetic from the beginning. Even though the problems may be obvious to the consultant, it is imperative that the client is guided rather than directly confronted with what needs to be done. In this case, it was discovered that the rising costs of food and petrol were the least of the concerns; a tremendous amount of waste was occurring in terms of labour costs and lack of utilization of extra product. Hours of operation were continuous from 11.00 - 23.00, seven days a week. This resulted in idle staff, an unnecessary labour cost. In reviewing the tapes from the cash register over the period of one week during peak season, it was revealed that the least amount of sales occurred between the hours of 15.00 and 17.30. It was suggested to close the restaurant during these two hours, retaining minimum staff to prepare for the evening menu. This was met with resistance, as many of the staff members were personal friends of the owner. Upon viewing the raw data, however, the point was taken when it was proven that even this one act would improve the profit margin (Coulson-Thomas, Colin). Records also revealed that daily sales were consistently low on Mondays. The option to close the restaurant on Mondays was offered, saving not only labour costs but also utility costs. The figures revealed that the profit margin would significantly increase if both methods of closure were implemented. Next, utilization was explored (Siegel, Jeff). Since the public is given to trends, the consultant must be abreast of current trends in any industry. The restaurant industry is particularly vulnerable to dietary trends and must adapt in order to survive (Finlayson, Ian). It was suggested that instead of discarding extra ingredients, a 'Daily Special' might be offered to customers that fit in with the current trends The Four Aspects Of Food Cost) and possibly offered later as a standard menu item if the dish proved popular. After two weeks of tracking the most popular menu items, it was to the owner's surprise that three menu items were not selling well (Restaurant Management Tips: Sell The Big Contributors). These were the pasta dishes with heavy cream/wine/cheese sauces. It was explained that given the pressure of the media to engage in slimming, many people were likely to shun dishes with a high carbohydrate/fat value. It was suggested to remove these items from the menu and offer them as specials now and again, using ingredients already in stock rather than making a special order and increasing the risk of waste. In reviewing the questionnaire that the owner had been given, it was discovered that he had already changed his mind about several things during this meeting that he had adamantly opposed when he filled out the questionnaire. Once seeing the proof of the current practices of business being the problem and not so much the rising costs, it was decided to call a staff meeting with my presence. During the meeting of all staff members, much of the same information was presented as the owner had been given. Due to staff fears of losing income, it was discussed that split-shifts and reduced hours could be implemented, with the division of labour becoming more efficient (Tissier, Jean-Marc). Here is where the consultant must sometimes act as therapist; for now, the consultant is the teacher and the owner and staff are the students. For the consultant it is important not to be condescending or harsh. It is recommended that an atmosphere of mutual responsibility is established. This is where the point must be driven home that the owner and staff are the first priority; in order to make the customers first priority, the staff must have a sense of well-being. That is the job of the consultant first, then the owner when the consultant's work is implemented. During the staff meeting, handouts were distributed for reference and total utilization practices were demonstrated. Presentation was also discussed and the staff was encouraged to voice ideas, encouraging creativity and more options. At the conclusion of the meeting, an agreement was reached by all for a new schedule, which would begin the Monday following the meeting, when the restaurant would be closed. Customers were informed of the new schedule in the ensuing days. A sign was posted on the door of the restaurant informing customers of the coming changes in operating hours. The restaurant was monitored for a two-month period of time, and a steady increase in profits was noted. Even in the first month, the desired profit margin was near the desired level. The success of this consultation depended upon the willingness of the owner to heed the advice, which he had paid for. This depended upon the quality of presentation on the part of the consultant and the attitude with which the information was presented. The consultant should also have periodicals and publications on hand to show to the client, to encourage the client to be able to make informed choices in the future. This not only gives the client an opportunity for self-reliance, it also demonstrates that the consultant has 'done his homework' in preparing for that particular case. The resources used for this case are given in Appendix A. Success in consultancy depends on many factors, but high on the priority list is the relationship between consultant and client/customer. There must be a sense of camaraderie and mutual respect in order to assure the best results. Appendix A Sources Of References Friedl, Stephen J. 'So You Want to Be A Consultant,' Steve Friedl's Unixwiz.net Tech Tips |Online| Available at: http://www.unixwiz.net/techtips/be-consultant.html Rickman, Cheryl, 'Customer Relationship Management: Technology v Culture,' The CEO Refresher |Online| Available at: http://www.refresher.com/!crcrm.html Caldwell, Mark, 'Top 15 Business Mistakes Consultants Make.' Ajarn's SQL Corner |Online| Available at: http://weblogs.sqlteam.com/markc/articles/Top15BizMistakes.aspx Taylor, Harold, 'Ten Principles of Scheduling: Scheduling time to get things done indicates commitment,' Harold Taylor Time Consultants, Inc. |Online| Available at: http://www.taylorontime.com/articles/ten-principles.html Frans, Peter, 'The Effective Leader Is Decisive!' Management Articles, Trimitra Consultants |online| Available at: http://www.trimitra.com/articles/leadership_01.html Coulson-Thomas, Colin, 'Working with Consultants,' Professional Consultancy, Issue No. 14, Institute Of Management Consultancy |Online| Available at: http://www.imc.co.uk/news/professional_consultancy_article.phpitem_id=502&issue=14 Tissier, Jean-Marc, 2001, 'Generative Project Management, Part 3: People and Relationships,' Effective Consulting Magazine, Nov/Dec. 2001, pp. 15 - 18 Hickton , Maren L. 'Desperate Restaurant Owners: Lessons From The Field,' Restaurant Report Weekly |Online| Available at: http://www.restaurantreport.com/departments/biz_field_lessons.html The Four Aspects Of Food Cost, Food Reference Website |Online| Available at: http://www.foodreference.com/html/artfoodcost.html Restaurant Management Tips: Sell The Big Contributors, Chef2Chef Website |Online| Available at: http://foodservice.chef2chef.net/restaurant-management/chapters/tip01.shtml Garrison, Tim K., 2004, 'Do Consultants Cost You Money' Nation's Building News Online, 22 Nov. 2004 |Online| Available at: http://www.nbnnews.com/NBN/issues/2004-11-22/Builder's+Engineer/index.html Finlayson, Ian, 09 March 2004, "A review of the Foodservice supply chain for the PRC,' Practical Solutions International Ltd. |Online| Available at: http://66.102.7.104/searchq=cache:saa7FOjZVIkJ:www.pesticides.gov.uk/uploadedfiles/Web_Assets/PRC/Foodservicesupplychain2004report_web.doc+ideal+restaurant+profit+margin+for+UK&hl=en Siegel, Jeff, August 2005. 'Cutting Costs,' Pizza Today |Online| Available at: http://pizzatoday.com/backoffice_articles.shtmlarticle=MjgwNXN1cGVyMjgwMnNlY3JldDI4MDk Read More