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Costing | KRG Hospitality

Costing

by David Klemt David Klemt No Comments

Chef Duffy x NRA Show: Balance

Chef Duffy x NRA Show: Balance

by David Klemt

Street art-style, AI-generated image of a chef holding a color-coded recipe sheet

Those would be some pretty rad sleeves in real life.

I’m not done with the invaluable menu tips and tricks shared by Chef Brian Duffy during his 2024 National Restaurant Association Show live menu reads.

The KRG Hospitality team attends and speaks at multiple hospitality industry trade shows, conferences, and expos each year. When reviewing the education on offer, I always search for Chef Duffy’s name to see if he’s doing live menu reads.

And why have I developed this habit? Simple: The amount of insights one can take back to their business and implement immediately. Consider the impact one of Chef Duffy’s asides can have just on the guest experience.

As an example, when addressing the burger section of an anonymous operator’s menu, he casually mentioned that he always adds two slices of cheese to a cheeseburger to fill the top out more.

There’s also his tip for housemade, signature seasoning blends. Don’t make a quart, make ten pounds and store the blend in a flat tray, labeled clearly. Chef Duffy’s reads aren’t a breakdown of tips that only the operator who submitted the menu will find beneficial; everyone who pays attention will walk away with valuable advice.

At this year’s NRA Show, Chef Duffy had only enough time to get through three menu reads. However, he still packed his session with helpful advice. So, after reviewing all the notes I took, I decided I’d need to write two articles.

Let’s go!

Achieving Balance: Food Costs

In yesterday’s article, available here, I touched on one of Chef Duffy’s key points: achieving balance.

He made this point in response to a sports bar menu that had a couple pricing issues. One involved add-ons, with two slices of bacon costing $3.50 while a chicken breast was six dollars. And then there were the daily specials: two Chicago-style hotdogs cost more than a burger.

However, there’s more to balancing a menuand the kitchenthan ensuring pricing makes sense to guests.

By now, we’ve all heard and read ad nauseam that costs are rising. In fact, we’ve all experienced these increases. Streamlining the menu, including production, can help mitigate this issue.

As Chef Duffy said during his menu reads, he’d rather execute 25 items perfectly than produce 50 items that suck. I can say that we wholeheartedly agree with this sentiment.

In part, we agree because we favor smaller menus. Offering fewer menu items made perfectlyconsistently so—with cross-utilized ingredients as often as possible reduces food costs. There’s also that pesky paradox of choice inherent to a bloated menu.

But there’s another benefit: kitchen team satisfaction and retention. An overwhelmed kitchen team is an unhappy kitchen team, and an unhappy kitchen team will look for the exits. Losing a single team member costs an operator thousands of dollars, let alone an entire team.

Achieving Balance: Labor Costs

This is probably my favorite tip from this round of live menu reads: Chef Duffy color codes his recipes and menus in the development stage.

An operator can realize multiple benefits from this approach to menu programming. Among these is a visual representation of how many dishes are being prepped and produced by each station.

Color-coding the recipes and menu allows an operator, their leadership team, and kitchen team to avoid, as Chef Duffy put it, hammering a specific station. I’ll also opine that this technique can help identify any labor or skill gaps (or redundancies).

Chef Duffy’s method of menu development also helps operators balance their menus before they ever reach their guests’ hands. Case in point: One menu Chef Duffy reviewed in Chicago listed a single item underneath its own menu section. That’s not great balance.

I think every restaurant and bar operator can benefit from this tip, whether a visual, auditory, reading, or kinesthetic learner.

Achieving Balance: All Hands

A restaurant or bar doesn’t achieve success due to the efforts of a single person. So, why do so many concepts maintain silos?

When Chef Duffy prices a menu, he doesn’t do so alone. Rather, he involves the owner (or owners) of the business, the kitchen manager, and the head chef.

The word “culture” is thrown around a lot these days, nearly to the point that the word has lost its meaning. An operator who truly wants to build a positive work and brand culture needs buy-in from their team. A great way to not achieve that is to avoid transparency.

So, share numbers with the appropriate parties. A head chef needs to know the kitchen’s numbers if they ever hope to achieve the title “executive chef.” The leader who oversees the kitchen team can’t do their job effectively if they don’t know what the kitchen costs the business and what revenue it generates.

And a team that doesn’t feel trusted or appreciatedand that there’s no opportunity to develop as a hospitality professional to grow in this industry—is one that won’t hesitate to leave for better employment.

To that end, Chef Duffy strongly recommends that operators spend an hour per week with each kitchen team member. After all, as Chef Duffy pointed out, if an operator’s vision isn’t being executed, they have only themselves to blame.

An operator can’t expect to achieve consistency without working to achieve balance. Without consistency, a sustainable, scalable business is unachievable.

Image: Shutterstock. Disclaimer: This image was generated by an Artificial Intelligence (AI) system.

Bar Nightclub Pub Brewery Menu Development Drinks Food

by David Klemt David Klemt No Comments

KRG Releases 2024 Start-Up Guide

KRG Hospitality Releases 2024 Restaurant Start-Up Cost Guide

by David Klemt

2024 KRG Hospitality Start-up Costs Guide

KRG HOSPITALITY RELEASES SIXTH ANNUAL RESTAURANT START-UP COST GUIDE

Toronto-based hospitality industry consulting firm with offices in key markets throughout Canada and the United States of America unveils their latest restaurant cost guide and interactive hospitality calculator.

December 21, 2024 (TORONTO)—Today, KRG Hospitality releases their 2024 Bar & Restaurant Start-up Costs Guide, which is free to download. The Toronto-based consulting firm specializes in startup restaurant and bar projects along with boutique hotels, experiential concepts, and entertainment venues. KRG Hospitality’s American headquarters is located in Las Vegas, Nevada.

For the past six years KRG has researched, reviewed, and published the annual start-up cost guide, one of the industry’s leading resources dedicated to restaurant project costing.

And each year this informative and transparent guide is used as a trusted budgeting tool by developers, lenders, contractors, consultants, and aspiring restaurateurs. The guide is founded upon KRG Hospitality’s proprietary database of previous project costs, which includes project data from restaurants, bars, and cafes developed over the past 24 months.

Further, this annual KRG Hospitality guide also includes the interactive KRG Hospitality Calculator, which is updated for 2024.

The costs to start a restaurant have been on a steady rise over the past six years. Major drivers are increases in inflation, interest, labor, construction, and equipment. Of course, there are also the unique materials required to deliver a scalable, sustainable, memorable, profitable, and consistent on-premise, off-premise, or hybrid-style concept.

Drawing upon this comprehensive guide, an industry-leading expert has analyzed the information and provided a succinct and user-friendly summary of the findings for each major start-up category. This isn’t simply a couple of pages identifying a few costs. Rather, the sixth annual guide is a deep dive that provides real insight into what to expect in 2024.

The guide is available now as a free download via this link.

About KRG Hospitality

KRG Hospitality is a storied and respected agency with proven success over the past decade, delivering exceptional and award-winning concepts throughout a variety of markets found within Canada, the United States, and abroad since 2009. Specializing in startups, KRG is known for originality and innovation, rejecting cookie-cutter approaches to client projects. The agency provides clients with a clear framework tailored to their specific projects, helping to realize their vision for a scalable, sustainable, profitable, memorable, and consistent business. Learn more at KRGHospitality.com. Connect with KRG Hospitality and the Bar Hacks podcast on social: KRG Twitter, Bar Hacks Twitter, KRG Media Twitter, KRG LinkedIn.

Disclaimer

While using this guide helps develop a rough preliminary financial and strategic milestone plan, it is strongly recommended that you seek professional expert advice to provide you with a more precise, project specific estimate as each concept and market will be slightly different. KRG Hospitality Inc. is not responsible for any project that is not currently under contract within the company.

Image: KRG Hospitality

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by David Klemt David Klemt No Comments

Restaurant Fees Facing FTC Scrutiny

Restaurant Fees Facing FTC Scrutiny

by David Klemt

The Federal Trade Commission Building in Washington, DC

The focus on rising costs and hidden or “junk” fees over the past few years is bringing the Federal Trade Commission’s attention to the restaurant space.

Really, it was only a matter of time. Consumers are quite clearly fed up with being hit with unexpected fees. Whether purchasing concert tickets or popping into a QSR for a quick bite, they’re over the perceived nickel and diming.

That’s to say nothing of the other businesses that consumers feel are going too far with fees.

However, much of the public conversation about junk fees revolves around restaurants, and in some instances bars, as well. A common refrain on social media and online communities is, to paraphrase, “Just tell tell us what it costs on the menu!”

Of course, there are consumers who don’t want businesses to raise their prices at all. There’s no reasoning with these people, and they see all increases and fees—even those that aren’t hidden or bogus—as ripoffs.

But there are those who understand the challenges operators are facing. Understandably, these people just want transparency. And they want to have a clear idea of what it will cost to dine and drink somewhere before they plan their visit or are handed their check.

These consumers now have allies in state and federal governments.

FTC Focuses In

Some people may be surprised to learn that the FTC’s focus on junk fees isn’t entirely new. In fact, the agency has been digging into this topic for nearly a year.

Last November, the FTC asked for the public for their opinions on deceptive and unfair practices. Specifically, practices that relate to junk fees. Per the FTC, American consumers are paying tens of billions of dollars in junk fees annually.

According to the agency, they received 12,000 comments.

Now, with the support of the White House, one would assume, the FTC is asking for public input again. This time, the agency is seeking comments about a rule their proposing to address junk fees.

Last week, both the White House and FTC proposed rules that will make it mandatory for businesses to disclose all fees up front. Additionally, the White House wants to curtail “excessive” bank fees for basic services.

Put simply, the FTC’s proposal will ban hidden fees, require transparency regarding all fees, and allow the agency to impose penalties.

And now, after zeroing in on airlines, landlords, utilities, entertainment, and banking, the FTC is looking at hospitality.

Restaurants Under Scrutiny

As they did in November of last year, the FTC is once again asking for the public to comment on fees. This time, however, restaurants have been included by the agency.

To be sure, this focus isn’t exactly new. Washington, DC, for example has addressed junk fees in the restaurant space. As with other jurisdictions that have tackled this topic, restaurants must be conspicuous and make guests aware of all fees before their checks arrive. Additionally, operators must be clear about their intended use for fees.

In Washington, DC, a violation of these rules can lead to a $5,000 fine for a first-time offense. That penalty can rise to $10,000 for additional violations.

California has also passed Senate Bill 478, signed into law by Governor Gavin Newsom. This law, which also targets hidden fees, takes effect on July 1, 2024.

Most likely, the FTC is seeking comment to make adjustments to their proposed junk fee rule in order to include restaurants. From what I’ve seen, restaurant delivery fees in particular are drawing the ire of consumers and attention of state and federal agencies.

“All too often, Americans are plagued with unexpected and unnecessary fees they can’t escape. These junk fees now cost Americans tens of billions of dollars per year—money that corporations are extracting from working families just because they can,” says Lina M. Khan, FTC Chair.

Consumers will have 60 days to submit their comments to the FTC.

Takeaway

Proactive operators who haven’t already done so should make their in-person dining and delivery fees obvious.

Best practices for fee transparency include highlighting them on menus; announcing them via table tents or talkers; including fees on websites; and including a notice or disclaimer on reservation pages.

However, operators should avoid viewing being transparent about fees through a lens of compliance. Rather, being clear and upfront with guests is just good business. In fact, it’s in keeping with the spirit of hospitality and service.

If the final experience a guest has with a restaurant is being unpleasantly surprised by their check due to junk fees, how should be expected to respond? Their perception of the venue or brand will plummet, and they won’t return. How long can a restaurant sustain that guest reaction before the damage is irreparable and an operator has to close their doors?

Operators are being asked to thread a needle every day. Costs are rising and there are only so many solutions available to most operators that can keep their doors open, keep guests and staff happy, and pull the business toward long-term success.

To be clear, fees are generally fine—if consumers feel they know what to expect ahead of their visit. Nobody wants to be surprised, and that shouldn’t be difficult to understand.

So, operators need to be transparent about fees. They need to consider dynamic pricing for menus. That requires an absolute understanding of costs, guest tolerances for pricing, and the market.

The payoff, however, is happier guests who are far more likely to return for in-person dining and to place delivery or takeout orders. Savvy operators will put the work in now to get ahead of the junk fee fallout.

Image: Ian Hutchinson on Unsplash

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