People, Process, Products

In October, we discussed the process of conceptualizing your foodservice enterprise by reviewing the market, location, and concept components and how they fit together. This month, we are discussing what’s next in the development process: planning profits, people, and processes. Similar to before, we will review these pieces individually and how they’re interconnected.

Plan for Profit: Business—any and every—exist to make money. If your foodservice enterprise isn’t planned to make penny, the chances of success and sustainability are slim. Thus, we have to start with the financials. Once you’ve determined your concept, market, and location, you must take a closer look at your budget.

Budgeting begins with determining the following:

  1. Capital Budget: based on the three pillars, you should be able to estimate the necessary capital required for construction and startup.
  2. Revenue: you will need to model the following:
    1. Product Prices: Based on your concept, market, and location, determine the range of prices you will charge for your products
    2. Number of Transactions per hour: you should take traffic count from similar concepts near your desired location to determine an estimated transaction count
    3. Product Sales: based on your traffic counts, estimate the sales of each product per transaction
    4. Average Check: use the prices, transactions, and sales to determine average check
  3. Recipe Costing: during menu development, it is absolutely necessary to cost your recipes to ensure that the product, price, and profit potential are aligned.
  4. Labor: this is the second piece of this puzzle, and is further discussed below.
  5. Expenses: Evaluate your location and concept to determine approximately what your expenses will be.

Plan your People: Next, it is important to determine what your labor needs will be. In a previous Enterprise Insight, we discussed labor costs at length. Just as in that discussion, it is important to plan ahead for your labor needs with an eye to costs, as per planning for profit.

Additionally, though, developing your talent pipeline has as much to do with culture as it does your profit and loss statement. When hiring for a new location—whether it’s the first or fifth—ensure that the team is going to fully embrace, embody, and deliver the brand and what your company stands for. Hire slowly and intentionally, and plan ahead for the needs of the organizational structure.

Plan your Processes: Equally as important as your people and profits is your process—you need to know how things will operate in order to maximize both people and profits. Thus, this piece needs to be considered at the same time as the previous two, because it is systemic.

For example, if you own a bakery, you need to understand how and when your baked goods will be restocked. This decision is both tied to and will drive the people and profit portions—not enough staff and you won’t be able to restock in a timely manner, and sales will suffer. Or, you might have too much staff, which can drive sales, but may overrun your labor budget.

All in all, this gives a snapshot of how the different components of the development process are interconnected.