pressure?
Jeff and Tina,
Period 9 p&l shows a -33,102 loss for Pasta Bravo. At 23,908 average sales, I think we have our expected sales level at this store for awhile. School may add a couple thousand per week, but recent sales figures suggest that still isn’t going to change overall WPRA.
We ran 59.33 labor without Lenny. 33.77 on food cost. Net income before depreciation and amortization was negative $28,679. Here are a few points I want you to consider and then some steps that I need you to support as we move closer to making this store work.
- Industry average for fast casual labor is around 32%. At 36% we would have to run $39,404 per week to achieve this at your current labor number. Since we never pro-forma’d this unit at that sales figure, we would be missing sales by a long shot even if sales were not an issue. Even adding another 16,000 per period and not another dollar on labor would leave us with 49% labor.
- We have cut hours but we are still far from being able to consider this a progressive strategy. In some ways we are losing ground. We all get paid to solve problems. This is a big one and we aren’t reacting to a level I know we are capable of.
- Food cost should come in at market. I know there are problems associated with volume and other issues such as the lasagna pans that PHI has not solved as yet. We need to push forward to solve these and not wait for direction from PHI. Work with them, but until they start paying our bills, they are consultants not partners. We will thank them for advice and then proceed with what we feel is best for our business. We need to be reasonable, but we need to be creative in solving these food cost issues. Break down the reasons for the high costs, isolate corrective steps, execute and follow up. It is hard work, but it is a simple formula.
Regardless of any future sales bump from College or other events, we are at the point where reality must be addressed. Effective with your next schedule, you need to write your labor to hit no more than 40% labor fully loaded. Period 12 must be reduced to 38%. You will need to manage it hourly to make sure you aren’t losing customer service along with reducing labor. I think you can do it if all of your management team understands what is at stake. Running labor this high is not good for anyone. No one’s job is on the line - I shouldn’t even have to say that - but I know that will worm it’s way into someone’s brain so I’ll just mention that up front. However, if labor can’t be reduced, then we will have to make cut-backs which may involve moving high paid people out of the store to other locations. That, of course, will make the burden heavier on the remaining management. I think you need all of your team there to make this successful, but we have to react now. Those hours are there, finding them is what you do and you can do it. If we don’t move on it now, any decisions that we will be forced to make (and we will make them) will be on our hands.
Write your schedule to 40%. Manage it daily to make sure you come in on schedule. No exceptions. I’m happy to discuss it with you, but I only want to talk about it after you have written it and have at least one week of experience. It also shouldn’t have to be said, but I’ll add one more point.
I am committed to this project. I championed this restaurant against the advice of the shareholders and several within Pizza Hut. I authorized a platinum level budget for training and building the restaurant. I have never been more proud of an opening team than I was with all of you. In many ways, I am your biggest fan. However, we will celebrate the success of this restaurant only when we can get it to a level that makes financial sense. I’m not talking about making a ton of money right now but we should at least be keeping up with the rest of the market. No one is better equipped to get it there than you and your team. Let’s focus on what we must do and keep all of our energies on why this can work. Perhaps I could drive you to financial success but I doubt it. In any event, it would be much more pleasant, rewarding and permanent if you took the position of leading us there. I realize none of this long e-mail comes as any surprise. The point of this e-mail is to make it clear that we are past the point of “wait and see”. We need to get on it TODAY!
Thanks.
Period 9 p&l shows a -33,102 loss for Pasta Bravo. At 23,908 average sales, I think we have our expected sales level at this store for awhile. School may add a couple thousand per week, but recent sales figures suggest that still isn’t going to change overall WPRA.
We ran 59.33 labor without Lenny. 33.77 on food cost. Net income before depreciation and amortization was negative $28,679. Here are a few points I want you to consider and then some steps that I need you to support as we move closer to making this store work.
- Industry average for fast casual labor is around 32%. At 36% we would have to run $39,404 per week to achieve this at your current labor number. Since we never pro-forma’d this unit at that sales figure, we would be missing sales by a long shot even if sales were not an issue. Even adding another 16,000 per period and not another dollar on labor would leave us with 49% labor.
- We have cut hours but we are still far from being able to consider this a progressive strategy. In some ways we are losing ground. We all get paid to solve problems. This is a big one and we aren’t reacting to a level I know we are capable of.
- Food cost should come in at market. I know there are problems associated with volume and other issues such as the lasagna pans that PHI has not solved as yet. We need to push forward to solve these and not wait for direction from PHI. Work with them, but until they start paying our bills, they are consultants not partners. We will thank them for advice and then proceed with what we feel is best for our business. We need to be reasonable, but we need to be creative in solving these food cost issues. Break down the reasons for the high costs, isolate corrective steps, execute and follow up. It is hard work, but it is a simple formula.
Regardless of any future sales bump from College or other events, we are at the point where reality must be addressed. Effective with your next schedule, you need to write your labor to hit no more than 40% labor fully loaded. Period 12 must be reduced to 38%. You will need to manage it hourly to make sure you aren’t losing customer service along with reducing labor. I think you can do it if all of your management team understands what is at stake. Running labor this high is not good for anyone. No one’s job is on the line - I shouldn’t even have to say that - but I know that will worm it’s way into someone’s brain so I’ll just mention that up front. However, if labor can’t be reduced, then we will have to make cut-backs which may involve moving high paid people out of the store to other locations. That, of course, will make the burden heavier on the remaining management. I think you need all of your team there to make this successful, but we have to react now. Those hours are there, finding them is what you do and you can do it. If we don’t move on it now, any decisions that we will be forced to make (and we will make them) will be on our hands.
Write your schedule to 40%. Manage it daily to make sure you come in on schedule. No exceptions. I’m happy to discuss it with you, but I only want to talk about it after you have written it and have at least one week of experience. It also shouldn’t have to be said, but I’ll add one more point.
I am committed to this project. I championed this restaurant against the advice of the shareholders and several within Pizza Hut. I authorized a platinum level budget for training and building the restaurant. I have never been more proud of an opening team than I was with all of you. In many ways, I am your biggest fan. However, we will celebrate the success of this restaurant only when we can get it to a level that makes financial sense. I’m not talking about making a ton of money right now but we should at least be keeping up with the rest of the market. No one is better equipped to get it there than you and your team. Let’s focus on what we must do and keep all of our energies on why this can work. Perhaps I could drive you to financial success but I doubt it. In any event, it would be much more pleasant, rewarding and permanent if you took the position of leading us there. I realize none of this long e-mail comes as any surprise. The point of this e-mail is to make it clear that we are past the point of “wait and see”. We need to get on it TODAY!
Thanks.