PB

Increase
F&B
Sales
Secrets to Boost Profits
(Targeted at F&B Operators and Managers)
By
Eric Alagan
Micro Mouse Business Series
LCA Consultants Pte Ltd
Singapore

First Published April 2011
Published by:
LCA Consultants Pte Ltd
(Company Registration No. 201008768Z)
No1, Jalan Ulu Sembawang
The Sensoria, # 05-11
Singapore 758930
WWW.LCABOOKS.COM
ISBN 978-981-08-7714-9
Copyright @ 2011 by Eric Alagan
Cover artwork @ 2011 by Eric Alagan
Typeset and Cover design by : Rank Books
Printed in Singapore
This book is an original work by the author. All Rights Reserved. No part of this
publication may be reproduced, stored in a retrieval system, or transmitted, in
any form or by any means, electronic, mechanical, photocopying, recording or
otherwise, without the prior written permission of the copyright owner.
Condition of Sale
This book is sold subject to the condition that it shall not, by way of trade or
otherwise, be lent, resold, hired out or otherwise circulated without the copyright
holders prior consent in any form of binding or cover other than that in which it is
published and without a similar condition including this condition being imposed
on the subsequent purchaser.
Disclaimer
The author and publisher disclaim all liability and responsibility for loss caused to
any person and/or organisation by any act or omission to act directly or indirectly
as a result of material contained in this book.
A CIP catalogue record for this book is available from the National Library Board
of Singapore
National Library Board, Singapore Cataloguing-in-Publication Data
Alagan, Eric,1955
Increase F&B sales :secrets to boost profts / by Eric Alagan. Singapore : LCA Consultants, 2011.
p. cm. (Micro mouse business series)
ISBN : 978-981-08-7714-9 (pbk.)

1. Food service management. 2. Cafeterias Management.
3. Restaurant management. 4. Small business Management. I. Title. II. Series: Micro mouse business
series.
TX911.3.M27
647.95068 -- dc22 OCN702567438

To My Children
Alicia
Adamson
Amelia
Dedication
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About the author
ERIC ALAGAN has more than 35 years of international business
experience in the areas of aerospace MRO, security consultancy and
services, trading and logistics and supply chain. He has held several
progressive positions in multinational corporations and last held the
position of managing director, Asia Pacifc for a European aerospace
company. He has been involved in several green feld start-ups,
mergers and acquisitions.
Eric has managed companies in Singapore and Australia with
extensive experience in ASEAN, the Indian sub-continent and the
Pacifc islands.
He holds several engineering qualifcations, a business degree from
Royal Melbourne Institute of Technology and a masters degree in
logistics and supply chain from University South Australia.
He currently undertakes business consultancy work, writes novels
and self-help books for entrepreneurs under the Micro Mouse
Business Series.
The frst two titles released in 2011 are:
1. Staff Selection Secrets to Employ the Best People
This book targets micro businesses, entrepreneurs and those
interested in Human Resource.
2. Increase F&B Sales Secrets to Boost Profts
This book targets existing cafes, restaurants and F&B start-ups.
Eric has also written a novel, COFFEE SHOP, A Business Thriller Set in
Singapore. Weaved into the plot is a business plan based on detailed
research that Eric undertook. Coffee Shop is available in all major
bookstores in Singapore.
Eric is married to Lisa Chew and they have three adult children
pursuing business and medicine.
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preface
Increase F&B Sales targets cafes, restaurants and other micro enterprises in
the Food and Beverage (F&B) sector.
There are various defnitions for micro enterprises but the commonly
accepted is any business that has 2 to 9 people with a turnover of under
$2 million.
Hence, many of the ideas and concepts are also applicable to food courts,
coffee shops and even hawker stalls.
Micro Mouse Business Series a play of words based on the famous Mighty
Mouse, an animation superhero created by Terrytoons for 20th Century
Fox. In that cartoon a mouse beats all the big boys, normally portrayed as
cats. Therefore, this series of self-help management books hopes micro
enterprises can hold their own against the fat cats of industry.
The Series draws on the experiences and observations of the author and
presents suggestions on increasing sales in F&B outlets without raising
prices, reducing portions or lowering quality. This book provides a series
of simple steps to achieve measureable targets.
However, you should always rely on your own independent professional
advice, judgment and preferences. No warranties, assurances, guarantees
or representations about the accuracy, reliability, timeliness or otherwise of
the information contained in this book can be given or to be construed.
To the full extent permitted by law, LCA Consultants Pte Ltd and/or the
author shall not be liable (including liability for any form of negligence,
errors or omissions) for any loss or damage arising out of your use of this
book.
You must always consider the appropriateness of the information in this
book (as expressed explicitly or implicitly) to your relevant circumstances.
By buying this book, you have agreed to the above terms.
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A PHOTO FINISH WIN
I once played a video clip of a closely run 100 meters dash to a
group of executives and asked if they could identify the winner.
They could not, so I replayed that video and this time some of
them made a few guesses but there was no consensus about who
actually nosed the tape frst. I replayed it but this time took it
frame-by-frame and everyone saw the winner.
Competing in the business world is like that. You do not have to
win by a mile. Put another way, you do not need a 100 great ideas
because most of that 100 had already been thought of, practiced
by your competitors. You too probably know most of them.
What you need is one or two ideas no one else had thought of or
exploited.
I hope and wish you could fnd one or two such ideas from the
dozens contained in this book.
All you need is a fraction of a second that nose length to win.
Eric Alagan
For the sake of expedience, throughout the book, the author
uses male/female genders interchangeably and where he
mentions a male, it refers to a female and vice versa.
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Employee Capability Factor Do you know what that means?
How do you identify an employees Capability Factor, How do you
determine your teams Capability Factor, How do you maintain or
better still improve your teams Capability Factor.
These are some of the questions that Staff Selection addresses.
The book assumes no prior knowledge or training in Human Resource
and takes you by the hand to develop your very own Human Resource
Manual in the process of Staff Recruitment, Selection, Interview
Techniques and Probation.
The book is flled with dozens of worked examples, samples forms
and letters that all you have to do is to simply insert your company
letterhead and use.
There are models and tables that help to identify and evaluate not
only the Hard Skills, but the elusive Soft Skills.
Whats more, the models allow you to incorporate your opinions,
values and views about whats important to you the employer.
Get the best people but what do you mean by best? How do you
decide between loyalty and diligence, between punctuality and
product knowledge, between a person who has great customer
relations but makes many mistakes? The book allows you to compare
durians with rambutans your defnition of best.
DEBUT SELF HELP BOOK BY ERIC ALAGAN
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Consistency how do you ensure that a person employed today is
good as or better than someone you employed 6 months ago? The
book shows you how using simple, numeric models.
Return on Investment and Cash Flow Budgets. How do you determine
the ROI when employing additional head count?
Staff Selections contains simple models to develop Cash Flow Budgets
and Return on Investment. For those HR people and entrepreneurs
who do not have a fnancial background.
These are some of the hard, hands on and practical questions that
befuddle some of us. These are exactly the type of questions Staff
Selection addresses.
How much do you need to invest in this book? Much less than
employing a Consultant much less than engaging an Employment
Agency, even much less than a dinner.

I guarantee that youll not regret it. You see, Ill be releasing up to 12
business books over the next few years. If I disappoint with this frst
book wholl buy my subsequent 11?
Why waste money creating opportunities seize opportunities when
they appear Sun Tze, Chapter 4,
Retail Price $49.50
Buy Direct from Publisher LCA Consultants Pte Ltd
Call: 9786 1964, 6365 1464
SMS: Staff Selection <Name> space <Email> 9786 1964

Email: SALES@LCABOOKS.COM
Price $29.50
Includes Free Delivery Within Singapore
C.O.D
No GST
(Price subject to change w/o notice)
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A NOVEL BY ERIC ALAGAN
(pen name Daniel Ellsworth)
This business thriller set in Singapore provides insights of the
Asian corporate world behind the squeaky-clean image of
Singapore.
Roy, scion of a well-connected family, rapes and kills Edwins
teenage sweetheart. Edwin, son of a domestic help, hides
his pain, grows up and starts anew with Lucy. Roy stalks,
engineers Edwins dismissal. At age ffty-four, Edwin, now
unemployable in a country that worships youth, establishes
a coffee shop chain. Roy engineers a hostile takeover of the
chain. Read how Edwin prevails.
At another level, the novel alludes to how suspected Thaksin
money fows into Singapore and is subsequently cleaned
when a large investor steps in. The author draws on his
international business experiences and portrays the business
practices, cultural norms and negotiating styles of Thai,
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Indian and Singaporean business people. He captures the
casual vibrancy of the Indian businessmen that belies their
sharp business acumen. In contrast, the Thais are formal and
courteous but no less ruthless. It also highlights how local
family owned businesses subordinate optimal decisions in
deference to family interests.
Whether you are a casual reader, a romantic, an experienced
professional, a seasoned entrepreneur or a politician
accustomed to deals and double crosses, Coffee Shop will
not disappoint you.
COFFEE SHOP - A Business Thriller set in Singapore
Paperback, 429 pages, LCA Books
Call: 9786 1964, 6365 1464
SMS: Coffee Shop <Name> space <Email> 9786 1964
Email: SALES@LCABOOKS.COM
Price $25.00
C.O.D
No GST
Includes Free Delivery Within Singapore
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contents
Chapter 1 Introduction
1.1 F&B Manual
1.2 Life Cycle of Business
1.3 Anecdotal Overview
1.4 Start with Basics not End with Basics
1.5 Time Required to Recover Your Current Situation
1.6 The Givens
1.7 The Key, Mothers Cooking
Chapter 2 Evaluate Current Situation
2.1 Quality of Location
2.2 Rental Cost
2.3 Proft & Loss Statement
Chapter 3 Determine Which Item Generates the Most Proft
3.1 Unit Cost and Proft
3.2 Cost of Labour and Leasehold
Chapter 4 Factors that Limit Sales/Proft Growth
4.1 Limiting Factors Overview
4.2 Limiting Factor Operating Times
4.3 Limiting Factor Meal Times & Table Sales
4.4 Limiting Factor Dining Area & Furniture
4.5 Limiting Factor Kitchen Area
Chapter 5 Determine Current Sales vs. Potential Sales
Chapter 6 Kitchen Loading & Waiting Time
6.1 Shortest Waiting Time & First-Come-First
6.2 On-the-Spot Promotions
6.3 First Start First
6.4 Longest Start First
6.5 First Start First vs. Longest Start First Methods
6.6 Why Meals Have To Arrive Together
Chapter 7 Communication
7.1 STAFF SELECTION by Eric Alagan
7.2 Verbal & Non-Verbal Communication
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7.3 Presentation Dressing & Mannerism
Chapter 8 Mistakes & Accidents Recovery
8.1 The Key
8.2 Possible Recovery Actions
8.3 Determine Root Cause
8.4 Scenario Chart
Chapter 9 Staffng
9.1 Part Timers
9.2 Financial Benefts of Employing Part-Timers
9.3 Other Benefts of Employing Part-Timers
9.4 Multi-Tasking
9.5 Staff Retention and Sales
9.6 Pairing Waitstaff and Customers
9.7 Determine Potential Number of Regular Customers
Chapter 10 Sales Strategy
10.1 Sun Tzes Strategy
10.2 Review of Preparations to Date
10.3 Overview of Method
10.4 Preliminary Budget for 6-Week Period
10.5 Sales Target
10.6 Target Market
Chapter 11 Action Plan
11.1 The Ten Action Plan
11.2 Controls on the Ten-Action Plan
11.3 Walk-In Customers
Chapter 12 Budget and Controls
12.1 Recover the Promotion Cost
12.2 Recover Advertisement Cost and Calculate BEP
12.3 Scenario with 1-for-4 Promotion
12.4 Tweaking Advertisement Cost
12.5 Growing the Business
12.6 Monitor and Control
Chapter 13 Conclusion & Review
List of Examples
List Tables
Abbreviations
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1
Increase F&B Sales Chapter 1: Introduction
Introduction
Chapt er
1
One report says that more than 90% of all businesses in
Singapore are one-man-operations (OMO) and/or micro
enterprises (defned as one with 2 to 9 people with a turnover
of less than $2 million per annum).
Many micro businesses are in the food and beverage (F&B)
industry, though the nature of the F&B operations makes it
unlikely to be an OMO.
This book targets the retail level of the F&B industry,
encompassing small cafes, coffee shops and even
restaurants. Much of the information will also be useful for
hawker stalls. Therefore, the term F&B used in this book refers
primarily to cafes, coffee shops and boutique restaurants.
Nevertheless, larger organizations and even restaurant chains
might fnd some of the snippets useful.
This book addresses the all-consuming issue How to
increase sales?
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Increase F&B Sales Chapter 1: Introduction
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Increase F&B Sales Chapter 1: Introduction
The market is fooded with thick academic books
expounding theories behind marketing and sales. These
books have their uses, but quite useless for the humble
operator of a coffee shop or even a boutique restaurant.
There are also many self-help books but these usually skew
towards small and medium enterprises (SME) businesses
with fxed assets not exceeding $15 million, a workforce of
less than 200 people and a turnover of $2 million and more.
Moreover many of the books available in the local bookstores
are foreign publications and of limited value to the local
entrepreneur operating in Singapores unique environment,
opportunities and challenges.
This book hopes to fll that void. It presents an easy to read
format with a systematic process that points you towards
increasing sales. It also allows leeway to accommodate your
personal preferences and situation.
1.1 F&B Manual
This book will help you to develop a comprehensive manual
tailored for your particular operation. Henceforth, we shall
refer to it as F&B Manual in bold.
This F&B Manual will contain all the fnancial computations,
tables, forms and samples you would ordinarily require for
your business.
This F&B Manual would be fexible enough for you to modify
and expand as your business grows. This will also help in the
training and orientation of your employees. It would form a
solid foundation to build up your procedures and policies.
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Increase F&B Sales Chapter 1: Introduction
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Increase F&B Sales Chapter 1: Introduction
This book will take you through the steps to develop your
very own F&B Manual. Please pay attention whenever
you come across the icon . It means you need to add
another piece of the jig saw to completing your very own in-
house F&B manual.
But there is one major challenge for you. It calls for a radical
change in your mind-set. For one very simple reason: How
do you stand out if you insist on following the herd?
1.2 Life Cycle of Business
The above is a typical life cycle graph used to chart sales
and product life cycles. It is my believe that all businesses,
products, sales and even the performance of staff can be
shadowed by the life cycle graph.
Briefy, product or business life cycles go through four
phases:
1. Introduction business start-up (sorting out problems,
create market awareness)
1 2 3 4
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F&B
Manual
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Increase F&B Sales Chapter 1: Introduction
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Increase F&B Sales Chapter 1: Introduction
2. Growth phenomenal growth in sales (Phase 2 above)
3. Maturity sales fattens out (doing more of the same) and
competition bites in
4. Decline unless new products/services introduced and
business re-invented
You know best, which phase your business is in. As noted
above, if you are in the Growth Phase, you probably do not
need this book.
It is impossible to replicate a specifc situation that fts
any one operation, unless of course we study/evaluate that
particular F&B operation. Therefore, throughout this book,
I shall use basic examples and draw fctitious scenarios. The
purpose is to provide you with ideas and models you can
adapt to your particular situation.
For example, I had used a seating capacity of ten tables (as
in table & chairs) as a guide but your establishment might
accommodate twenty; four chefs but you might have two
chefs, ten operating hours versus your twelve hours and so
forth.
In Chapter 12, Budgets & Control, the examples show a
break-even-point (BEP) of fve weeks but your situation might
throw up longer or shorter BEP.
In the tables and examples provided, simply plug in your
numbers.
One fnal word though this book points out a systematic
method for generating sales, no book can guarantee success.
Success, as you know, depends on many ingredients the
method contain herein provides one condiment.
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Increase F&B Sales Chapter 1: Introduction
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Increase F&B Sales Chapter 1: Introduction
1.3 Anecdotal Overview
I recently enjoyed my best Christmas lunch ever in a 5-star
hotel restaurant. The food and presentation was excellent,
the ambiance enchanting and the waitstaff attentive. Even
the crockery and cutlery were exquisite. To top it all off, the
price was extremely reasonable with a bottle of Champagne,
the 5-course lunch for two was about $230.00.
But even with a full time marketing department, the 150-
seater restaurant had only seven diners!
So, for those of you F&B operators lamenting the empty seats
in your outlets take heart as even the professionals get it
wrong!
1.4 Start with Basics not End with Basics
Many people plunge into the F&B industry with scarcely any
thought about marketing and sales. They think
(i) They (or their partners) are good cooks as all their friends
and relatives have commented favourably;
(ii) The location is great because they know or a friend in
marketing has told them that location is the key;
(iii) The rent seems reasonable; and
(iv) The list goes on.
So when people (even executives) lose their jobs; do not want
to work for others; do not want to drive taxis or fnd other
alternative employment they think hawking or food stalls is
a convenient fall back option. They are convinced they can
do better than the hawkers and caf operators. Occasionally
the media reports that professionals, managers, executives
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Increase F&B Sales Chapter 1: Introduction
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Increase F&B Sales Chapter 1: Introduction
and technicians (PMET) who had taken the plunge and seem
to be doing very well.
It is a cinch! On the other hand, is it?
More than 80% of new businesses collapse within 5 years. I
believe more than 80% of new F&B businesses fold up within
2 years if not sooner.
There may be another group of F&B people: those already
doing well and seeking tips to improve; those simply carrying
on the family F&B business and want to do better; and yet
others (the cleverer or more cautious ones) who are toying
with the idea of taking the plunge but want to learn as much
as possible upfront.
1.5 Time Required to Recover Your Current
Situation
Whichever category you fall under, there is time to address
the situation.
Obviously, the more time and staying power you have the
better your chances. Each businesspersons situation varies
and this book will help you to determine the time.
For a given situation, it could be anything up to 3 months to
realize the ideas contained in this book, provided you start
now.
In the fctitious F&B outlet we use in all the examples in this
book, it takes 10 weeks. How long it actually takes depends
on several criteria:
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Increase F&B Sales Chapter 1: Introduction
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Increase F&B Sales Chapter 1: Introduction
1. How good your record keeping is this is key.
2. How motivated and hardworking the owners/operators
of the target F&B are.
3. What the current situation is in the target F&B.
0
F&B
Manual
Step 1 to build F&B Manual Generate a simple
Gantt Chart (Target Week 1)
The top row gives the weeks 1, 2, 3 and so forth. The cross
in week 1 indicates you should carry out Step 1 in week one.
1.6 The Givens
First, let us catch the real reason most F&B outlets fail.
Contrary to what your friends and relatives said about your
excellent cooking and what your marketing friend said about
location mind you they are all right it is about not only the
food, location or even affordability of the rental expenses.
These are all givens.
What do I mean by givens?
To put it simply, if you are racing in F1 it is a given that you
have a fast car, a technical team and lots of money; if you
are operating a taxi it is a given you have a vocational (taxi)
license and so forth.
Step One: Simple Gantt Chart to Plan Target Dates
1 2 3 4 5 6 7 8 9
Step 1 - Generate a simple Gantt Chart
x
Step 2 -
Step 3 -
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Increase F&B Sales Chapter 1: Introduction
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Increase F&B Sales Chapter 1: Introduction
Having all the givens such as good food, excellent service,
convenient location and etcetera does not guarantee success.
1.7 The Key Mothers Cooking
It has everything to do with your customer and more
accurately the customers needs, wants, habits and comfort
zones.
Nice words but what does all this mean and more
importantly what is the relationship and relevance to your
business?
That is a good question. Perhaps we can approach it another
way.
Do you like your mothers cooking?
Chances are most people will say yes. Do you realize almost
everyones mother cooks the best food?
I have visited friends, relatives and frankly, some of their
mothers cooking sucks but their families swear by it. So
what do you do? You compliment your friend or relatives
mother/wife on her cooking. The myth propagates perhaps.
But the husband and children are not simply being
nice to their wife/mother. They are sincere with their
compliments.
Why is this?
Because the style of cooking you adore is an acquired
taste. Taste is habit forming and it creates needs, wants
and most importantly evokes comfort zones.
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Increase F&B Sales Chapter 1: Introduction
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Increase F&B Sales Chapter 1: Introduction
To increase your sales you need to create these emotions
(needs, wants, habits and comfort zones) within your
customers so they keep coming back and more importantly
bring their friends along, widening your net.
Repeat visits help build habits and comfort zones makes
your food taste like mothers cooking.
How do you accomplish this?
Well that is what this book shall attempt to address.
Step 2 to build F&B Manual Grade the Givens
(Target Week 1)
Determine the current situation of the Givens this is highly
subjective and a start point for you. Place this table in a folder
your F&B Manual.
0
F&B
Manual
Graded by: Date:
Excellent V Good Good Fair Poor
Quality of Food
Quality of Beverages
Presentation of Meals
Service Quality
Covenience of Location
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Increase F&B Sales Chapter 1: Introduction
Summary
Quality food and service, good location and
affordable costs are givens and do not by
themselves provide any unique competitive
advantage.
The key is to help the customer acquire a taste for
your offerings and build habits and comfort zones.
You do this by enticing repeat visits until the
customers love your food as much as their mothers
cooking.
This sounds simple and the rest of the book
takes you step-by-step on how to attain this, thus
generating higher sales.