If convenience-store retailers take an accurate audit and find big variances, where can they look in aiming to reduce margin leakage?
Consultant Liza Salaria, merchandising and foodservice practice lead at Chicago-based W. Capra, speaking at CSP’s C-Store Foodservice Forum in Schaumburg, Illinois, took a deep dive into unknown losses and known losses, the latter of which she discussed here.
Talking about unknown losses at the event June 19, she said, “Audit shortages feel like we are chasing ghosts.”
If there is high audit variance with an unknown (food audit) loss, Salaria said to confirm the variance is real. This is done by counting correctly and making sure costs and recipes are correct in one’s price book.
- Related stories:
Prevent convenience-store margin leakage by collecting data on waste, refining dayparts
Controlling costs will help reduce convenience-store margin leakage
Podcast: How convenience stores can fix margin leakage in foodservice
If the counts and values are correct, she said, an audit investigation should include making sure scans are accurate. Scans include voids, open rings, extras and employee drinks.
In addition, a retailer should investigate product yields, recipe compliance (overportioning), receiving (check-in, credits, invoices entered timely) and raw ingredient internal theft.
Confirming the audit is real also involves validating waste and spoilage is captured accurately.
“If you want to know your audits are real, you have to scan out waste and spoilage daily,” she said.
But how does one find unknown losses? Salaria said there are many places to look, and she addressed two common areas.
“Did you know that a spoon size of 2 ounces doesn't actually give you 2 ounces of ingredient?” she asked, adding that water weight is one of several reasons why this occurs.
Salaria said it’s important to consider if the customer sees the act of scooping in process. She worked with a large c-store chain that had a Mexican food concept where customers would line up at a bar, similar to a Chipotle. Salaria said the women serving the food would chat with the customers and give them big scoops.
“They were serving friends," she said.
Later, though, management said the stores weren't making enough margin and were overportioning in stores, so workers would need to start leveling scoops.
Salaria said she thought, “Oh my, this is not going to end well because you’re going to tell this woman she cannot do a heaping scoop of eggs. It was the biggest disaster. I should send this to Harvard as a business case. People quit. People got disgruntled. It was, ‘Corporate’s making us do it,’ and it was, ‘We didn’t understand the psyche of scooping food in front of customers, and the joy and it brought them in that role.’”
The solution, she said: a smaller scoop, “and let them heap it as high as they can. And it was fine. So I learned that year there is a psychological effect among team members about where you scoop," Salaria said.
Cheese in Liners
In another example of unknown loss, Salaria discussed how liquid cheese in liners leads to loss.
While observing in a store and taking pictures of each step in the process of transferring liquid cheese in liners to containers, she saw “so much raw ingredient yield loss from prep to end of life. So what happened was you put it in the bag, you retherm it, you squeeze it out.”
However, if no one scrapes the inside of the liner, she said, losses can mount.
“I intentionally made them do this because I wanted to see how much extra will run out,” she said. “This product sticks to these bags, so I took the bag and I weighed it. We lost 15% yield. If you’re working in a 4-pound bag of cheese, you’re putting 64 ounces in your recipe, you're decrementing at 2 ounces. You’re going to have huge audit shortages, and it’s all about raw ingredient loss.”
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.