Newbie needs guidance

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kojaks43
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Newbie needs guidance

Post by kojaks43 » Sat Aug 04, 2007 8:34 pm

As background, I am on the wrong side of 60, and have been unemployed for 3 years. I can take early social security, and maybe learn to like cat food. I have a friend that insists I open a restaurant. She has a friend that operates one of those Antique "Malls" and wants to have a Tea Room. My friend thinks it would be a marriage made in heaven. However, while I am a reasonably good cook, I have never run a restaurant. My background is in Advertising and Marketing. What I do least well is finding new business for advertising/marketing. Hence, I need something to do.

The "mall" is opened 7 days a week. From 10am to 3pm. Mall gets fair traffic during the day. There are 4-5 modest sized businesses within walking distance. No other restaurants except fast food.

I know I need a POS system. This one looks great. But I have 2 questions.
One is POS related and the other is restaurant related.

I ask the restaurant question here incorrectly, but I have been reading the posts and several users have a background in restaurants...so here is my question: Knowing what you know about operating restaurants, would you advise a novice to open one?

Here is the POS question: What is the difference between Category and Groups? I've read the Register.txt and just cannot get my head wrapped around the two concepts.

Your help will be gratefully appreciated.

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Andrew
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Post by Andrew » Sat Aug 04, 2007 9:18 pm

Hi there, categories are just ways of breaking your items down for sales reports. Groups are a feature which let you group products together for quick selection from the sales screen.

Back in the day, groups were known as the "not a touch-screen" feature, if you've seen most registers at cafes and restaurants, you'd see the staff select a main category by touching a button and then touching a product to add to the sale. In DHPOS' case - we can't support touch screens so Dale introduced the groups feature to do an almost as good job.

Here is one of the original discussions which came about before groups was introduced as a formal feature: http://dhpos.com/discuss/phpBB2/viewtopic.php?t=126
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daleadmin
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Post by daleadmin » Sun Aug 05, 2007 12:18 am

kojaks43,

One of the selling points on opening a restaurant is that your potential customer base is unlimited, everyone eats, otherwise you are dead and no longer a consumer of any kind. The downside is that everyone knows this and therefore there are just piles of places to get some grub. So why would they eat at your place? The only reasons I can think of is that your food is better than most, cheaper than most, or you have a great location. Do any of these reasons apply to your deal?

Andrew is correct in everthing he said, however I have graphics (so there Andrew)

The category thing is all about printing reports to tell you what kind of things you are selling. A merchandise report will tell you which merchandise has been rung up in the register. While this report can be sorted by stock number it is more useful if it is sorted by the type of merchandise, i.e., all the drinks are listed together, all the sandwiches are listed together, all the deserts are listed together, etc. This is why you enter different categories into the program and then assign the stock items to the categories.

"Categories" are helpful when printing reports.

"Groups" is a whole different thing.

The following screen is how most stores ring up a sale.
Image
To ring up an item you enter the stock number (either typed or scanned) for the item into the POS software. This works fine for most stores because all of their items will have either barcodes or price stickers on them that will have the stock numbers printed on them.

However it is usually difficult to get a barcode label to stick to a pile of scrambled eggs. And usually in a restaurant you ring up the food and then go make it, so the food does not actually exist when you are ringing it up. A nonexistant item is even harder to nail with a barcode label.

So in a restaurant you want to ring up items into a sale by picking them off of a menu printed on the screen, like this
Image
This is what the groups feature does. You can even rig it up so that it will display a menu of different types of food (Drinks, Deserts, Sandwhiches, etc.) then when you pick the type of food it will display all the food items in that group for you to pick from.

Its pretty neat-o actually.

Dale

kojaks43
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Post by kojaks43 » Sun Aug 05, 2007 5:24 am

Dale this came from Andrew's link to your 2003 message describing Groups:

A. Drinks
B. Breakfast entrees
C. Lunch entrees
D. Dinner enrties
E. Desert
F. Appitisers
G. Salads
H. Soups
I. Sandwiches

Would a restaurant use these same Group names as Category headers? The report would show total sales by Drinks etc. The Groups would have an additional page line listing specific items for sales selection. Right?

If so, can I ever get a report showing sales of Drinks, BY specific drink. i.e. I'd like to know how many people prefer Coke to Pepsi.

If I can get such a report, which I am reasonably sure I can, why do I need Categories? This is where I have the problem figuring out the difference between Groups and Category.

Dale, Your program is amazing. Even more amazing is you willingness not only to offer it for free, but to also put up with the likes of me asking these questions.

You are the best!

k

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Post by RollerBall » Sun Aug 05, 2007 6:15 am

Categories are the 'natural' way the stock file is set up without thinking or bothering about Groups. It obviously makes sense for a food store to list fresh and frozen foods under different headings, and fruit and vegetables and so on. These headings are the categories into which your stock file is divided and for which several very useful reports can be created. In a store like that, usually you have many hundreds and from my experience, even thousands of products and all are usually scanned in. Even fresh fruit for example, will have a bar code printed on a card next to the till which the operator scans before entering in the quantity purchased.

If you now put yourself in a particular situation, such as a cafe, restaurant or kiosk, the number of products is much, much fewer and by their nature, few if any can be scanned for sale. Try sticking a bar code on an omelette. Also, the 'card by the till' approach can't really work mainly because it's just too dang slow and inconvenient in what is usually a fast moving environment.

So that's why we have Groups. So categories are how your stock file is organised but Groups is a SELLING MECHANISM. From my experience, in a restaurant situation, your Groups are more or less the same as your categories - but not necessarily ... see later :)

This is what I say in my Groups manual.....

DHPOS is very effective in any environment where all of the items sold are scanned in but it can also be used in a restaurant or café where totally the opposite applies. The way this is done is by using a system that is incorporated in DHPOS, called GROUPS. The name is used because it refers to the special way in which the stock file is structured in this type of selling environment.

Here's a shot of the categories taken from an actual restaurant stock file

Image

Now here's how the top of the Starters category looks on the file

Image

Here's a shot showing how the Groups have been set up - note how the line numbers are in increments of 20, but starting at 1

Image


Here's how the Groups menu looks when you're using the system and want to input an order

Image


And finally, here's what Starters actually look like when you select them from the Groups menu

Image

Groups is a great selling mechanism and Dale has done an excellent job with it. But it isn't somehting you can get into without a bit of know-how and experience of how the system works.

Now what was it I said about categories and Groups are usually the same but not always? OK, let's say you have lots of hot starters and lots of cold ones. You might want to make them into separate Groups but they'd still both be in the category Starters. Got it?

BTW - one of the reasons I'll try to help is that I'm the 'wrong' side of 60 too and working with DHPOS has helped me a lot. Just make sure you make the right decisions for the right BUSINESS reasons - don't let your heart rule your head. It's best to to wait and go for the RIGHT opportunity rather than just the first one that comes along or because your friend thinks it's a good idea. You can lose a lot of money that way ;)

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About opening....

Post by FormicaFun » Sun Aug 05, 2007 6:02 pm

kojaks43,

If you love to cook, I encourage you to open a restaurant.... BUT before you do, take a trip to the local health department, and get a copy of the local health code. Use it as a bible. There are alot of rules and regulations about how you operate, store, cook, display, and serve your products. The local heath department will usually have books, or atleast give advice to new food operators. You might even want to try consulting a local community college, most have a cullinary program and the instructors are usually willing to give advice. I wish you all the best in your venture, and don't take my advice as discouragement.

Best of luck,
-Ryan :o)
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kojaks43
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Post by kojaks43 » Tue Aug 07, 2007 10:02 am

RollerBall wrote:
BTW - one of the reasons I'll try to help is that I'm the 'wrong' side of 60 too and working with DHPOS has helped me a lot. Just make sure you make the right decisions for the right BUSINESS reasons - don't let your heart rule your head. It's best to to wait and go for the RIGHT opportunity rather than just the first one that comes along or because your friend thinks it's a good idea. You can lose a lot of money that way ;)
Thanks for the graphics regarding Categories and Groups. I think I got it now.

If I may, I'd like to ask a few questions about restaurants.

The site my friend want me to utilize is in an Antique "Mall" It is an old office space re-purposed as individual antique dealer showrooms. Part of the office space is the old office's kitchen. It contains a refrigerator, toaster oven, sink, microwave and a coffee machine.
Size of Kitchen = 273.52 x $3/sq.ft = $820.56 x .07 (sales tax) = 878.00 total rent.
The landlord controls the money. I only need to use DHPOS to create a sales slip. However, I only have one customer, the landlord. The landlord collects the money from the diner and pays the state the required sales tax. My DHPOS will allow me to know the volume and makeup of the sales. The landlord also keeps 10% of the gross sales. So, if I have gross sales of $3,000 in a month, the landlord get $878 + $300. I get $1,872. Rent seems reasonable. What do you think?

I have to pay cost of goods sold.
Here is another question:
As a guide, how much can I mark-up my cost to arrive at a selling price?
I realize there is no hard and fast rule, but any help and guidance will be appreciated.

thank you,
k

RollerBall
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Post by RollerBall » Tue Aug 07, 2007 6:40 pm

Hmmmmm

You don't mark up - you check locally to see what the market can stand and then price accordingly. Then you buy products and ingredients of the appropriate quality for your target market at the best prices you dang well can. Restaurant margins appear very high - but so can overheads be and there can also be lots of wastage.

I have to say I'm not too encouraged by the set up. You don't seem to have anything like the control over the venture that you should have for a new business. A few questions - who pays for fixtures, fittings and equipment? What are the condition and quality like of what's there already? Remember, if it looks like a soup kitchen you'll attract exactly that kind of customer.... And what about staffing - it's unlikely you'd be able to manage, cook, wait on tables, clean up etc etc all by yourself.

On the other hand if it's a 'no strings' deal that you can walk away from with no notice and no cost to yourself (which is the only way I'd do it) you could have nothing to lose except your time and be able to learn a lot while you're doing it.

But I have to say that to me it seems to be coming at it from the wrong direction. A successful cafe or restaurant usually starts because the owner has an idea, a vision or an image of what they want to create, something different whatever. It's what's called a USP - unique selling proposition, it's what differentiates you from the competition and it's why people choose to come to you. All businesses are demand driven but restaurants are a bit special because by being the way the are (cuisine, style, image etc) they largely create their own demand. I don't see that here - but maybe I'm putting to much of a magnifying glass onto it.

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Post by FormicaFun » Tue Aug 07, 2007 7:37 pm

Ok, when you say "old office's kitchen"... was it a like a break room? If that's the case, you may want to research the equipment and the setup. Some counties require that establishments that prepare food for resale, be it a scratch kitchen, or if it's a snack bar that mostly reheats foods already prepared... require that you have commerical grade equipment. (Yet once again, the local food codes will have the answer to that question), but you might be able to get away with it if the equipment is NSF approved. The NSF seal is simply the letters "NSF" in a circle, and is usually located where you'd find the UL embossment. This is key. The NSF aka "The Public Health and Safety Company" basically reviews equipment and judges how easily the food contact surfaces can be cleaned/sanitized, and if the equipment is free from nooks/crannies/etc that would provide bacteria a happy place to hide and grow.

I'm gonna guess that the coffee maker will be ok, most offices have BUNN-O-Matic coffee makers because of the high volume of coffee typically consumed in an office enviroment. The refrigerator, if it's a 'home use' refrigerator, could go either way. Some health boards allow them, some don't. Toaster oven.... not so much. Microwave, like the refrigerator, it could go either way... but most health boards will allow 'home use' microwaves, so long as the NSF seal is there.

As far as food costing goes, you want to shoot for around 35% cost average. As in how much it costs you to purchase the product. After that, labor and overhead will suck up enough of your gross profit so you'll atleas turn a decent net. Beverages are your money makers, case in point... Chick-fil-a has survived many a sales slump from lemonade profits.

If you do need to upgrade your equipment, or are in need of more.. check with your local restaraunt supply stores. Most sell used or refurbished equipment.
Image

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Post by daleadmin » Tue Aug 07, 2007 7:40 pm

kojaks43,

Wow, what a GREAT deal, for your landlord.

He gets a flat rent PLUS a percentage. How can he lose? If you sell nothing he still gets $878 a month. If your business is fantastic he gets $878 + 10%. BTW, I do not know what state you are in but I have never heard of sales tax on rent.

I am assuming that you are purchasing the raw food. If it does not sell, too bad for you. If it spoils or expires, to bad for you. Your landlord still gets the rent, goodie for him.

Does this food service have a history? Did someone run it before and it has sales records? Go see the records? How many other people are wanting to do this. Just you? Why is that?

Is this place crawling with shoppers? Do they spend a long time in the mall so they will need to by food from you? If they only spend an hour then they can grab someting from MacDonalds after they leave. How many customers do you expect in a day?

What kind of food service will it be? A snack bar (soda / chips), a lunch counter (soda / chips / hot dogs / hamburgers), or a sit-down restaurant?

You say that your landlord will handle the money. How does that work? Does he take the food order, give it to you, you give him the food, then he rings up the customer's money on his register? What if your talley of what he owes you does not match your talley? I bet if there is a difference that your total will be higher.

When do you get paid? Do you have to go out and purchase food every day and then he pays you once a month? Going to have BIG cash flow problems that way.

As far as a markup is concerned look at what similar items are selling for near by. You may be able to charge more since you have a "captive" clientele (like a concession stand in a movie theater.) Find out how much you will have to pay vendors for the same items. Divide one into the other and that is your markup. Your "nut" is what you need to break even. Your nut on rent is $975.00 (10% of sales = 97.50 plus $878.00 in rent = $975.50) Then you add in the cost of the food. A 100% markup means that $975.50 in food sales cost you $487.25 so now your nut is $1462.75. But that increases your 10% commision to your landlord from 97.50 to 146.27 so you have to sell additional food for that. I am not going to do the math (since I am lazy) but lets say that the "nut" is $1600 in food sales. So it will take $1600 in sales for you to earn NOTHING. This assumes that you have no other expenses (employees, condements, cups, dishwashing liquids, business license, food dispensing license, etc.)
On the other hand your landlord will make $878.00 + $160.00 = $1038.00.

But lets say you make the additional $1400 in sales for a total of $3000. That would be $140 in additional rent + $700 in additional food costs so $1400 - $140 - $700 = $560. Your profit for a months work would be $560 assuming that you have a markup of 100% and sales of $3000 per month. Your landlord will make $300 commision + 878 rent for $1178 (I am still not sure about that sales tax on rent thing). You have all the risk and all the work and your landlord makes twice as much as you do.

BTW, there are 4.33 weeks in a month so $560 / 4.33 = $129.33 per week. $129.33 / 40 hours per week = $3.23 per hour. GREAT PAY assuming that you make anything at all. Although I do not know how many hours a week the mall will be open.

BTW2, $3000 / 4.33 = $692.84 per week in sales. $692.84 / 40 = $17.32 per hour in sales. Does that seem reasonable?

Dale

kojaks43
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See? I knew this was the right forum to post to.

Post by kojaks43 » Wed Aug 08, 2007 12:58 am

Being a complete rookie with restaurants, I am pleased with the guidance you all have provided.

I knew of problems with the health dept but not with equipment per se. Thanks for the background.

The landlord ran a Tea Room in the "break room" kitchen, and tells me they have all the necessary licenses. I have not seen them, but my agreement will have the landlord hold me harmless in case of a license issue. Landlord advises the license will cover me.

I am going to do a survey of traffic into the "Mall". If traffic looks promising, I just might do it because my risk is limited to the purchase of food supplies. Landlord furnishes equipment.

Again, thanks for all you help and directions.
k

zzzxtreme
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Post by zzzxtreme » Thu Nov 01, 2007 9:28 pm

sorry off topic

wow u guys pay lots of taxes !

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