The Food & Beverage Business
Helping Entrepreneurs Succeed....
Al Dente: Literally means “to the teeth / to the bite”. The term is used when evaluating the correct degree of doneness of dishes, particularly vegetables and pasta. It is considered just right when biting into an item offers a slight resistance without being hard.
American Service: American style food Service involves serving restaurant guests food that is pre-plated in the kitchen itself. Table sauces, Bread & Butter, Salads etc. are usually placed at the table. Possibly the only style of food service wherein service is from the right side of the guest.
Angel Investor: An investor who provides capital and sometimes even guidance to start-up businesses in return for a shareholding or equity in the company. Considering the risk they take in first time entrepreneurial ventures, they usually expect high returns. Referring to them as “angels”, might just stem from the fact that they invest at a stage prior to proof of concept.
Asset Register: A register that lists the restaurant’s assets including land, building, machinery and equipment, their purchase date, purchase price and a few details necessary to compute the depreciation and tax on these items. It also helps keep track of smaller items such as furniture, computers etc. and their physical condition during internal audits conducted usually by the Finance and Accounts department.
ATL: “Above the Line” refers to sales & marketing techniques that promote the awareness of a brand through media channels including television, radio, print, cinema, the internet, and even out-of-home mediums like billboards. Since the agencies involved used to charge a commission when the phrase was created, accountants back then categorised them as “operating expenses” and therefore called them “above the line” costs.
B&B Plate: Bread and Butter Plate is a 6 inch side plate placed to the left of the dinner plate. In a fine dining restaurant, it would be used to place bread to be buttered and consumed. It is also known as a quarter plate and in many cases side dishes or starters are placed in it for consumption.
Back Burner: As putting a pot on the back burner implies that it isn’t actively being attended to, just simmering; so also tasks put on the back burner would be the ones that are low priority for the moment.
Bain-Marie: A water bath or double boiler that comprises of 2 utensils: a smaller one placed inside a larger one with a liquid (usually water) in between. It may be used for cooking custards, whipping mousses, melting chocolate etc. or for keeping food warm as with chaffing dishes on buffet counters or even in a cold version as in the case of a salad counter.
BCG Matrix: A 4-quadrant tool for restaurant menu engineering, named after a business consulting firm called the Boston Consulting Group where its original avatar was first created. Each item on the menu is mapped to 2 parameters: profitability and popularity. The standardised recipe card provides us with details on profitability (selling price less recipe cost) while the POS data provides us with the number of units sold per dish, indicating its popularity.
Bev Nap: A “beverage napkin” which collects the condensed droplets on a beverage glass. A small square napkin is either placed on the table below the glass as a coaster or a long rectangular one wrapped around the glass when offering to a guest.
Biometrics: Verifying the individual biology of a human being by measuring and authenticating his unique characteristics is known as biometrics. They include finger prints, face recognition, voice recognition, DNA, iris recognition and even blind tests for odour. It is used in restaurants to allow limited access to certain confidential data and at a more basic level to authenticate the presence of a staff member on duty, which is then linked to his salary disbursement, leave, etc.
Blast Chiller / Freezer: A blast chiller is a commercial appliance, usually used by restaurants and catering companies to rapidly cool down food from +70C to +3C or lower within around 90 minutes, thereby rendering it safe for storage and future consumption. A blast freezer does the same while taking the temperature down even further to -18C in around 240 minutes. Chilling wine or freezing ice cream very quickly are examples of how it may be used.
BOGO: “Buy one get one free” is a promotional offer at restaurants and other retail businesses. For instance during lean hours at a restaurant, you may offer a free pint of beer for every pint bought.
BOQ: The Bill of Quantities is an itemized statement of the cost components, including materials and labour, of a project during construction. It serves as the basis of comparison for competitive bids between aspiring contractors and also a frame of reference to measure actual itemized costs and quantities versus those budgeted.
Bouquet Garni: An assortment of either fresh or dried French herbs used to enhance the flavour of stocks, stews, soups, casseroles and broths. They may either be wrapped inside a cheesecloth / muslin sachet and then placed in the stock, or simply tied together and placed in it directly. Bouquet Garni typically includes Bay leaf, Parsley, Rosemary, Thyme and Peppercorn. At times, vegetables like carrots, celery, leeks and onions are also included.
BTL: “Below the Line” refers to those sales & marketing techniques that are more focused and measurable using mediums such as direct mailers, flyers, telemarketing, stickers, point of sale brochures, exhibitions etc. Since no commission was involved when the phrase was created, accountants back then categorised them as “capital expenditure” and therefore called them “below the line” costs.
BYOB: “Bring Your Own Bottle” is a restaurant policy that allows guests to bring their own liquor. It is often subject to a fee / corkage.
CAC: Customer Acquisition Cost, the cost of acquiring a new customer, is a metric that every business owner or leader should know. Convincing each additional customer about the value of your product and service involves initiatives in research as well as sales & marketing. So for instance, if all these costs add up to say 30,000/- for a certain period and you have acquired say 100 new customers in that period, then your cost of acquiring each new customer i.e. CAC will be 30000/100 = 300/-.
Cambro: A US based restaurant-ware company renowned for its food & beverage storage containers which keep hot food hot and cold food cold. Nowadays the word Cambro is often used synonymously with any brand of plastic storage containers.
Cannibalization: It refers to the loss of a restaurant’s market share in a particular catchment on account of a similar offer coming up in that catchment, either by another outlet of the same brand or by another brand altogether.
Capex: Capital expenditure is the amount spent towards the procurement of assets that increase the capacity or efficiency of a business for more than one accounting year. Assets including building, equipment, vehicles etc.
Casual Dining: A restaurant which offers a casual ambience and food at moderate prices where formal dressing is unnecessary. Table service usually involves food being served either pre-plated or on platters with or without a buffet option.
CDP / DCDP: Chef de Partie / Demi Chef de Partie is a chef in charge of a particular section in the kitchen such as grills, sauces, etc. In standalone restaurants, he may have a wider responsibility than handling just one section. He is the third in-charge of the kitchen, the first being the head/executive chef and the second being the sous/under chef.
Charcuterie: A charcuterie is a specialized store or a space within a hotel dedicated to the cooking, curing and smoking of meats, mainly pork as well as others including game meats, game birds, poultry, veal and seafood. Products on offer are essentially served cold and usually include sausages, pâtés, terrines, galantines, roulades etc.
Chef’s Table: A table at a restaurant that offers an exclusive meal experience to discerning guests, usually for a premium price. The table is located either in the kitchen itself or right next to it, while the chef prepares his culinary creations.
COGs: Cost of Goods sold. In the case of Food & Beverage for instance, it would include not just the materials used to produce that particular category of food & beverage, but also materials “consumed” through wastage, spoilage, theft or complementaries, thereby allowing one to keep a tab on actual versus budgeted COGs.
Commis: A junior kitchen assistant or apprentice who performs the more basic tasks of food production in each section of the kitchen, getting promoted from Commis III to Commis II and finally to Commis I, before reaching a DCDP level.
Commissary: A kitchen facility where food is prepared for distribution to multiple locations. It could be a centralised space where food is partly prepared for a chain of restaurants where the final cooking is completed. It may also be a place where food is entirely prepared and then delivered, either to other eateries where it is sold, or directly to customers as in a catering service.
Comping: Comping a meal or dish means giving it free or complimentary to a guest who may either be a regular patron, one of some commercial importance to the establishment, or even one whose experience at our restaurant has not been up to the mark.
Controlling interest: A shareholder who owns over 50% of a company’s voting shares, may be deemed to have “controlling interest” in the company. At times, when the shareholding may be even less than 50%, but the remaining shares are not actively voted, the shareholder may also have effective control of the company.
Corkage: Restaurants that allow guests to bring their own alcohol, may levy a charge called corkage for consuming liquor (originally drawing the cork of each bottle of wine, now other liquor as well) bought “off the restaurant premises”.
Cost-centre: A department within an organization which does not contribute to its profits but instead only adds to its costs, is called a cost-centre. In a restaurant for instance, departments like human resources, marketing, accounts, IT and admin are examples of cost-centres since they come with a cost attached, but don’t bring in any profit directly. Their presence however, is pivotal to improving the efficiency of the organization at large and boosting its productivity. Such “cost-centres” are therefore a necessary part of the business.
Creditor Days: A ratio that tells us how many days on average it takes a company to pay for the goods or services it buys. In the restaurant industry, depending on the terms we have finalised with each of our vendors, we must make our payments. If a certain vendor allows us a 30 day credit period and we pay him late, say in 45 days, it will strain the relationship. At the same time, paying up too early doesn’t allow us the use of good cash flow for our working capital. Creditor Days = Trade Creditors / Cost of Sales × 365 days. For example if in a certain period the restaurant owes its vendors 9,00,000/- and our cost of sales for that period is 150,00,000/-, then the debtor days of the restaurant will be = 9,00,000 / 150,00,000 × 365 days = 21.9 days.
Crumbing: In the kitchen, the term “crumbing” or “breading” refers to coating a piece of wet food with a bread-like mixture such as bread crumbs before cooking. In the restaurant, the term “crumbing” refers to clearing the table of food crumbs between courses, with the help of a small brush.
CTC: Cost To Company is the total annual cost that a company incurs towards retaining a particular employee. It includes all expenses which are a part of the salary as well as perks and other hidden expenses which may not be a part of the remuneration package. Ideally it should include the cost of items which directly or indirectly go towards an employee’s gain such as training programs for instance but not the cost of business-related expenses such as mobile phone bills incurred to conduct the company’s business. This interpretation of CTC varies from organisation to organisation.
Dashboard Report: a management tool that measures and presents critical data on the key business performance areas in a summarised manner much like a car dashboard, so the management can quickly respond with appropriate decisions.
Debtor Days: A ratio that tells us how many days on average it takes a company to get paid for what it sells. In the restaurant industry, though we get paid for dine-in sales by cash / credit card immediately, delayed payments sometimes occur in party catering. Debtor Days = Trade Debtors / Sales × 365 days. For example if a customer owes the restaurant 3,00,000/- and our sales for that period is 150,00,000/-, then the debtor days of the restaurant at that time will be = 3,00,000 / 150,00,000 × 365 days = 7.3 days. In a restaurant business, since we don’t really need to offer credit to anyone, “zero” debtor days would be ideal.
Delicatessen: Sometimes abbreviated to “deli”, a delicatessen is a store that sells fine foods like cured meats, pickled vegetables, artisan cheeses & ice creams, ethnic dips etc. to the luxury market. Some delis also have a sit down restaurant section where sandwiches, salads, cold pressed juices, rotisserie chicken, gourmet coffees etc. may be served.
Designated driver: To ensure a safe drive home for his companions from a social event, one person elects to abstain from alcohol himself. Some bars offer an incentive of free non-alcoholic beverages to these “designated drivers” thereby encouraging social responsibility as well as their own sales of liquor. These days, for everyone in the group to have fun, designated drivers maybe simply be outsourced to a paid-for agency.
Due Diligence: The detailed investigation of a business or person before transacting with them. For instance, you may conduct legal, financial and operational due diligence of a business before you consider buying that business or verifying facts about a certain individual before entering into a contract with him.
English Service: A formal sort of food service in which the host or hostess flamboyantly carves or portions out meat or vegetable dishes on the platters in which they are served. Then the waiter takes these platters around to first serve the guest of honour, followed by the remaining guests.
Equity: Net worth of an organisation comprising of paid up equity capital plus reserves and surplus.
ERP: Enterprise Resource Planning is a business management system which integrates various activities of the business. In a restaurant, activities include Food Production, Inventory Management, HR, Marketing, Finance & Accounts, Customer Database etc.
ESOP: An Employee Stock Option Plan is a method of compensating employees with shares of the company rather than only a cash salary for their work. It encourages a culture of loyalty and reduces the outgoing cash burden on the business. The company typically buys back stocks from the employee only when he leaves or retires. ESOPs also bring the advantage of reduced tax burdens.
EV: Enterprise Value is a measure of a company’s value – often the theoretical price in the event of a buyout. It considers not just the equity of the company but also its debt (since the buyer will have to assume it) and its cash (which the buyer will receive). Debt increases the buying cost of the company, while cash reduces it. It is usually expressed as a multiple of either the Last Twelve Months (LTM) Revenue or its EBITDA.
In highly mature markets like the US, restaurants may see a Median EV of say 0.9 to 2.1 times LTM Revenue or say 7.7 to 9.9 times LTM EBITDA, depending on the type of restaurant: Fine Dining / Casual Dining / Quick Service etc. (“Restaurant Industry Insights” – Duff & Phelps). In less mature markets like India, which have much more room for growth, EVs are often higher.
Feasibility Study: A tool that helps evaluate the positive and negative aspects of a business opportunity, study the risks and identify ways to mitigate them before committing an investment and take an informed decision on its technical, social and financial viability.
FF&E: Furniture, Fixtures & Equipment. Movable furniture and heavy equipment including tables, chairs, sideboards, computers, refrigerators, cooking ranges, coffee machines, microwave ovens, food processors, worktables, storage racks etc.
FIFO: First-In, First-Out is a method of inventory management based on the premise that goods bought first (first-in) are the goods sold first (first-out). This is logical from the stores perspective in the case of perishable goods as well as from the accounts perspective since during inflation it yields the best value of closing inventory (the cost of goods bought first, thus cheapest, correspond best with cost of goods sold first).
Fire it: Firing a certain dish or the entire order at a particular table is a call for action to actually begin cooking those items immediately. A server estimates the time within which a guest must be served his food as well as the time it would take the kitchen to execute the order and gives a “fire it” request accordingly.
Fit-out: An architectural term in regard to the act of filling the raw shell of a space with a restaurant’s interiors including its ducting, utilities, treatment of walls, floor & ceiling, ventilation, lighting plumbing etc.
Focus Group Discussions: A form of market research where a small group of 8 to 10 people may be brought together and led by a moderator to discuss their opinions, preferences, beliefs and attitudes towards certain products or services, with a view to have a qualitative insight into a small section of the brand’s target market.
Food Contamination: The unintended presence of harmful substances (physical / chemical / biological) that can cause illnesses such as food poisoning.
Footfall: The number of people frequenting a restaurant or a specific locality, during a particular period of time. Visible footfall at a particular location is often a key consideration in guesstimating possible sales of a business when selecting that location for a start-up.
FQ1, FQ2, FQ3, FQ4: An accounting period of 12 months is broken down into 4 Fiscal Quarters with the business performance measured for each quarter. The fiscal year maybe Jan-Dec, Apr-Mar or otherwise.
Franchise: A business scaling up technique where the learnings from one unit can successfully be used to grow the brand to multiple units. The concept owner is the franchisor, while the entity investing in the brand is the franchisee. The franchisor earns a one-time fee or royalty from the franchisee for use of the brand name and guidance on the business. The franchisor also earns an ongoing percentage of sales and profit for on-going training and support given to the franchisee.
French Press: Also known as a “plunger pot”, this coffee brewing device may occasionally be used as a tea infuser as well. Coarsely ground coffee is left to steep with water for a few minutes after which it is pushed to the bottom of the device using the plunger. A French Press brings out great flavour in a beverage, but the water needs to be exceedingly hot for the drink to be perfectly satisfying. French pressed coffee or tea left to stand for beyond a few minutes turns bitter and is best consumed soon after pressing the plunger.
French Service: Food salvers are first placed on the guest table. The finishing of the partly cooked food may be done by the waiter on a cart near the dining table itself right before the guest. Then the salvers are returned to the table and the guests help themselves.
Garde Manger: In French, it translates “keep to eat”. Essentially a part of the cold kitchen, this section covers pantry items such as soups, salads, sandwiches, sauces, condiments, cheeses, sausages, pâtés, terrines, pickled foods and even ice carvings.
Goodwill: Often used synonymously with reputation of a business, from an accounting perspective, the goodwill of a business refers to the value of its intangible assets. Typically the future economic benefits of a business are computed using its present popularity and existing profits as an indicator of its valuation.
Gueridon Service: An interactive and flamboyant form of restaurant service where food is prepared on a well equipped trolley or small table in full view of the guest, right next to his table and served to him directly.
HACCP: Hazard Analysis & Critical Control Point is a system that monitors the production, storage and distribution of food with a view to identify and control contamination that could lead to health hazards.
High Street: The commercial centre of a city where shops and institutions are located. In the restaurant context it refers to an independent location where potential guests conducting their business just outside the restaurant doors are likely to step in and patronize the restaurant. Since it is positioned directly on the street, it is less influenced by the success or failure of another business. Many consider it more desirable than a store-in-store location, particularly for a startup wishing to start their brand with a clean slate.
Holding time (food): The amount of time you can hold a dish after it is prepared, until the time it may be served without compromising on the quality & safety of the food. It also applies to the holding of raw food. Whether you are holding raw food or cooked food, ideal hold temperature plays a crucial role in food safety of the dish.
House Brand: An item of merchandise declared by an establishment as preferred for its guests and usually offered at a bargain price. For instance, a house brand of wine at a restaurant is one either chosen from those available in the market, or then one especially made in-house for them.
In-house restaurant: A restaurant situated within a larger establishment such as a hotel or corporate office. Unlike a stand-alone restaurant, support functions are shared with the parent organisation.
Ingress/Egress: The right to enter a property such as a restaurant, is referred to as ingress. A guest who has created an issue in the past for instance, may be denied ingress to the restaurant. The right to leave a property such as a restaurant, is referred to as egress. A guest who is creating an issue in the present may be denied egress from the restaurant.
Inorganic Growth: A business plan that involves accelerated growth by merging with or acquiring other businesses is referred to as inorganic growth. Such growth can bring new ideas into the business and also allow quick access to new markets.
IRR: Internal Rate of Return is a budgeting tool to evaluate the attractiveness of return on capital investment in a certain project. It is the annualised effective compounded return rate that makes the Net Present Value of all cash flows from that investment, equal to zero. If the IRR of a project is higher than the return any other investment opportunities offer, then it is desirable to go ahead with the undertaking.
Intellectual Property (IP): An intangible asset of human knowledge that is patented or copyrighted as property of the person or organisation who has commissioned or funded the research of such an endeavour. Examples may include the creation of a particular brand-name, a certain formula, a process design innovation, a newly invented piece of equipment, a fresh body of work etc. On account of the value attached to the creation of this distinctive information, it is considered ethical for parties exposed to such information, to keep it a secret. They are often asked to sign a Non-Disclosure Agreement (NDA) with the IP owner as protection from plagiarism.
JV: A Joint Venture is a contractual arrangement between two or more parties agreeing to create a new business entity by contributing equity, exercising control over the enterprise and sharing profits or losses over a finite period of time.
Key Money: In parts of a city where the rent act restricts escalation in rentals, landlords protect themselves by collecting additional money from prospective tenants who would like to secure, modify or renew their tenancy. It is usually paid by way of a deposit of some months rent, often in cash. While in some instances it is refundable and stated to cover non-payment of rent or damage to property, it is often taken as non-refundable to cover cleaning and repairs. Key Money is illegal in many countries and so though some refer to it as “goodwill” to protect landlords from below market rentals, others say it is simply a bribe that landlords extract from tenants.
Kill it: Cooking a dish extra-well to the point of almost being burnt. For instance, a guest who emphatically insists that his steak not be the slightest bit pink and wants it really well-done, might be a candidate for his server telling the kitchen that the dish be cremated (till there’s not the slightest bit of life left in it).
Kitchen steward: One who supports the kitchen staff by keeping all kitchen areas, equipment and utensils clean and sanitised. Apart from cleaning pots and pans, a kitchen steward would also be responsible for clearing the debris from serviceware including cutlery, crockery and glasses and washing them thereafter.
LCV / CLV: Lifetime Customer Value / Customer Lifetime Value is an assessment of the financial value of a customer to an organization through the entire period of their association.
Example 1: A customer spends 100/- on each visit, visits once a month and is transferred to another city after 2 years. This customers lifetime spend will be = 100/- × 1 time × 24 months = 2,400/-.
Example 2: A customer spends 100/- on each visit twice a month and continues being a customer for 5 years. This customers lifetime spend will be = 100/- × 2 times × 60 months = 12,000/-.
Clearly, all customers are not built equal. (Some customers may even refer you to new ones, without you spending any money in acquiring them). We must also consider the customers that leave. Let’s say that out 100 new customers you acquire in a particular month, 5 leave. So the churn rate is 5% per month. This means that the “lifetime” of your customer will be 1 / 0.05 = 20 months.
LCV = (Average spend per month × Gross Margin %) / Churn Rate. So if the average spend per month is 150/-, the gross margin 70% and the churn rate 5%, the LCV = (150 × 70%) / 5% = 2,100/- over 20 months.
LCV to CAC Ratio: When the cost of acquiring a customer exceeds the ability to monetise that customer, the business model is a failure. This ratio helps keep track of just that. If the LCV equals the CAC, its not worth it. When the LCV is 3 or 4 times the CAC its considered to be a good & sustainable model. If its 5 times or more, the business should explore the possibility of spending more on its research as well as sales and marketing initiatives to acquire new customers.
LDA: Legal Drinking Age is the minimum age at which a person is legally permitted to consume alcoholic beverages. Some European countries permit drinking of alcohol from childhood within their home while some Islamic countries and a few Indian states do not permit it at all. Broadly, across most countries, legal drinking age ranges between 18 and 21 years.
Lead time: The amount of time between placing an order (with a vendor) and the receipt of his products and or services. Knowledge of the lead time of each vendor helps plan out the ordering time-schedule, the payment schedule and the overall management of inventory.
LIFO: While Last-In, First-Out has accounting connotations, in the Restaurant Business this method of human resource management may be used in the event of a staff lay-off where the employee last hired (Last-in) would be the first to be relieved (First-out).
Line Cook: A line cook is one responsible for looking after a particular line or section of responsibilities in the kitchen. He may be assigned the task of stocking up plates at the pick-up counter, cleaning the cooking surfaces of his station, prepping sauces at the snack counter, or cooking food at the grill section on a particular day. Some cooks stay in this position through their career, while for others it is something they may choose at the start of their career as a path to become all rounders by working each section of the kitchen.
LOI / MOU: Letter of Intent / Memorandum of Understanding is a document that outlines an agreement between two or more parties. The extent to which this is legally binding depends on the wording as well as the intention of the parties concerned. It serves as an interim “in principle” arrangement before a final agreement / contract is signed.
Loss leader: A pricing strategy where a certain dish on the menu is deliberately priced either equal to or lower than its actual cost, thereby “losing” money for the organization. This is done with the intent of “leading” customers to make other purchases within the business that will bring in the profit; thus the name. For instance, a restaurant may offer a soft serve ice cream at a throw away price, only to encourage its customers to spend more on their other items... say their burgers for instance, which are profitable.
Loyalty Program: With a view to retain valuable existing customers and encourage new ones to make frequent purchases, a business creates a reward program through which it awards its guests bonus points, gifts or special services for their patronage to encourage them to continue spending more. The company running the program gains access to their customers’ habits and preferences, and also some personal information about their customers.
M&A: Mergers & Acquisitions is a phrase used in the context of business strategy where a business intending to grow, either combines with or buys out another firm with a view to create a new entity that can better leverage the joint strengths of both companies in the marketplace.
Maitre d’hôtel / Maitre d’: Meaning “Master of the House” in French, is in charge of allocating guests their tables and servers their dining areas each day. Being responsible for the overall dining experience and complaints if any, this person often plays the role of a de-facto restaurant manager and is thus considered to be a key to a restaurant’s success.
Menu: A menu is a statement of food and beverage items on offer, designed on the basis of guest needs and organisational objectives. This French word implies “particulars”. It had its origins in 1541 when Duke Henry of Brunswick was seen referring to a long slip of paper that reflected the list of dishes to be served. This enabled him to reserve his appetite accordingly.
Menu Engineering: Identifying the most and the least popular & profitable dishes on the menu with a view to eliminating or altering existing dishes and adding new ones, while holistically considering their price and portion sizes to deliver better value to guests and promoters.
MEP: Mechanical, Electrical and Plumbing is a sub-section of specialised engineers within the architectural team that develop designs and drawings including air-conditioning, ventilation, plumbing, fire protection systems, telecommunication systems, power & lighting etc.
Michelin Star Restaurant: Michelin, a French tire company launched its first guide book in 1900 to encourage road tripping, by anonymously reviewing restaurants for their culinary excellence. Inspectors across the world rate food at restaurants based on quality of products, mastery of technique, mastery of flavours, personality of cuisine & level of creativity, value for money and consistency of food throughout the menu & through the year.
One Star: A very good restaurant in its category, offering cuisine prepared to a consistently high standard. A good place to stop on your journey.
Two Star: Excellent cuisine in its category, skilfully crafted dishes with specialities and wines of first class quality. Worth a detour.
Three Star Exceptional cuisine, distinctive dishes, precisely executed using superlative ingredients. Often extremely expensive with outstanding wines. Worth a special journey.
A Bib Gourmand Award signifies quality food at a value price. Most other Michelin Star restaurants tend to be expensive.
Minimum Guaranteed: May refer to (a) Minimum Guaranteed Guests (Party Catering) – The minimum number of guests assured by the host as chargeable by the restaurant for a particular event, or (b) Minimum Guaranteed Rent – The minimum amount of rent assured to the landlord payable by the restaurant as a base figure, over and above which the landlord may be entitled to a percentage of the restaurant’s sale (usually net of taxes).
Minimum Wage: The lowest wage that an entrepreneur is permitted to pay by law, as per the employee’s specific category (un-skilled, semi-skilled, skilled worker). The government defines minimum wage amounts to ensure that a basic standard of living by way of good health, comfort, dignity, education and contingencies are provided for its citizens.
Mis en place: Literally translated “put in place”.
In the cooking area it refers to preparation of the kitchen for cooking by ingredient processing as well as utensil and service-ware readiness.
In the dining area it refers to preparation of the restaurant for service by table setting, service-ware cleaning as well as sideboard stacking.
Mis en scene: Literally translated “put in scene”. This refers to the broader picture in area preparation. It includes mis en place as well as general layout readiness.
Molecular Gastronomy: A discipline of food science where chefs utilise their culinary knowledge with an understanding of physics & chemistry to innovatively and artistically transform the tastes & textures of foods. This experimental style of cooking uses some specialised ingredients, tools & techniques including pressure, temperature and food chemical mixtures to create some extraordinary results including spheres, vapours, foams and seemingly limitless other possibilities. Some prefer to refer to it as “deconstructivist” or modernist cuisine.
Mood Board: A collection of images, text and object samples that represents the proposed mood or feeling of a particular brand of restaurant or other retail space. Designers use it to visually illustrate the style they intend treating a certain space with, gathering feedback of others in the team and gaining their concurrence.
MTD: Month to Date is the period starting at the beginning of the current month and ending at the current day. It is often used to see how the business is actually faring up to the current day versus its budget for that period in terms of sales, profits etc. for instance.
Mystery dining: An exercise in which a restaurateur secretly hires the services of a professional to report on the delivery of the restaurant’s brand experience to its guests with a view to correct gaps that occur in this endeavour.
NCNS: A “No Call No Show” by an employee who goes on an unauthorized absence from work without notifying his employer. When this happens often or for a significant duration, a legal notice usually needs to be given and disciplinary action taken.
ODC/OPC: Outdoor Catering / Outdoor Party Catering includes various social events from weddings to seminars, anniversaries to picnics that are catered to outdoors. While outdoor usually indicates open air spaces, it may also include enclosed spaces such as banquet halls where the caterer creates a temporary kitchen at the venue where he serves his guests.
Organic Growth: A business plan which involves core growth of a company internally by increasing its output through expansion of its own existing customer base and also by introducing new products or services.
Organoleptic Tests: A sensory evaluation of food and beverages in areas including product colour, appearance, hand-feel, mouth-feel, pliability, aroma, taste etc. usually conducted by a trained professional or panel of judges.
Outsourcing: Contracting some services to a third party with a view to focus on its own core business, improve efficiency, save costs etc. In the restaurant context for instance, services such as valet, housekeeping, dessert preparation etc. are sometimes outsourced.
Pax: A hospitality industry term used interchangeably with “people”. So number of pax is typically in reference to the number of guests at a restaurant, number of customers at a party, number of occupants in a hotel, number of passengers in an aircraft etc.
Performance Appraisal: A systematic and periodic review and evaluation of an employee’s work performance as against the goals outlined for him in his existing role by his superiors. The criteria of assessment may include job knowledge, productivity, initiative, adaptability, leadership ability etc.
Pick-up counter: A counter in the kitchen from which servers pick-up food items to be served to guests. One member of the kitchen staff barks out the order for each table and as each item is prepared, the kitchen staff deposit it on this table in readiness for a “pick-up” by the servers.
Plating: Presenting food attractively on a plate, platter or bowl to increase its appeal to restaurant guests is an art called plating. It involves highlighting the key ingredient with support ingredients while maintaining a balance of colours, textures, shapes, temperatures and nutritional aspects. A white plate is considered by most as the best background to present their food’s natural colours. Some find it aesthetically better to plate an odd number of pieces rather than even on their plate. Many chefs visualise a clock and have their favourite placement locations for each aspect of the meal corresponding to the hour, for example protein between 9 and 11 o’clock, starch between 4 and 8 o’clock, vegetables between 1 and 3 o’clock.
Points / point system: Refers to the allocation of predefined units for various levels of staff with an intention of equitable distribution of tips.
POP: Point of Purchase is a type of marketing material placed at locations where purchase decisions are made. For instance, a tall menu tent card display at a restaurant entrance or danglers hung above a food deli display counter.
Pop-Up Restaurant: A temporary restaurant where a chef can test-launch his food or a restaurateur can test-launch his concept in a brick & mortar format for just a few days or weeks with a live audience. Also called supper clubs, these restaurants can operate from a home, an existing restaurant during its non-peak hours, an event centre, a gallery, a factory, or even a car, thereby limiting the capital expenditure and the liscensing requirement. Patrons are usually informed of pop-up restaurants through social media and often appreciate their creativity, variety and affordability.
POS: Point of Sale is the location at which sales transactions occur. While in a restaurant this in-fact happens between the guest and the server at the table, the computer terminals referred to as POS terminals, capture sales transactions and print receipts at sideboards nearby.
Proof of Concept: Evidence that demonstrates the feasibility of a particular business model or concept wins the confidence of its investors. For instance, an entrepreneur who with his existing restaurant can show proof of success in terms of consumer demand, return on investment, profitability, operational efficiency, solidity in team etc. is more likely to be funded to scale up his brand to multiple locations.
Ramekin: Fireproof dishes in which individual portions of savoury or dessert items are both baked and served. A Ramekin is also the name of a food made of cheese, egg and breadcrumbs prepared within a ramekin dish.
Ramen Profitable: A business that is making just about enough money for its promoters to make ends meet. This buys some time for the business to continue surviving in the marketplace. Being Ramen Profitable is not just good for the morale of the entrepreneur, but also improves the promoter’s relationship with his investors. Popularised by Paul Graham, this term is believed to be derived from the low-cost noodles called Ramen.
Regulars: Guests who patronise a business frequently enough to be rewarded or at-least more personally acknowledged than other guests. Repeat patrons are a critical factor in the success of a restaurant businesses.
RevPAR: Revenue Per Available Room is a measure of the financial performance or health of a hotel. It is a function of room rates (per night) and occupancy.
RevPAR = Total Net Room Revenue† / Number of available rooms in the same period
† net of discounts & taxes, and not including revenue from meals.
RevPASH: Revenue Per Available Seat Hour is a measure of the financial performance or health of a restaurant. It is a function of seat revenue (per hour) and occupancy.
RevPASH = Total Net Food & Beverage Revenue† / Number of available seats in the same period
† net of discounts & taxes.
Right of first refusal: A contractual right within a business agreement, that allows one party the privilege of first exercising or rejecting an option granted by the other party. For instance, a landlord may grant his tenant the first right of refusal in extending their agreement beyond the initially proposed period. Only if the tenant declines, the landlord may put his property up for rent to an alternate tenant.
Robot-Coupe: A commercial food preparation equipment manufacturer head-quartered in France. It is most renowned for its reliable, patented heavy duty food processors through industry kitchens across the world.
Roux: Pronounced “Roo”, this is a mixture of equal parts of melted fat (butter or vegetable oil or lard) and flour, cooked together as the base for the three mother sauces of French classical cooking (béchamel, velouté & espagnole). Roux is also used as a thickener for soups, stews and gravies. The extent to which the roux is cooked contributes to the flavour and colour of the final dish.
Running Order / On the Fly: Refers to an order that needs to be served right away. This is either because the guest is getting late, the rest of the guests at the table have been served, a guest needs to leave urgently, a dish is inedible, or because the waiter has delayed or made a mistake with an order that needs to be replaced / served urgently.
Same-Store Sales: A metric that measures growth in restaurants / retail stores that have been doing business for more than 12 months. From the 13th month onwards, the revenue and growth of the restaurant can be compared to its own performance in the same period the previous year. This can be done for a particular week, month or financial quarter the previous year, and once the second year of being in business is complete, you could compare the entire years sales to the previous years sales.
SBU: Strategic Business Units are autonomous operational divisions within large companies that have independent missions and objectives. They are small enough to respond quickly to market situations and large enough to control most factors influencing their long term performance.
SCM: Supply Chain Management covers the management of inventory (either stored or in transit) through each stage that the goods pass – right from the raw material stage at the vendor’s premises until the point of consumption stage and includes all the various work-in-progress stages in between. In the case of food, it involves the management of inventory from farm to plate.
SEC: Socio Economic Classification is the way marketers categorize their potential customers on the basis of occupation and education of the chief wage earner of a Household in India. This is based on a flawed assumption that higher education always leads to higher income and therefore higher consumption potential. For instance, a post graduate executive may indeed be likely to have a higher income and therefore higher consumption potential, but in reality a trader / retailer with almost no education may be earning and consuming more.
Service Charge: An additional charge for a service for which there is already a basic fee. At a restaurant, it may involve adding an additional percentage of the bill to the total bill, often in lieu of tipping. It may also involve the restaurateur paying service tax to a consultant for instance.
Service Tax: A tax levied to a service provider for services rendered. Monies received for out of pocket expenses such as travel, lodging etc. supported by documentary evidence that are borne by the client, are not subject to service tax.
Sharking / Poaching (employees): When an entrepreneur or a business head from one restaurant, persuades an employee from a competing restaurant, to join them instead. Fellow restaurateurs often-times call for a truce on poaching so as not to hurt one another’s businesses.
Shelf life: The amount of time for which a food or other perishable item may be kept on the shelf or served to a guest, without becoming unsuitable for consumption or unsuitable for cooking. A fresh-cream cake for example, may have a “best consumed by” number of hours on the label, after which it’s intended form may begin to deteriorate such as the cream drying up, souring etc.
Shorting: Like short-changing, a cashier may be shorting a restaurant of money, a vendor may be shorting a restaurant of wares or a guest shorting a restaurant of money due to the restaurant by way of the check.
Sideboard / station: A pre-service setup area in the dining room containing extra cutlery, crockery, glassware, linen, accompaniments, water jugs, hot plates, POS system etc.
Silver Service: A formal style of service wherein food is transferred from a service dish to the guest’s plate from his left using a service spoon and fork. Clearing of plates and serving of beverages is done from the guest’s right. Further, guests seated at the table are served clockwise, ladies first followed by the gentlemen and lastly the host.
SLA: Service Level Agreement is a contract between two parties that represents the minimum performance criteria that a service provider promises to deliver to its customer. It usually comprises of service provider deliverables including basic measurable service level scheduled, problem handling, response time, warranties, penalties payable against gaps in delivery etc. as well as customer responsibilities.
Sommelier: A French term for a wine steward who has expertise in wine varieties, their procurement, storage and service. In high-end restaurants, that offer such wine, a sommelier will help the restaurant select its wines, work in conjunction with the chef to plan the pairing of wines with food and accordingly recommend suitable options to guests, as per their tastes and budgets.
SOP: Standard Operating Procedures are a set of operational instructions (usually in the form of a manual) with a view to ensure uniformity in the maintenance of predetermined standards of performance and delivery of guest experience.
Speed Pourer: A device fitted at the mouth of a bottle (usually liquor) to facilitate a speedy flow and accurate quantity of the drink without spillage. Particularly useful during peak hours at a bar, the bartender’s practised hand, times each pour to perfection sometimes sliding his thumb or finger over the air-hole to control the pour.
Speed Rail: A bottle holder usually made of stainless steel in easy reach of the bartender to facilitate speedy service to guests. Based on the bar menu, the bartender keeps within it the most often used bottles of spirits, other liquors and mixers.
Store-in-Store: The location of a restaurant situated within another business such as a mall, theatre, casino, airport, railway station etc., where the existing patrons of the larger business are tapped as potential patrons of the restaurant. The success or failure of the larger business often influences the destiny of the restaurant and so restaurateurs sometimes try and sign up for such a location with an entrance independent of the mall.
Succession Planning: The identification and development of internal talent to meet the future goals of the company. It prepares people for leadership roles in readiness to take charge when the need arises.
Sweat Equity: A shareholding in a company earned by an individual’s effort rather than money invested by him in a partnership. In a start-up, apart from co-founding partners who may hold shares by virtue of their “sweat”, some employees may also be offered stock equity alongside a basic salary which is usually lower than a salary that equals their market value.
TA/TM: Target Audience / Target Market are specific groups of customers that are targeted as your ideal guests in a start-up or your preferred guests in an exiting restaurant business based on characteristics such as age, gender, income, education, buying habits etc.
Table Turns: The number of sittings per meal at each table through the opening hours of the restaurant are known as table turns. To ensure and improve profit in the restaurant business, table turns need to be done, though without the guests feeling rushed. For instance, a fine dining restaurant can have two table turns at dinner while a casual dining restaurant with a shorter guest dining time may do three or more table turns.
The Floor: Getting on to the floor means getting out of a place of low activity like an office for instance, to an area where the action is! While this mostly refers to areas where the customers are, it is also used in context with back of the house areas of action like the kitchen.
Udipi: A little town in Karnataka, India, whose local cuisine was originally cooked at the Krishna Matt Temple in Udipi. Their quick, clean and economical vegetarian meals, slowly made their way into the hearts of many people in different parts of the country. Starting with their own cuisine including idlis and dosas, they went on to create and offer their own versions of Chinese food and also pizza which are quite popular amongst Indians the world over. In the restaurant business, Udipi restaurants are admired for their resourcefulness and innovation.
UPS: Uninterruptible Power Supply is a device that provides energy backup to the IT system during electricity fluctuation or failure, thereby enabling the user to save valuable data during a power failure.
Upside Sharing: Sharing the “upside” with the landlord of a restaurant would mean that in a situation where sales exceeds expectations projected by the restaurateur, he would be willing to share a percentage of those increased sales with his landlord thereby putting both sides in a win-win situation.
Valuation: Determining the worth of a company by analysing the market value of its assets, its future prospective earnings, the composition of its capital structure and the quality of the company’s management. Valuation of a company is required during a merger or acquisition, tax assessments, business analysis etc.
Venture Capital: Money provided to a company in its early stages in return for a share in equity. Though such investment may be considered high risk:high reward, investors with sound business acumen are usually able to identify high-potential businesses that are scalable. Usually, venture capitalists invest after the proof of concept stage.
Waitlist: A list of guests waiting to be seated at a restaurant while it is full. The restaurant representative handling the seating writes down the name of the host of each group in the order they arrive along with the number of their guests. Then as the occupied tables clear up, she allocates a table based on a first-come first-served basis and a match between table size and group size based on the policy of the restaurant. While a celebrity skipping this line rarely goes down well with other waiting guests, a handicapped person skipping it is often more acceptable.
YTD: Year to Date is the period starting at the beginning of the current year and ending at the current day. It is often used to see how the business is actually faring up to the current day versus its budget for that period in terms of sales, profits etc. for instance.