Tracing a food cost overrun
- Type
- Demonstration project
- Project
- Restaurant chain demonstration project
- Industry
- Restaurant chain
The scenario and numbers in this demonstration project are simulated data.
- Industry
- Restaurant chain
- What was built
- Agents, skills, semantic models and write tools, built on demonstration data
- Where the knowledge came from
- Demonstration data from the finance, POS and SCM systems
Root cause before the board
- When the month-end close finishes, the finance system raises an alert: some stores' food cost rates are above the group's alert line.
- The CFO needs a root cause analysis before the board meeting. Finding the cause takes a comparison across the month-end figures, SCM purchasing records and actual usage from the POS.
Finance, purchasing and store figures
- This demonstration project has semantic models on the finance, POS and SCM systems.
- The finance semantic model defines the food cost rate as food cost divided by food and beverage revenue, and shows the gap to the group's standard rate.
- The agents use the semantic models to check each store's monthly food cost rate, find the stores over the line, and list the other stores in the same month as a comparison group.
- The agents break out how much each store is over the standard, and find these stores' main suppliers and main ingredient categories.
- The agents calculate actual usage as SCM receipts minus the month-end stock count. They then compare it with the theoretical usage from the POS standard BOM, and find the items used above standard.
- Example: a buffet store uses more rice than the standard. The reason is that guests serve themselves and portions are not counted.
- The agents check suppliers' price history for the last 6 months in the SCM, and confirm which ingredients went up.
- The agents split each store's overrun into the share from supplier prices and the share from kitchen practice and waste.
Improvement plan and approval
- The agents draft an improvement plan: recipe correction orders for the stores, plus a proposal to renegotiate a supplier contract.
- Before the recipe correction orders and the supplier renegotiation are written to the POS and SCM, the agents stop for approval. The purchasing manager authorises the renegotiation.
Continuous improvement
- At restaurant groups like this, recipes and supplier prices will keep being revised.
- The agents will collect feedback on their answers from users. The feedback will go to Odin.
- Wrong answers will become tests. A change will be kept only if scores improve.
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