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Optimizing Restaurant Operations with COGS-Well's Bill Lindsey: From Cost Management to Menu Engineering

• Erika Rivas

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In this episode of the Restaurant Technology Guides podcast, host Jeremy interviews industry veteran Bill Lindsey, founder of COGS-Well, a company specializing in cost of goods sold software for restaurants. Bill shares insights from his long career in the restaurant industry, which began in 1974 as a restaurant manager and evolved into developing restaurant management software. The discussion covers the basics of back office systems, the importance of managing cost of goods and labor, and strategies for improving profitability, such as menu engineering, waste reduction, and leveraging AI for inventory management. Bill also highlights the unique features and methodologies of COGS-Well, designed to set up inventory systems quickly and efficiently while maintaining high data quality through auditing teams. Additionally, the episode emphasizes the importance of partnering with vendors, leveraging rebates, and making data-driven decisions. For more information and a demo of COGS-Well's solutions, listeners are encouraged to visit their website and dedicated landing page.

00:00 Introduction and Welcome

00:25 Meet Bill Lindsey: Industry Veteran

01:44 Understanding Back Office Systems

03:16 Labor and Food Costs: A Balancing Act

07:09 Impact of Tariffs and Volatility on Food Costs

13:18 Strategies for Managing Costs

26:55 Boosting Sales with Desserts and Appetizers

28:06 Leveraging Rebate Programs for Extra Income

30:58 Reducing Waste with AI and Donations

35:38 Introduction to Cogswell's Unique Approach

37:00 Setting Up and Managing Inventory Efficiently

44:01 Optimizing Menu and Labor Costs

52:03 The Importance of Partnering and Data-Driven Decisions

This is the Restaurant Technology Guides podcast, helping you run your restaurant better.

Jeremy Julian:

Welcome back to the Restaurant Technology Guys podcast. I thank everyone out there for joining us. As I say, each and every time. I know you guys have got, uh, lots of choices, so thanks for hanging out today. I am joined by an industry veteran that I've known. I dunno, I think all three of his last, last, um, endeavors. But, uh, he's an expert on the field and, and quite honestly, every time he and I get a chance to spend some time together, I learn something new that I didn't know. And I feel like I know a lot about the restaurant. Space. but Bill Lindsay is kind of one of those, one of those people that, uh, has been there. He is done that, and he is done it multiple times over. So, bill, can you introduce yourself to our listeners for those that aren't familiar with you, and then we'll talk about your latest endeavor.

Bill Lindsey:

Well, thanks very much. I really appreciate you having me, Jeremy, uh, especially a second time around. my. Name is Bill Lindsay. our company is Cogswell. I've been in the restaurant industry all of my life, which is longer than you care to hear about, but, uh, I'll give you a teaser. I was a restaurant manager in 1974. I was also a food and beverage director in Las Vegas for many years where we developed our own inventory software and recipe software. And then PCs came out and I got involved with, uh, three gentlemen that I partnered with today. In a company doing restaurant management software. So, uh, this is actually a fifth generation system that we're in now at Cogswell, and I like to say we've learned a few things over the years, including a few things that don't work. So, uh, I look forward to having that conversation with you today.

Jeremy Julian:

I love it. and so for those before we jump into Cogswell, for those that don't, I guess clearly define for our listeners, what is a back office system? What is a back office management system? Because regardless, I mean, regardless of who you talk to, some people think that's just their point of sale back office. Some people think it's a full ERP. Define for our listeners what is the, the baseline of what a back office system is before we jump into kind of what Cogswell does.

Bill Lindsey:

That's a great question. So there are truly only two controllable costs in the restaurant. food and bar cost or cost of goods sold, cogs and labor. And so generally a back office system has those two key components in it. we've had systems that also included accounting and payroll and a lot of other ancillary systems to build an all in one. In the days that we had a company called, compete Restaurant Management Systems, that, was since purchased by Restaurant 365. So what we decided was rather than trying to handle both labor and cost of goods sold, that we would really focus. Exclusively on the cost of goods. Soul side. There are a lot of good labor products out there that do great scheduling and payroll integrations and break management and overtime and all those sorts of things. But people have struggled endlessly trying to manage their food and bar costs. So, Cogswell is what I would say half of a complete back office system. The other half would be a good labor management product.

Jeremy Julian:

I love that. Well, and, and a lot of people call those their prime costs. We've had quite a few guests on that'll talk about them being their prime costs, but they do work synonymously together. I mean, one of the things that you and I were talking about pre-show is the fact that a well-defined kitchen, kitchen recipe system, I. Gives you the ability to have tight labor controls in a tight labor market or a labor market where you understand what you need to do, um, how much you're purchasing, what you're purchasing, and all of that end up being really, really critical. Just got back from RLCA couple of weeks ago when we're recording this. There's so much volatility, there's so much challenge that everybody's struggling with. Talk to me a little bit about how you guys think about labor because you guys don't manage it today. It is a critical component to ensuring that you are able to serve the guests. Before we kind of jump into really the core of what Cogswell is helping to solve for on the food costs and, and, uh, inventory side.

Bill Lindsey:

Yeah, it's another good question. You know, people don't often think about labor in the context of cost of goods sold, but they really do run hand in hand. if you look at full service restaurants. they tend to have a lot of prep, and not quite as much labor, whereas fast food will be just the opposite. Very little prep and more labor counter service type help. So there's always this pattern of trying to balance, I call it an old fashioned builder, buy or prep or buy. So a lot of what we get into is trying to understand exactly what the menu is, what the requirements are, and are there any efficiencies in terms of. How much to prep and when to prep and, uh, most importantly, how to avoid waste when prepping. So there's a, a very integral part of all that, and I can get into some great detail on how we look at it, but generally, you're either going to spend more money on labor and less money on product or money, more money on product, and less on the prep labor that goes into it. And it's trying to find that sweet spot that maintains your core values of your product as well.

Jeremy Julian:

Well, and it's funny'cause you know, if you watch the kitchen nightmare shows or the bar rescue shows, they often will look at, at, food cost. But they'll also look at product mix and they'll go, okay, how many things are we selling tater tots as part of? And if I'm only selling tater tots in one dish and they take, you know, three hours to prep, you probably should cut it from your menu because it's taking so long every day to prep these things. Is that kind of what you're talking about, bill? It's just these you, these one-off items or these items that are really hard to execute against. And take a lot of time and a lot of effort to get that. Is that kind of some of where you guys at least consider it?

Bill Lindsey:

That's some of it. And the other part is, you know, take something simple like shredded cheese. You know, you can buy shredded cheese from Cisco. but it has a cornstarch powder on it so it doesn't melt the same, it doesn't taste quite the same. So, uh, if you sell a lot of product that uses shredded cheese, it might be in your best interest to shred your own cheese. Well, how much are you spending in labor to do that? And how do you balance that against the fact that you can in fact buy a pre shredded product? And most importantly, how does it support the quality of your menu? So. You know, it's not a simple math question. Uh, it's it's not what I call a private equity question. it's really more of a judgment and understanding a little bit of art and a little bit of science, and how can we get the best result between the two?

Jeremy Julian:

Well, and I've used this in the last couple episodes. I mean, Anthony, who, I work the, I get the privilege of working with Anthony, but he, he has a saying, you know, it looked great on the whiteboard or it looked good in the boardroom. You know, some of these decisions that get made ultimately end up not, you know, not netting you the result that you're looking for. And so the fact that you can think through both the labor component and the food cost component and what that looks like is huge.

Bill Lindsey:

That's funny. You know, I have a similar saying that the best software is in PowerPoint. And everybody's trying to sell you something that they don't have yet.

Jeremy Julian:

Yes. Yeah, absolutely. That's funny.

Bill Lindsey:

Deliver it.

Jeremy Julian:

Yeah, I just got off a demo right before I got done or jumped on with you and I was like, okay, can you actually show me that? I don't wanna see it on the PowerPoint. very similar there. So now let's dig into kind of what it is that you guys have been really focusing on, which is oftentimes the, the largest percentage of costs within the business. a little bit about kind of what you've seen over the last year. I guess we're, we're recording this in, in May of 2025. the, the price of eggs earlier this year was ridiculous. We talk about tariffs. I just was doing an interview with a, a CFO of California Fish Girl, one of our clients. I. They import most of their fish from overseas, they're struggling to figure out because they've got menu price items and, and they're struggling'cause the price of fish has gone up in relation to tariffs. But more so, I mean, and, and again, I'm a little bit younger than you are, but uh, I've been around a long time. I've not seen this level of changes day to day, week to week in the food cost system in quite some time, if ever in my career. Yeah.

Bill Lindsey:

Never. I mean, the only other time that was similar was COVID and it was more of a supply chain. Um, you know, the product was there, there was just no way to deliver it, so. Right. a few things a, about the tariffs. the biggest problem is I don't think is the tariff as much as the uncertainty. is it 10%? Is it 25%? You know what percentage where and with whom. If you look at the FDA statistics, about a third of all fresh vegetables are imported, and what's happened is we've all become very accustomed to year round supply. I. You know, it used to be, you know, you'd get, uh, melon in the summer and you'd get berries in the fall. And uh, now we want those things 12 months out of the year. So there's been a lot of work done in order to set up a, a more of a global supply. I. Of fresh vegetables and fruits. More than half of all fruit is imported in the United States, and some are exclusively imported things like bananas that just don't grow in the United States. the vast majority of olive oil comes from Europe. And so while all this is going on, depending on the menu that you have, these are big drivers, but you picked the Kango val drivers then that seafood. 94, according to the FDA, 94% of all seafood is imported in the United States. Now that's including seafood that's caught or harvested in our own territorial waters. And the reason is that, uh, the cost of scaling and deponing and fileting and all the other prep that goes into a finished seafood product is less expensive in China. So right now. China is our number one supply of seafood. 94% actually that uh, unless you're coming off the boat and you happen to be fortunate to live at the beach, uh, it's all going to China before it comes back here. And where it's getting even tougher is imagine the tariff that's gonna be charged on the seafood raw product going into China. Then the packaging costs. And then the tariff coming back, whether it's 145% or 80%, or whatever it ends up being. If you're in the seafood business right now, you're in a very dire predicament because you can't make a plan. you know, we saw what happened with, uh, the all You can eat shrimp at Red Lobster.

Jeremy Julian:

Didn't work out so well

Bill Lindsey:

Crashed a national brand. Well, this is a little bigger than all you can eat shrimp. it's gonna be just about all seafood products. So, there's a lot of volatility and inability for people to plan. And if you're thinking about building another restaurant and you're in the seafood business, you're thinking maybe not at this point.

Jeremy Julian:

and you've gotta manage it. I mean, that's one of the big things that, that I guess in general, um, and again, I remember I implementing inventory systems. It was like, Hey, gimme an alert on anything that, that changed, you know, 8% from my last invoice on this item. And now I'm sure you guys, you guys have some of these things, you know, where, where the, the invoice gets imported and everything is more than 8% different than it was even last week because the volatility and so. Why is that so critical to manage that at a tight level? Um, for those that I guess haven't gotten to that level or are not managing the invoices that are coming in and haven't digitized that.

Bill Lindsey:

Yeah, you know, it's a tricky question because vendors and packers are clever. Uh, you've heard the term shrink lation, you know, hey, it's the same price per case, but there's less in each case. And also what we're seeing is the flip side. I call it the Costco effect. Uh, we used to buy a 10 pound box and now comes in a 25 pound box. So we expect to pay more for it. So one of the key drivers is to understand your unit cost. Cost per pound, cost per ounce, cost per each, whatever those things are. So when you're doing your cost alerts, percentage up and down is a good trigger. and we use that in our own internal receiving audit. you know, one of the things that we do that's unique to Cogswell is we have our own team of auditors that monitors exactly that. And one of the reasons that we do it is sometimes it's actually a pack size change. Or it's a misunderstanding, or it's a vendor that failed to mention that that's a pound price and not a case price or a catch weight. So we have audit teams that comb through all of our customer data and are on the lookout for that sort of stuff on a day by day basis. the tough part about it is that it's hard to know. And what you really need to be able to do is to look at your menu and have a trigger in your software that tells you that the. Cost of this menu item has just exceeded a threshold that you set. So part of that is target costing. You know, in the old days, we would cost out the menu and it was a. And, uh, now in the software days, it's called a target cost. So instead of just looking at commodity prices, you know, the price of cauliflower went up, the price of broccoli came down. There's no way to make sense of that, intuitively. But if you see the, the cost of this entree or this appetizer has just exceeded a threshold that we set as a target. That lets you know that you need to make adjustments to either pricing or to how you prep the item or source the individual ingredients. And, with all of this tariff stuff to kind of circle around back to that, I think the one that a lot of people aren't thinking about, well two of them, one of them is coffee, with a little bit in Puerto Rico. a little bit of great coffee that comes out of Hawaii. But almost all coffee comes from other countries. you know, the folks at Starbucks have to really be wondering how this is all gonna play out, Pete's and, and other major chains. But every restaurant serves coffee. And while it doesn't tend to be a highly. Expensive item. It's one of those items where it offsets the fact that you're not making as much profit on certain other things that you sell. breakfast is a very clever day part to balance properly on your menu. You know, there's some things you're not making much money on that are very popular and other things that you're making a lot of money on that are even more popular. So trying to get that weighting together. But the other one that I'm, I'm. clueing people into it. For those of you out there that are looking for something you may not have thought of, it's time to reevaluate your packaging. We're all in the grab and go world. we've got all these delivery services, would like'em or not. Uh, they're here to stay. People got kind of used to all that during COVID. So how you package your product to go. Whether you're a QSR or a table service or a fast casual, it's time to look hard at that packaging.'cause I guarantee you the cost of every one of those bags wrappers, plastic wear is going to increase significantly in coming days. So put all that together with the fact that, uh. You know, we've got a labor constraint, uh, that's happening. There's a lot of migrant labor that's necessary for harvesting come fall, and there's a lot of farmers out there saying, well, if we can't sell our excess grain to China or to usaid. Then what's going to happen? And so here's some good news. The bright spot in all this, and this is just me from my perspective, I'm no economist, but if we're having a hard time selling, uh, the excess grains, Again, looking at some FDA statistics, we export about 15% of our pork and about 20, I'm sorry, about, uh, 15% of our poultry and about 20% of our pork. So what's gonna happen? Well, if we're not exporting it, there's gonna be a large supply. And that's gonna drive costs down on some of these key drivers for menu items. grains, poultry, pork are potential bright spots. Uh, that can make life a little bit easier for people. But, uh, you've gotta really think through everything that you spend your money on right now, packaging. Raw product and decide where can we hedge? And sometimes hedges are things like private labeling. you know, most of that private label stuff is just product that's coming off the same, production line as the brand name product. you know, I was a food and beverage director in Las Vegas for many years, and we would have a seafood buffet and, uh. We would buy a lot of seafood from major, uh, producers like uh, Mrs. Fridays and Gorton's and others, but we would buy their off-label brand, which was like 20 to 25% less expensive. Same product tastes just as good, maybe a little irregular, but on a buffet, nobody's looking for continuity. They're looking for a plate full of food. So looking at private label stuff I think is important. Also trying to decide, you know. Can we, we like to make this product fresh, but can we supplement the fresh product with a canned product or a frozen product? And quite frankly, some things are better frozen, especially if you're making soup. So I see a lot of people using fresh produce and stuff to make items that might be more efficiently produced with Frozen and in some cases canned products. And I think they got a bad wrap. You know, people started, you know, we want to go farm to table. Love it. Absolutely love it. There's no tariffs on farm to table. It's a very smart strategy. But, uh, when the price goes up for the commodities, it's going up farm to table as well because they see some elasticity in the pricing market. So it's time for people to start thinking about can they supplement some of the production and makes what I call strategic recipe decisions.

Jeremy Julian:

and I, the other piece I would say to you, bill, that I've seen restaurants do is from time to time is they're like, you know, I can't charge more for the takeout menu item versus, dine in. But ultimately it costs you more to produce it because you've got this packaging, or I can't, we had a customer I was talking to in kind of the, the March timeframe. That, uh, was primarily a breakfast place and they were struggling so much with the egg price volatility that they ultimately lost money in certain times because they were, they, they weren't reactive enough to see and they were, they were having to go through, I mean, the one difference. In some of this tariff stuff for electronics, some of these manufacturers can bring stuff in and put it in a warehouse and they can sit there for six months. You can't keep eggs on the shelf for six months and have them still be good. It's perishable. And so you've gotta get new product in every day, but you have to be looking at it because if you, if you look at it at the end of the quarter and that's the only time you look at your food cost, you could have lost money in a full product category without knowing that. So, you know, I guess from that perspective, how. How does that actually work? I guess before we kind of get into some strategies that you think people can use, how can you do that without killing yourself from a labor perspective? Because, and again, I, I know the answer, but I would love for our listeners to hear your thoughts on kind of how do you do that? Because there's always, you know, it's not gonna change that much. It's not that big of a deal, but we know that it is, and we know that there's a capability.'cause one or two points on a food cost is a huge, huge difference.

Bill Lindsey:

Sometimes that's all the profit. you know, I always say this is a penny business and if you're not watching your nickels, you'll never see the pennies. And you know, the simplest way to do it, but, and we mentioned this earlier, is target costing. You know, if I've got a 30% cost of goods, you know, when I priced my menu, I made a few assumptions. I said, okay, we're gonna sell it at this price. It's gonna be a 30% food cost. So I need to plug that target as a baseline and say, anytime the cost of, uh, of sales on this particular item exceeds 30%, I need to know because I have to react to it. And if you do that, it's a very simple way of just, triggers. Wait a minute, what's gonna happen now with eggs? I think we all kinda saw the smoke on the horizon and knew what was happening there. Uh, when they started culling the chickens. The interesting part about that is it was very regional. The effect. I mean, you know, in California it was a much more pro profound effect than in some of the northern states because of the size of the farms and the number of chickens that are involved. Interestingly, if you look at Canada, they didn't have an egg shortage. Uh, they don't have the huge factory farms that, you know, oh, we got 2 million chickens here and. We've got bird flu, we're gonna have to cu 2 million chickens. So some of it is the farm to table approach. It's having local vendors wherever you can. I'll tell you a short story. When I was in Las Vegas, we did a lot of eggs. I mean, we did a ton. We had a buffet. We had a great breakfast restaurant. And, uh, um, I signed a deal with, a chicken farm in California. And the deal I signed with them is, uh, you're gonna drive a truck in the middle of the night and you're gonna deliver X amount of eggs to me six days a week. And we never refrigerated an egg. they would lay the eggs, they would. Box them up, they would put them on the truck. We would start cracking them for omelets the next morning. And, uh, there was a bad, uh, salmonella outbreak in Las Vegas. Uh, some of it was how people were handling the product, but uh, the health department was basically visiting the kitchen, saying, where are you getting your eggs? And they came into my kitchen. I said, a hundred percent of my eggs were in the chicken yesterday. They were delivered about two 30 this morning and we're serving them for breakfast now. And, uh, I showed the guy what I was doing. Well, we got a nice piece of the newspaper that, you know, if you're having trouble getting eggs, here's a place where you can go, where the eggs are clean and fresh and come from a local farm. So sometimes these business practices become advantages. When you're marketing out to your customers, but I can't stress enough that if you're not doing target menu costing, you're just missing the most obvious solution to let you know that there's a, a problem that needs to be addressed. I.

Jeremy Julian:

thank you for that. And I, I agree with that. How, I guess just a one last follow up question on target. How, what do you put into that target? Do you put the labor to produce it? Do you put just the raw food cost? Do you put the packaging cost help? Help our listeners understand how deep do you go and does it really even depend on the service style?'cause maybe in a different service style, might change how you would evaluate that.

Bill Lindsey:

So couple answers to that. The first thing is for target costing, go cost of goods only. just because that's your trigger to look at either the ingredient costs changing a vendor, possibly, or doing in-house prep if you have to. And then you analyze the labor cost of doing that. in our software, and, and I don't hear a lot of this with a lot of other products, but we fully embrace and understand that. So for any recipe that you have. You can assign a job to that recipe with the average minutes of, of effort and have an average wage rate in each of your restaurants. So you'll get your food cost for all the ingredients, but you'll inherit a proportion, a portion of the labor cost. Proportionate to the size of the serving. So you know, if it's a 20th and you get a 20th of a labor cost, what will end up happening is when you look at the recipe, you'll get a very clear understanding that, you know, sometimes half the cost of the item is labor. if that's the case, maybe that's okay, but maybe there's a couple that you could evaluate there where maybe, uh, it's like people in the bar department, if you're making a rum and coke, how good does the rum really have to be? so sometimes you can find ways in order to, uh, you know, hedge. If you will. But if you're not tracking your prep labor costs, you are absolutely missing the mark In today's, uh, uh, business environment. labor constraints are tough. wage rates are increasing, and it comes down to can we afford to prep this in-house or do we have to find a frozen product or a canned product? And if we do, how can we do that without sacrificing our standards

Jeremy Julian:

Yep. Well, and I would, the other thing I would say is just be careful that you don't have a sacred cow in your, in your menu.'cause there's oftentimes that you find that people, they don't use the data, they've got a sacred cow'cause it's. The owner's favorite menu item. It's the owner's wife's favorite menu item. It's something there that they don't realize that, you know what, we can keep that item just a single one for the wife when she comes in, but not sell it to the rest of the community because at the end of the day, it's not needed. And I, I see this often when I talk, but we have to have it. We've always had it on the menu and it's like. Do you really? We sell six of'em a week and it takes us more time to, and we can't increase the cost'cause it's a grilled cheese with bacon. So I can't charge$22 for a grilled cheese with bacon. But we've got, you know, fresh made hall of bread and whatever else that we only make for this. And so I, I would tell you as you're evaluating these things, using the data to be able to make those decisions as a way more critical thing. I think, you know, people romanticize from time to time their, their menus and, they, they don't realize that it's ultimately a business. It's a penny business, but it's a business nonetheless.

Bill Lindsey:

It absolutely is. And, uh, and you're, you're completely right. Um, you know, you've heard of the term pride and authorship. Um, I also look at, uh, pride. Didn't chef. I've worked with some chefs that are, you know, you can't do this to me. And, uh, it's not up to my standards. And, um, I would always tell my chef the difference between a chef and a cook is you can take this and make it great. If you're half as good as you think you are, and I believe you are, you're gonna make this something that people will enjoy. Even though it's not the best ingredient, but anybody can make the best ingredient work. I need you to make this work and you owe it to your staff. put it this way, if all of a sudden your food cost jumps up, you can't just slash the menu. there's, you can't just change every recipe, but you can start sending people home. So I used to tell my staff, this is how I protect your job and I need you to help me and sometimes it's a simple thing and I'll give you a good example. not enough people do contests anymore. I don't know what happened to that. Uh, there's some great companies out there that do great jobs in motivating staff to do a variety of things, but, um, whenever we started to run into a labor. Constraint. I always prided myself that I ran, uh, operations with 800 people at a time. I've never done a layoff in my career. I would find a way to increase profit so that I didn't have to send people home and just sit down with the staff and say, let me show you the numbers. This is where we're at, and the only way I can help protect your job is for you to help me and sell more drinks.

Jeremy Julian:

Sell more desserts.

Bill Lindsey:

Desserts, appetizers. You gotta know which ones to sell. we would sell fruit at breakfast, talk to your guests and just say, you know, you really should have a little bit of fruit and we're doing a contest right now, and you can help me win. Can I sell you a side of fruit for a dollar? And people are like, yeah, okay. I'll play along. You get enough of that and all of a sudden you see the numbers start to creep up, and now we're all in the game together and the staff understands that I don't wanna cut your hours, but the only way we can avoid doing that is we need to lower our food costs so that I can spend it on you

Jeremy Julian:

Yeah. Well, and you talk, you talk about profitability. I know, I know in kind of our notes pre-show, you had shared a couple of other things. We've already kind of talked about, talked about some of the different product choices that you're going with. What are some other things that you see underutilized that I guess. Take Cogswell out of the equation. But Bill, you've been doing this for a while and you've run very successful brands and you've seen very successful brands. What are some other things that people under utilize? And I know personally and you put'em on onto our notes, there's quite a few things that I don't see, I don't see happening in a lot of the brands that are out there.

Bill Lindsey:

Yeah, I mean, the easiest one are rebates, For goodness sakes, no charge, no fee, no commitment, no obligation. Uh, we have a rebate program that, uh, we sign up our customers and it doesn't cost them anything. It's completely passive. And what ends up happening is that the rebate programs, you know, we work with Buyer's Edge and uh, and others, and they basically collect the data directly from your distributors, and all of a sudden you start getting checks.

Jeremy Julian:

Yep.

Bill Lindsey:

And it's good money. I mean, it really is. It's significant money and it's free money. you're gonna spend what you spend on each of these products, and if there's a rebate out there, somebody's gonna get it. And if it's not you, it's your distributor.

Jeremy Julian:

Yeah. Well, and the funny thing is you even talk about a buyer's edge. Like it, it's amazing to me because people are like, well, I'll do it myself, but they don't realize I'll go manage that all myself. They don't have time and the energy to do that. So you find somebody to do it. They might take a small percentage of it. But they do this every day for thousands of restaurants all over the country. And so it's like they know how to play the games that the suppliers are, are playing, not, not that they're games in a bad way, but they're trying to drive behavior and they're able to help you with that. So you give up a small percentage of what you would've done to do it yourself, but most times restaurants aren't even doing it at all. So it's found money that once you sign up for it, it's just done. It's a done deal.

Bill Lindsey:

Yeah. Here's the other secret. it doesn't lower your rebate to use their service. Their tank doesn't come out of yours. It comes out of the distributor side. So it's kinda like credit card fees. You know, once you start understanding how credit card fees work, you realize that there is a way to game that to your advantage. you know, there's products out there that if you use their credit card, the products are free. they're not free. They're just using the fees that are. They reallocate the fees. So when we did our rebate program, that was my very first question. If my customer signs up with you for rebates, how much money are they leaving on the table? And they assured me that they get the full rebate. Their part comes out of the distribution side and manufacture direct deals that they've negotiated. So it'd be crazy not to sign up for rebates and also be. Senseless to try to do it yourself when they can do a better job of it. The other part of it is they get additional deals through other, manufacturers for things that you wouldn't expect, like shoes, like linens. Other ancillary things that you need as supplies in your restaurant. They get a negotiated deal where as a member that's participating in the rebate program, you can buy this stuff at a price that you're not going to get through a normal distribution channel. So that's a big one. And uh, you know, anybody that's not getting your rebates, uh, it's time to start paying attention to that. The other one, and this is a very interesting one, waste. all right, so one of the things that people are doing now is they're using AI to be more efficient in terms of how much should we buy, how much should we prep, and how much should we prepare? Uh, shout out to my buddy Matt Wampler and ossa over at Clear Cogs. I think they're the best at it. We have a lot of customers in common. We do a lot of that ourselves in our application, but we don't look at the weather and the little league team and is there a concert in town? So you can be very efficient in terms of doing that, but there are always unforeseen things like weather that occur or whatever the situation may be. So I try to preach the sermon of don't wait until it's waste. Get into the habit. A cadence of. Donating food. And let me explain to everybody in the audience how this works.'cause I'm shocked by people that are not aware of what's available to them. there's the, uh, the Path Act of 2015. So this has been around for 10 years, and you may not have heard about it till now, but there's what's called an enhanced tax deduction. And by enhanced tax deduction, what I mean is you can donate up to 15% of your taxable income. Under this act and get a very enhanced, significant deduction. And the way it works is this, this'll blow your mind if you take the total cost of preparing an item, and by total I mean your food cost as well as labor and overhead. You can double that. So it's a two x deduction, or you calculate the cost basis plus half of the markup. So if you're a table service restaurant, you have a significant markup on product. Let's say it's$50 worth of, uh, meats. And, uh, you know, you're on day two and it's gonna be fine for another couple of days, but maybe it's not quite as good as the product that you would sell in day one, that sort of thing. So let's say that we donated$50 worth of product under the Path Act. Let's say we put another 20 bucks in labor on top of that in overhead. So now we're up to$70. And let's say this is something that we would normally be able to sell for about$180 in revenue. You can either get$140 write off if you go two X or the lower one would be your initial$70 and the markup that goes on. And I think we come out somewhere around$125. So for something that you are going to throw away and absorb, a$50 loss just turned into$125. Tax deduction, and not only can you do this in your restaurant, but there's a company out there that I've become very familiar with called Copia. Their website is Go Copia, G-O-C-O-P-I a.com. If you're not familiar with these guys, they have an app. That you put on your phone, and there's major brands out there doing this that I don't wanna throw around names of brands without their permission, but you'd be surprised how many national brands have figured this out. So you put in a profile for the product, and at the end of the day, you do a line check and you say, okay, 20 pounds of this, five pounds of this, seven pounds of that. Donate it. And not only will they track what you donated and the overhead costs to help you get your deduction at the end of the year. But either a charity will come by and pick that up, or if they don't have a pickup service, then Copia will find a, a delivery service that will come by and pick that up and take it to a local food bank or charity that can use it. In general, they're donating within five mile radiance of the restaurant. So you're feeding your community, you're protecting your bottom line. It is an investment to a certain degree because that deduction applies at the end of the year when you file your taxes, but you took a$50 loss and turned it into$125 tax deduction. Depending on what bracket you're in, you're doing much better than you would have had. You just let this die in the walk-in and throw it out on the last day.

Jeremy Julian:

Yeah, no. And all of those, I mean, all of those are great for the world, great for the brand. They're, they make financial sense and ultimately you're helping. I didn't realize that they had gotten to a place, I remember when they started and I was blown away with what they were trying to do, and it sounds like they, uh, they continue to kill it, let's. Flip the page real quick, bill.'cause we've talked very little about Cogswell. I love that you've shared so much about ways that restaurants can make more money, but Cogswell in general, um, why don't you kind of just give us a high level of what it is that makes Cogswell different and why on, you know, round five, as you said to at the onset. Are we using some of the new technology? All of the wisdom that you and your partners have garnered to truly create a differentiator in the space because there's tons of competitors of yours, and there's lots of things that you guys did from the lots of hours of different things that you guys have done to make life easier for end users. Mm-hmm.

Bill Lindsey:

thank you for that opportunity and I'll try not to get too salesy here, but we took a different approach. I mentioned my first inventory system was before there were PCs and we had a company called re max Restaurant Management and Control Systems. Uh, there was, uh. Basically merged with Aloha to form Radiant Hospitality. One of my partners, uh, Dave Douglas, was the first president of Radiant Hospitality, so we've got a, a pedigree and we've all been doing this for a very long time, and certain things hadn't changed. They take too long to set up. It's a lot of manual data entry. It's very vulnerable to bad quality data. It's too much time in the office for the staff. So we built a different architecture with Cogswell. So for example, if you were to sign up for Cogswell today and either provide us with order guides or scanned invoice images, we will set up your inventory for you before we bill you for anything. And we can normally set it up in a couple of days. We do it better than you would do if you were doing manual data entry because we developed a standard packaging library. You know, the kids call it ai, we call it data mapping, and it's been around forever. We have a, a database, a library, if you will, of every vendor pack description we've ever encountered on any invoice in North America, and they're all mapped into our standard packaging library. So imagine. Feeding us a, a stack of invoices and, uh, basically it runs through our process and, uh, we then have all of your inventory items set up all the way down to the recipe unit level. But what we also did is we created an audit team. We call them receiving auditors. There are other companies that will tell you that they do. Some are part of what we do, and I can assure you that it's very unique what we do. We monitor every single item received for all of our customers, and we have a dashboard for our audit team. And whenever we see the cost of an item peak or crater. One of our staff investigates and makes sure that that's not a change in packaging or a misunderstanding on the pack size. So I like to say without an audit, automation is a fast track to a bad number. So whether we collect this data through digital sources like EDI connections, you'll hear that term, it's a direct connect to a major supplier. Whether we get alcohol invoices from FinTech or whether people scan them in. To our scanning solution that we call Invoice plus, or if you work with any of our partners, automate used to be Plate iq, factora, a newer product with a little bit more AI in it or shoebox. All of that data can flow seamlessly in a Cogswell, so we've completely automated receiving. We've put an audit team on top of it. We've built the structure of a standard packaging library and we can have customers up and ready for inventory counts in just a couple of days. So that's a game changer already. And what we've also done is we've created options where I. If we are to interface with North Star POS, uh, in fact we just did one last week with a client in common, uh, we immediately create all the recipe items. We map them into the recipe items, the name, the category, the sales price, and then the customer's job is to open up each of those items and fill in the ingredients using the items we set up for them and manage on our standard packaging library. So it's a different architecture, it's a faster turnaround. There's very little, if any, office time involved in managing the software. But there's some things that I always tell people to think about. You know, I always see my biggest competitors excel because they've tried all the other products and found out that they just don't work as well as advertised. So I'll let that speak for itself. But, uh, people want to take pride in their numbers, so they build these very elaborate spreadsheets. Well, not only do you not get history or trending, but we have built in analytics. You don't need to understand how to do actual versus theoretical. You just need to click on the report and use the data that comes out. And some people call it a VT or actual versus ideal. It's basically, uh, if I sold a hundred hamburgers and I used 105 buns, y. Where did the other five buds go? Is it a quality problem? Uh, did they drop'em on the floor? Is there apportioning issue? That sort of thing. So without putting recipes into Cogswell, there is a tremendous amount of benefit that people can get because you still have to track your actual cost

Jeremy Julian:

Yeah, your actual cost. And, uh, most times it's so funny to me because I hear, well, my, my food cost is often. It's like, well, tell me help, help me understand how you're calculating this things. It's like, what did I sell and what did, like what was my total sales and what did I cost for cost to buy product today? That's what your actual food cost is. It's not theoretically that that hamburger should had two patties and had a, a bun and had pickles and ketchup and let, none of that matters. At the end of the day, what did I spend? What did I sell it for? That is your actual food cost. And it's so funny to me how people conflate in their head, theoretical versus actual. Is that something you guys are finding often?

Bill Lindsey:

a lot. You know, we have people say, you know, well, we don't really do all the recipes, that it's like, good for you, you don't have to do, maybe you don't have a problem, but unless you're tracking trends. Unless you're seeing that your cost per cover has changed, and then is it the mix on the menu exactly what happened and why? Now you need a system where you can drill into that data, and I'll give you a great example. Let's say you're a steakhouse. You're buying tenderloins, you're buying strip loins, you're buying prime. Whatever your key, uh, you know, your quarters or your primal cuts are, we'll just take a tenderloin. Well, we've got a full filet, we've got a petite filet. We use the tips to make two or three other things and Cogswell, you can go into the tenderloin. And click on a recipe button and say, well, I got a 16 ounce filet, I've got a 12 ounce, and I use four ounces of tips in each of these items. And my yield is somewhere close to around 95%.'cause we're just, you know, peeling and denuding, that sort of thing, and hit enter. And now I've got actual versus theoretical on one of my most expensive items, it took me 10 minutes. Did they put the right amount of parsley on the plate? Go figure. Who cares? It's the protein that matters. So I always coach people. It's the old 80 20. You know, before we had computers, we tracked 20% of our goods and it gave us 80% of the overall benefit. So key ingredient, costing is a big piece of it. once you get into this and you start seeing the numbers, now the carrot. Takes hold over the stick and it's like, you know, let's get the rest of these ingredients in because we're getting a lot of good, valuable information. But if you're a Brazilian grill, for example. it's all you can eat. If you're a buffet, you, if you're a, a, make'em. As the customer walks through and says, oh no, I want more lettuce and less tomato. Don't worry about theoreticals. What you really wanna know is how much are you actually using and what is that costing you, and are your ingredient costs trending up or down? So before you get into the weeds of recipes, you still need a system with built-in analytics. That's giving you cost alerts on commodity changes and the ability to drill down on it. Then you get into things like putting labor costs on items to see, should we prep it? Should we, buy it, proportioned, get into suggested orders and try to be a little bit more efficient in terms of how you're doing things. But let's talk about prep and labor for a minute. in my day, we had a term called prep to shelf life. And I don't often hear people talk about it anymore, but here's the theory of prep to shelf life. If I have an item and it's got a three day shelf life and I'm making it fresh every day, then I am in fact using three times the labor dollars that I need in order to maintain my quality and standards on this one item. Multiply that out times all the items and all the restaurants, and you can see where your dollars are going. So one of the things that you want to be able to do is to say, well. Here's how much I have. Here's how many days it's gonna last. Some of it may have expired, hopefully not. But if, if I've got enough to get through the day, I'm not gonna prep that product. But if I can't get through the day, how much do I prep to last until Saturday or Sunday, or three days from now? So you wanna get a cadence of prep. That aligns with that. the other one too, when you start thinking about this, here's another one that people don't do anymore. Uh, I call it the lost art of flow through economics. nobody calculates flow through anymore. And I'll explain it in simple terms. Let's say you've got a table for four in your restaurant and you put two people on that table, theoretically, if you were to seat a third person on that table, what's your profit on that one seat? And the answer is about 70% because you've already paid the labor cost. Everything is sunk. So when you're looking at your dining room, if you're not yielding your dining room, do you have more two tops than four tops? Can you push'em together to make. A party of six. If you're not looking at your seating and efficiently seating your dining room, you're leaving money on the table that you would otherwise take to the bottom line. And with flow through what you do, especially if you have multiple restaurants with the same menu and similar pricing, you calculate your average revenue, you calculate your average controllable income. And you divide basically the controllable income into the revenue for each of these stores, and you calculate your flow through. So let's say I've got a very busy store that's above average revenue and they've got about a 20% flow through, and I've got a very slow store that's under average in revenue and they have a 30% flow through. I'm taking the managers and I'm gonna flip'em. If you can make a 30% flow through on a slow dining room, I need you in my busier restaurant because you'll drag more of those dollars to the bottom line. People don't look at things like that anymore for some reason. And I talk to users and I go, well, what's your flow through? And they're like. What, and it's like, oh, you gotta do your flow through just to see who's efficiently managing your two controllable costs, labor and cost of goods sold. the other thing too is menu engineering. And this is a much maligned term. People, you ask'em if they do menu engineering and it's like, uh, yeah, you know, what do you do with your challenges? And what do you do, you know, with your workhorses? And people are like, what are you talking about? So in simple terms, for those of you that aren't, in the weeds with this, it's one of my favorite things to do. You're looking at profitability. I. Popularity and it's a matrix. So if you group all of your hamburgers, if you're selling burgers or steaks, if you're a steakhouse, group'em by category and then rank them most popular to least popular, and calculate your popularity index to be considered highly popular. You want to be in the top 70% of your bracket. To be highly profitable, you have to be more than the average profit for your category. It's an over under, if you're into gaming terms, like I live in Nevada, so I, I deal with gaming a lot. So there are four generally recognized categories for the combination of high profitability, high popularity, so high, high, high, low, low, high, low. Basically stars, challenges, workhorses and dogs. Everybody focuses on the stars and the dogs. Those are too easy. The question is, what do you do with a challenge? And what is a challenge? A challenge is a high margin item that you don't sell enough of. You train your staff. Hey, first time in the restaurant, what do you recommend? Oh, you know, the Denver omelet is a favorite around here, and it's also your highest margin. Item, you train your staff. if you're looking at something that's a workhorse. Workhorses are great. You know, uh, we sell a lot of grilled cheese. It's not super profitable, but it's very, very popular, so, okay, that's fine. If it's in the middle of the pack. You don't want a workhorse on the post. You need a star up there to drag the profitability up, and then you position the workhorses in the middle to carry some weight. And if you start doing this and you really practice it, it's been around since I think 74. It came outta University of Michigan. A guy named, uh, carnival came up with this, and it's still my favorite way to look at things because it's not just your cost of goods sold. The popularity of the item will determine how it mixes in and weights into your menu. And now you can make very small surgical changes that drive, you know, if you got a very popular item and you raise the price 25 cents, that's a much bigger profit impact than if you have an item that's not so popular and you raise it by a dollar. So it's understanding that menu mix. how do you manage your menu? do you do the old diagonal line like we used to do with newspaper layouts? Put the highest margin stuff up here, make it so that when they open the menu, it's what catches their eye because that's what you want them to buy. And understanding. If you're at the counter and you're ordering, what's the picture over the shoulder of the counter person And

Jeremy Julian:

the person suggesting?

Bill Lindsey:

yeah. What are you selling? And most importantly, the modifiers. Most software out there today doesn't understand the relationship between modifiers and menu items. In Cogswell, we have a parent-child relationship. So what we do is we scrape through the transaction detail and add up the number of times somebody ordered the sandwich with chips, with fries, with cole slaw, with tossed salad, and roll those into the menu item so that you can get a very good snapshot on how that item performs. So here's the question. Do you suggest chips or do you suggest coleslaw? If there's a picture, does it come with a bag of chips or does it come with french fries? If you don't know these things, you're missing an opportunity to drive more profit with the menu that you already have today. And if you factor in the labor cost of prep behind it, you may find out that coleslaw is cheaper, but the prep labor that goes into it means you really should be selling chips'cause you throw.

Jeremy Julian:

give away that bag of chips'cause the coleslaw would kill you.

Bill Lindsey:

Exactly. and now you train your staff and you let them know that here's how you protect your job and make better tips. These are the things that you suggest. Here's why you suggest them. and getting people to buy into the program so that they understand what to do. So generally speaking, with Cogswell, the big advantages are setup efficiency. Better quality data and audit from our team to make sure that you're looking at real numbers, generating and mapping your menu items, relating modifiers to menu items so you get a full view of your business, prime costing for all of the prep that you're doing to decide if it's worth it to make this in-house. And most importantly, a product that has benefited from decades of experience into what works and what sounds good on the whiteboard. Quote Anthony, but doesn't work in practice.

Jeremy Julian:

Well, there's two things that I, I would, I guess as we wrap up, bill, that, that I would, ask our listeners that are still here 52 minutes in to think about is, is you talked a lot about partnering, whether that be with a buyer's edge, with a cogswell, with your suppliers, with your team members. So understanding that and then making data-driven decisions are the two things that I take away from today's episode. Love for you guys to look at Cogswell. I think they do a fantastic job. They've got, people that have been doing this longer than many of the people that are, that are running restaurants today have even been alive maybe. Um, and so with that, they bring that wisdom, they bring that knowledge, and quite frankly, they're a joy to talk to and they'll help you, even if you don't buy their product, they'll be like, Hey, how are you thinking about this? And how are you thinking about that? Which is part of why I, I love having Bill on for the second time.'cause there's stuff that, you know what, really ultimately, if you take away one or two things from this of partnering with your, your. Partner, you know, your vendors, your software suppliers, partnering with your team to do these things. You'll run a better restaurant, you'll make more money. And ultimately the reason why this show exists is to help restaurants to thrive. And so, bill, thank you very much. How would people learn more? How do people get in touch? I know you know, you guys got the website, you guys are at some trade shows coming up. How, how do they, how do they learn more and where do, where do they go from here?

Bill Lindsey:

So certainly it can go to the website. It's cogswell. You can tell from the shirt. COG. Gs with a WEL l.com. we're also gonna put up a landing page, uh, cogswell.com/uh, t, uh, RTG for, for the restaurant guys. We'll have a landing page where you can go in there and enter your information and we'll follow up with you and provide you with an online demonstration. Uh, we will be at the National Restaurant Show, but this may not come out until after the show occurs. And if you're looking for me, it's bill BIL l@cogswell.com. if I can't help you, I will find somebody who can help you.

Jeremy Julian:

Yeah. Well, I look forward to seeing you in, uh, a couple of weeks, uh, in Chicago. I know you guys are out kind of on the trade show circuit. So, again, guys, everybody needs something like what Cogswell has. It is way, way, way too difficult to run a restaurant blind nowadays, and there's so many things. So if you've gotten burned in the past, don't just go back to Excel, go look at something like Cogswell, because you know what? They can automate 80 or 90% of what you do by pulling those invoices, pulling in, and and creating the items to look through. And they've used that experience to help thousands and thousands of restaurants all over the country. So Bill, thanks for coming on for a second time sharing so much of your wisdom. Look forward to seeing you, to our listeners. Make it a great day.

Bill Lindsey:

Thanks very much.

Thanks for listening to The Restaurant Technology Guys podcast. Visit restaurant technology guys.com for tips, industry insights, and more to help you run your restaurant better.

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