Friday, January 27, 2017

Linen in the New Year

Happy New Year from Chefsheet. 

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HOW TO SAVE MONEY ON YOUR LINEN COMPANY:

In the most general sense, linen companies provide restaurants with items such as uniforms, towels, linen napkins and tablecloths. Linen companies also usually offer ancillary services such as area rugs, deodorizers for the restrooms, first aid kits and cleaning supplies. In order to contract a linen company, the restaurant is required to sign a service agreement which will set terms such a pricing, payment terms, replacement costs and length of the contract term.

The linen you use in your restaurant may be owned by you but cleaned by the linen service or perhaps the linen service both owns and services these items. In fact, some restaurants may own some items but source and service other items through a linen company - which may actually be cost effective.

Cleaning linen is not easy. The process to remove grease, wine, lipstick and other food stains that accumulate on restaurant linen takes industrial strength. Restaurateurs (like myself) who have tried to bypass this process/expense by doing it at home know just how smelly and ineffective this can be. Restaurant linen requires strong chemicals, tough machines and a lot of energy to launder, and it's expensive to do this.

There are a few operational ways a restaurant can control linen costs. Staff training may be the most important and effective one of these. Put simply, the fewer rags a cook uses in a shift, the less you spend on linen. Also, ensuring that the linen received is usable, clean and not torn is very important. All linen companies are prepared to credit your account when their product is faulty. Just be sure to separate the damaged or unusable linens and contact the company to let them know. Finally, outside of operational issues, negotiating your linen contract is an important way that you can control your linen costs.

IMPORTANT: Most linen contracts will commit the restaurant to rent linen for a set term. This term may be for a year, 18 months, two years, etc., and most of these linen contracts are set to auto-renew at the end of the contract period. When this auto renewal happens, prices can be adjusted unilaterally by the linen company. So, basically the process is this; you find a linen company you like, agree on pricing and sign a contract to lock this pricing for a year. At the end of the year, the contract will renew and commit you to another twelve months while the prices are adjusted as the linen company sees fit. The contract often states something to the effect that the restaurant must notify the linen company in writing thirty days before the end of the contract if they wish to terminate the agreement prior to the auto renewal. In practice, with a contract like this, a restaurant would need to remember the date to write a letter to the linen company and cancel the agreement or, otherwise, see the prices change and be committed to another contract term. The good news: when negotiating a new linen contract most companies will allow you to remove this auto renew clause. If your linen company won’t let you remove this clause, then you should find another company that will. What you want your contract to allow for is for the agreement to only be expressly renewed. This means that if you do nothing, the agreement will end. In the event the contract ends you are then free to start a new contract with new pricing.

Another challenge in controlling linen cost is how you pay for lost product. Every restaurant will see some linen lost to the garbage, torn or even walk out the door in someone's bag. Your contract with your linen company spells out how this lost product is paid for by you. In most contracts, the lost product is paid for at the end of the contract term. It may sound good to not pay for lost product until the contract is over, but really consider what this means. Perhaps you have worked with the same linen company for several years. You remember to terminate the contract at the end of the term as you have found a cheaper linen company. Your current company then bills you for all the linen which you lost over the entire period you have worked together. Of course you have no records of this and no way to verify the losses. The good news: they will usually negotiate with you by offering you a discount if you sign with them again, and then the process repeats. You can even ask that your contract specify the losses must be calculated before the agreement can be renewed and since you now have opted out of auto renew you have all the leverage to get a good deal on lost product. When negotiating your contract, be sure and check the prices for replacement, lost product and know you will be paying for these at some time in the future. It's best to agree on that before signing anything.

Overview:
Signing a linen contract, or any contract, is a big responsibility. We highly recommend making clear rules within your organization as to who can sign a contract. This will ensure that a chef or manager does not commit you to a linen contract without your knowledge. It happens more than you think!

Be sure your linen contract does not auto renew. Insist that your contract be negotiated at the end of each contract period and consider not allowing these periods to be more than the standard twelve months.

Check the costs for replacement product in your contract and be sure you are billed for these replacements before your contract renews.

Don’t wash restaurant linen at home. It will make your house stink and destroy your washing machine!

CHEFSHEET CARES!
- Go to chefsheet.com to see other ways you can save money in your restaurant.

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