Food Cost Analysis

If you have been reading the past few posts about food cost, you probably have deduced that I do not like to be surprised.  I especially do not like to be surprised by a bad bottom line result.

I entered my career in restaurants in the days of paper and pencils, and calculators. 

I spent lot of time studying food cost and how to manage it successfully.

No surprises meant that I had to have a very good handle on the factors that contributed to managing my food cost: pricing menu items, watching waste, managing yields, tracking inventory and monitoring team activities.

And I got very good with a calculator and pencil.

If you are using the tools that we discussed in the earlier posts, inventory and plate costs, you will have the tools for analysis of your food cost.  

I always had my inventories set up so that I could compare each food cost category group to both projections and previous results.  For instance, I broke out meat as a category and a subtotal so that the “meat cost of sales” could be tracked as a component of the total food cost. 

If my food cost ran higher than projection, I could go back over each category subtotal and review what the problem might be.  This allowed me to hard target the problem, rather than “swagging” (Scientific Wild A** Guess) to my team. 

For “Plate Cost” I knew the cost of each menu item, what it costs to produce the item and what margin I needed for each item.  I also know the menu mix for each

Item, so I can assess the impact for both my food cost and my bottom line. 

Using that information, I could react very quickly if the cost of the ingredients changed, if my yields changed or if the pricing of the menu item changed. 

For example, in one job that I worked, my General Manager approached me about “my high food cost” on my shifts. His advice to me was “to get my portions and waste under control or he would fire me” and hire someone who would not blow up his food cost.  I didn’t know whether to laugh or swear at his ignorance, but I certainly wasn’t going to take his challenge lightly.  Using my knowledge of inventory and plate cost, I prepared a report for him that clearly demonstrated that I WAS NOT the problem, that his discounting and coupons were the cause of the food cost problem.  Quite simply, he was not charging enough for his food!

Even more interesting, the Area Manager got wind of my little project and asked me to expand my report for the entire last accounting period.  He wanted to share the discounting and coupon revelation with his boss and his entire team.  While I reflected in amazement that the entire organization seemed clueless about the impact of the mandated discounts and coupons, I welcomed the opportunity to bring some common sense to the process. 

I prepared the requested report, for an entire accounting period that clearly demonstrated that our unit had excellent portion control, minimum waste and effective yield management.  The food cost problem was the menu discounting and coupons, something that was corporate mandated. 

While a good case can be made for the coupons driving top line sales, the discounts was used, targeting low margin entrees, hurting the food cost because they did not take into account the high redemption rate by our guests that used the discounts and the price of the food that was used to create the menu items. 

My report certainly did stir things up, from the unit level right up to the regional level.  I gathered several new “friends” in the company, and got labeled the “smart guy”, because I understood Food Cost and could figure it out.   

Of course, being labeled the “smart guy” was also a pretty good career move for me, earning me several promotions, from unit to area to regional within that company, and then beyond.   

They definitely got smarter when they changed the coupons to drive top line sales by “packaging” multiple entrees and appetizers into a special deal, and keeping a very profitable margin while focusing our guests on higher perceived value.  

Still, my goal has always been focus to be very smart about my food cost. 

Food cost is a variable cost, but remember it always tracks with your revenue.  It should remain the same percentage of revenue, no matter what direction your revenue heads, either up or down.  As with labor cost, it is much easier to manage as your revenue goes up, because you have more offsets for errors. 

But you still must have very tight control over the costs for food and the revenue it generates, so it doesn’t impact your bottom line.   

Cheers! Here’s to building profits!

Calculating Plate Cost

If you are changing your menu, or if you just purchased a restaurant, you should do a plate cost of each menu item. 

Plate cost is the total input cost for a menu item.   It really doesn’t matter if you are serving a slice of pie on a plate, or several courses for carryout, you must know what it costs you to present that menu item to your guest.   You then divide that cost amount by your selling price to calculate your plate cost.

After all, if you have a projected food cost for your business, you have to know if each menu item helps you meet your projection. 

Admittedly, it is pretty simple to calculate the cost of serving a slice of pie.  You just start with your cost for the whole pie, and then use the yield to calculate the cost of each slice.  If the cost of the whole pie is $8.80 and it will yield 6 slices, then your plate cost is $1.47.  If your menu cost is $3.95, your plate cost is 37.13%.

Of course, it gets a bit more complicated if your bake your own pies in the restaurant.  In that case you have to have a recipe that your baker follows, so you can add up all the ingredient costs, to determine your cost for the pie.  Then you can calculate your plate cost, using the formula. 

The same applies to your other menu items.  You have to know the ingredient cost, so you must have a recipe for each item on your menu.  If you don’t have a documented recipe then you can’t accurately calculate your plate cost.  Thus the first step in calculating your plate cost for each menu item is to have a recipe, a recipe that is followed for each serving of that menu item. 

Of course, if your have a menu item that has several different ingredients, then you are going to have some work to do, especially if some of those ingredients have their own recipes.  Say that you have a hamburger that is made with your own special dressing.  You must calculate what a batch of your special dressing costs to make and then figure a yield, then determine the input cost of that dressing for each hamburger that you serve. 

Reading this far, your immediate thought might be this sounds like a LOT of work for a very low payoff.  Not really!  First of all, if you have a typical menu you probably have only about 45 to 60 menu items that would need to be costed out.  Second, most menu items have several of the same ingredients, so once you determine the cost of that ingredient portion, you can use that for every recipe. 

The much bigger payoff is that you will know exactly how much it costs you to serve that menu item and thus know if you are charging the correct price for this item on your menu.  And you then can calculate exactly the contribution to profit. 

If you don’t know, then you are just guessing.  Guessing is not the way to run a successful restaurant.

Now that you know the cost of each menu item, you have to make sure that it priced to contribute to your profit. 

10 Tricks and Tips to Make Your Food Inventory Easier and Quicker.

Do your food cost every week.

Unless you work for a chain where the weekly inventory and food cost is mandated, most owners and managers treat the weekly inventory as an “optional” exercise.  Believe me, it is not. 

I always enjoyed doing the inventory because I like to see the result, and make sure that I was meeting my profit goals.  I can’t have a big impact on my Fixed Costs every week, but I can really make sure that my food cost is in line with my projections and goal.  It is a first key step to make sure that your inventory is making you money.    

There is a variety of things that can happen to your food before is turns into revenue, and most of them are bad.  Delivery errors, waste, theft, reduced yields, spoilage, over portioning, recipe mistakes, and comps are adding to your usage without bringing revenue, thus increasing your operating costs and reducing your profits.  Careful inventory management helps you spot the problems, before the costs drive you out of business.

I crave success and thus spent a lot of time making sure my inventory was turning into revenue.  I took ownership of the food from the time I placed the order until I scraped the “leftovers” into the trash can.  Food Cost awareness was a part of my job that I really enjoyed. 

The calculator part is easy.  The handling, arranging, counting and calculating can be just as easy with some planning.  Establish your routine and it becomes very easy.

1)  Review your food inventory every shift.            

            I started every shift touching and checking all of the food.  I always knew what I had “on hand” and what it was going to yield.  I knew what we were going to sell that shift and what we needed to have prepped.  My kitchen staffs always worked from a large white board.  You can’t sell what you don’t have!

2)  Watch what is being used.  Watch prep, item sales and ending counts.

            I always watched what is being prepped and how closely the recipe cards are being followed.  An experienced cook can hit the ingredient measure very close, but for costly food items make sure the recipe is followed, using all the proper measurements.  I do not like waste in the kitchen!  

3)  Watch for the leftovers and “doggie bags”. 

            What is being scrapped off the plate by your bussers and dishwashers?  It is smart to make sure that your guests are getting what they paid for, but are your portions the right size for your guests?  Too small and guests feel cheated, too large and they waste it or take it home to "finish" later?   I don’t want my customers to waste food, and I don't want my menu items "re-served" under less than optimal conditions, so I made sure my portions were right.

4) Be consistent about what you count and when you count it. 

            It makes the most sense to count your inventory when your food stock is lowest, just prior to reordering most of your stock.  Typically, that is going to be Sunday, Monday or Tuesday.  You must decide if you are going to count food items that are “in use”, such as spices that are opened on the spice rack, or menu ingredients that are already prepared.  Prepped and in use ingredients are usually consistent enough to not affect food cost week to week.

5)  Place your food order carefully and check it in carefully.

            Make sure you order everything you need and get everything you are charged for by your purveyors.  Mistakes rarely happen, but it’s very smart to get errors taken care of at the time of delivery.

6) Keep accurate records of purchases and on hand inventory.

            It really doesn’t matter if your food cost bookkeeping is paper based, using a pencil and calculator or if it uses electronics and software, keep accurate records for both this week’s calculations and for your long term records.     

7) Train your team to store the same items in the same manner every day.

            To keep your records accurate, your whole team needs to be on the same page with you about how the food stock is handled and stored.  I kept my rules simple, only unopened, full cases in the stock room, open and partials in back stock, and units in the production and service lines.  It saved me a lot of time to have my team work smart.  

8) Go thru your stock once a day to keep order and know what is on hand.

            Every shift tour included time in all storage areas, opening all doors, and checking in all cabinets.  Part of this is following up on the team, and part of it is to previewing all stock to make sure everything is where it needs to be.  

               

9) Precount your inventory, check units, arrange stock for fast counts.

            Before you start the actual inventory, do a walk through to assure everything is ready for counting.  To do the inventory in the shortest time, you must have everything ready to count, you do not want to have to move items or open boxes to do the count.  Your focus must be on the count and writing it on your ledger sheet.  

10) Count by location, and count the same way at each location each time.

            Door to left, right to left, top to bottom, frozen to dry, it doesn’t matter.  What does matter is the routine.  Routine helps focus you on the count and working through it quickly. 

If you have done your steps, everything is ready, and inventory will go very quickly.     Plan, organize and control your food cost system to insure accuracy and efficiency, as well as profitability.  It will pay off for your restaurant. 

In the next post we are going to talk about food cost for each individual menu item.  Stay tuned!

Food Cost is Important!

Food cost is very important to the operation of a successful restaurant.

The cost of the food you serve could be your largest cost, and the one cost that, if not managed closely, will destroy your profitability.  It is your key controllable cost.

Before you establish your restaurant, or purchase an operating restaurant, you will have a key budget number for your food cost.

Whatever you call it, Food Cost, Cost of Goods Sold or the financial term “Input Cost”, you must have an accurate projection and track your actual cost against the projection regularly. 

What is food cost?

Simply it is the cost of all the ingredients that you use to serve your menu.

It is simple to calculate:

The total value of the food on hand at the start of the accounting period,

plus the total value of all food purchased during the accounting period,

minus the total value of the food hand at the conclusion of the accounting period, which gives you the total amount of food used during accounting period. 

Then divide the total value of the food used during that accounting period by the total net sales to get the food cost percentage for the period.   

To recap: Beginning inventory + purchases – ending inventory = food used / total sales = food cost.

That calculation is the simple part.  Managing it is much more complex. 

Of course you start with a budget and projections of your operating revenue, expenses and profit.  As you build your menu, you calculate a “plate cost” for each menu item.  Finally, you regularly calculate your food cost to see if your actual food cost is in line with your projections or budget.   

The calculation starts with doing a complete inventory of all of your food and beverages.  When the inventory is complete, you have to determine the value for everything on hand. 

How often should you do an inventory?  Or put another way, how often should calculate your food cost?  If you are doing a monthly income statement, then you must do the inventory at least once per month to accurately calculate the monthly income and profit.  But you will want to monitor your operating costs more frequently to be sure that your restaurant is operating to your profit projections.

When all is new, or if you have been having food cost problem, you should be calculating food cost on a weekly basis.  If everything is under control you may decide to extend that to biweekly. 

While I know and have worked with managers and owners that only did a monthly inventory, I would not.  I don’t like to be surprised.  I just believe that if you let four weeks go by, you don’t have the time to react and impact the food cost.  A lot of stuff can happen in four weeks, and most of it is bad.

Food cost is the key cost that you have to keep a very close track on, so that you can keep your restaurant profitable.  Checking it weekly gives you the vital information you need to react to variations in your food cost and get it back on track to your projections. 

In the next installment of this food cost series, we will talk about ways to make your weekly inventory easier and quicker.  

Know your Break Even Point

Knowing your restaurant’s Break Even Point is the most fundamental number that you must know.  As you assemble your business plan and budgets prior to opening your restaurant, you must calculate your BEP so you know exactly when your restaurant will begin to show a profit.     

These steps, before you serve your first guest, will give you a very good idea of the revenue you must have to generate a profit for your restaurant.  The Break Even Point is literally the dollar amount that covers all the expenses and the profit begins.  If your BEP is $21,836, the first dollar beyond that amount is profit.

Knowing the Break Even Point will help your planning.  You will be able to make adjustments to your business plan, budget or your operating plan before you get your restaurant into a fiscal hole that will be difficult to get out of.  If your menu plan and day part plans will not generate revenue sufficient to get the restaurant to BEP, then you must reduce your expenses to generate profit.  It is better to know that before you incur long term expenses, than to try to increase revenue later to overcome your expenses. 

Restaurants are tremendous cash flow generators, and many owners get seduced by the cash flow, believing that cash flow is the same as profit.  Unfortunately using your cash flow to solve problems means that you risk spending beyond the revenue and you will lose your business.  Without sound fiscal management, cash flow spending can continue until a crisis exposes the cash flow short fall or the expenses over run the cash flow.  

 

So how do you determine the Break Even Point?

The formula is Fixed Costs / (1-(Variable Costs/Sales))

To calculate your Break Even Point you must know your total fixed expenses, your total planned variable expenses and your planned net sales.  You probably have these numbers already available in your budget or in an Excel workbook. 

If you don’t have these numbers available in a workbook, you can get one here:

http://www.docstoc.com/docs/82061341/Break-Even-Point-Calculation-Template-for-Restaurants

This template is easy to use, quick to fill out and does all of the calculations for you.  Just enter all of your expenses in the correct budget category, and then let the workbook do all of the calculations for you.  The second page shows all of your results and the BEP that you must hit to profit. 

If you don’t use the template, just get the total dollar amount for your fixed expenses, your projected variable expense and your projected net sales. 

Step 1)   Calculate the variable expense cost percentage (Primarily Food and Labor Cost of Sales) by dividing the variable expense dollars by the projected net sales.

  

                        Projected Variable Cost of Sales = $52,769

                       

                        Projected Net Sales = $91,489

                        $52,769 / $91,489 = .5768 (57.7%)

Step 2)   Determine the Variable Cost remainder by subtracting the Variable Cost Percentage from 100%

                        1.000 (100%) - .5768 (57.7%)  = .4232 (42.3%)

Step 3)   Divide the Fixed Cost total dollar amount by the Variable Cost Remainder

                        Fixed Cost Expenses = $31,659

                        Variable Cost Remainder = 42.3%

                        $31,659 / .4232 = $74,809

Step 4)   The Break Even Point is $74,809

Remember that the BEP is simple to calculate and will help you determine exactly the steps that you must take to make (and keep!) your restaurant profitable. 

You should keep the figures necessary for calculation handy so that you can effectively evaluate any strategic decisions regarding your operational plan or (adding day parts or menu changes) any capital expenditure decisions and how they will affect your BEP.  You will also be able to track any changes to your variable expenses and how those will affect your BEP.  If there are changes to your restaurant cost structure, you will want to be able to react quickly and preserve your profit.    

Three Key Performance Indicators

Every restaurant operator needs to monitor the key performance indicators, to evaluate the fiscal health of their restaurant and to make strategic operational decisions.

We tell operators if they keep track of nothing else in their restaurant they need to keep track of these three key performance indicators, because they are critical to understanding your revenue stream and predicting what steps you must take to keep revenue on track. 

If you combine these three Key Performance Indicators with your Break Even Point, you will have the very fundamental information to make strategic decisions on your revenue. 

These three key performance indicators are essential to evaluating restaurant revenue performance. 

            1) Net Sales

            2) Guest Count

            3) Guest Average

These three key performance indicators are usually easy to validate and the source numbers are usually close at hand.  If they are they are not easily available from your point of sale system, make sure that you have the paperwork in place to make it easy to track and harvest these numbers on a daily and weekly basis.

If your restaurant is using a computer POS system, this information will be readily available from the POS system.  It may be in a report format that is different than what you will need but usually the hard numbers can be used and reformatted into an informative system for your monitoring and evaluation.

If your restaurant is not using a computer POS system, it may take a little more time to assemble the three Key Performance Indicators, but it is still possible using the paper trail that usually exists in some degree in almost every restaurant.  If you don’t have this critical paper trail, start it TODAY! 

Additionally, these three KPI numbers are usually easy for a restaurant operator to track and share.  You may not be willing to share detailed income statement information, but these key performance indicators should be shared with your entire team. 

Your service team should be tracking their contribution to the daily and weekly restaurant KPI numbers, because you certainly will be tracking their contributions to the success of the restaurant.  While your production team may have other targeted numbers to evaluate their contribution to the success of the restaurant, they also should be aware of these KPI numbers because these numbers are so critical to the evaluation of the revenue.  Basically, the more people on your team that are working to move the numbers, the better your restaurant will be.    

Ideally, you should be able to assemble a report of the three Key Performance Indicators that covers at least the last year of restaurant operations.  A shorter period can be used, but it may not demonstrate a full range of variances of seasons and operating conditions.  The longer the time period you obtain, the better you can evaluate and analyze the trends in reports that you generate. 

First – Net Sales 

The first key performance indicator that you must gather for your evaluation is Net Sales.  Net Sales is all revenue from sales of food and beverage minus tax that is collected on behalf of a government entity.  The Net Sales is frequently obtained directly from the POS system, usually in the end of day or end of week report.   

Second – Guest Count

The second key performance indicator that you should gather for your evaluation is the Guest Count.  The Guest Count is the number of people that are served in the restaurant.  This key indicator is usually available from the POS system, again in the end of day or end of week report.  Occasionally the POS system will not track the Guest Count, by not requiring the input of that information as each check is opened.  Contact your POS vendor to make sure the POS system is set up so that your service team can enter the number of guests for every guest check that they open.     

Third – Guest Average

The third key performance indicator that you should gather for your evaluation is the Guest Average.  The Guest Average is the amount that each guest spends in the restaurant.  The per Guest Average is sometimes available directly from the POS system however we have noted that many POS systems track the Guest Check Average.  

Again, you may have to ask your POS vendor to adjust the programming in your system so that you can get the information to output correctly.  For some odd reason most computer programmers believe that Guest Check Average is the same as Per Guest Average.  They are wrong!  It is also helpful if the vendor will format the information into the individual server reports so that they can track their personal contributions against the group average and against your established team goals and expectations. 

If the POS vendor cannot adjust the information in their system, you can fall back on a paper tracking system.  It would make most sense to require your servers to track each Guest Check that they open and tracking the number of guests for each check.  At the end of their shift, they can turn in the report to management for entry into a tracking spreadsheet, that will calculate the Guest Check Average for your due diligence tracking. 

How to Evaluate the Key Performance Indicators

These three Key Performance Indicators can be used to determine a lot about the operation of the restaurant.  Using these numbers you are able to track the business of the restaurant and critical trends of the business.  They are also the primary source of many of the other numbers used in the fiscal analysis of your business.  As we said earlier, if you track nothing else, these KPI numbers can provide some of the very fundamental information that will serve you very well.

As you gather these numbers, you should be able to put them into a system (i.e. computer spread sheet) so that you are able to do some analysis and manipulation of the information.  You should begin gathering at the daily level and then use the spread sheet to gather the information into larger blocks of time for your analysis.  

The first KPI number is Net Sales.  You should know this number for every business day, with a time span of at least 3 months, if not longer, for valid trend analysis and decision processing.  It is helpful to be able to break the net sales number into dayparts, if that is essential for your restaurant.  The daily net sales must come from the POS or cash handling system.  The number should be validated by checking it against the daily bank deposits or the guest check register.

The second KPI number is Guest Count.  You should know this number for every business day, for a minimum of 3 months for valid trend analysis and evaluation.  This number can also be broken into dayparts, if that is required for certain decisions.

The third Key Performance Indicator is per Guest Average.  You should know or be able to calculate this number for every business day, for a minimum of 3 months to make effective decisions.  Of course this number can also be broken into dayparts, to make effective evaluations of the business going forward. 

Once you have this information on hand and you are getting used to evaluating it and using it to drive your every day operations decisions, your restaurant will get easier to manage.

Let’s review three decision examples:

You note that net sales are off by 5% each of the last three weeks.  This downward sales trend is very alarming and you need an action plan to reverse the trend.  But an effective action plan requires knowing why net sales are trending down.  The Key Performance Indicators will help you hard target the problem. 

If Net Sales is down because the Guest Count is falling, you can do traffic builder marketing to get the Guest Count back up.  The problem is quite different if the falling Net Sales trend is from a declining Guest Average, you must action plan to get each guest to spend more, usually by focusing your service staff on upselling and adding on to each guest. 

Either way, you can make a decision that hard targets the problem and makes the most effective use of your time, your action plan and any marketing that you do.   

In the second decision, you must evaluate who are the contributors are on your service staff.  By tracking and monitoring the Key Performance Indicators for each server you can focus your coaching for each server on the challenges that each server must concentrate on to improve.  You can use the information as an opportunity to reward your high performing servers, and use the information to get the servers with lower numbers back on track. 

Again, you can target your feedback to each server.  The message is going to be different to a server that has the highest Guest Average on your service team but has handled the fewest guests.  They may be stuck with a lot of deuces or they might be working their tables for too long and not turning them.  The server that has a lower Guest Average but has a higher Guest Count may be missing sales opportunities by turning tables too quickly or by taking a section that is too large, with the mistaken belief that the table handles or table turns are their key to earning better tips. 

In the third decision, you must make your marketing decision for the next Quarter.  You might see the opportunity to build your lunch day part, because of certain market factors you have identified.  You should find a menu special that will attract enough guests so that your promotion is revenue neutral marketing. 

Your goal should be to build Guest Count at a smaller Guest Average, with a carefully planned sales effort that sells the convenience of your location, the speed of your service, your great tasting menu and friendly atmosphere.  If you handle the promotion correctly, you will retain Guests after the promotion.  Properly managed, the after promotion Guest Count remains at promotional levels, but the Guest Average returns to pre-promotion level.  This means that you have effectively increased sales in the lunch day part. 

In each of these scenarios, it is critical to have the Key Performance Indicators so that you are able to examine trends and make valid decisions that will impact your restaurant’s revenue and fiscal management. 

As a restaurant owner you have a lot to keep track of every day but you must be aware of these three Key Performance Indicators, because they tell you so much about your revenue and give you information necessary to plan for effective sales and profit increases.  Restaurant owners know that these Key Performance Indicators are the very foundation of running your restaurant By The Numbers!

Welcome to By The Numbers!

I love the restaurant business!

I can’t think of another business that is such a dynamic mixture of working with people, creating a product and hands on management.  The feedback from your efforts is nearly instantaneous and the pace of activity is non-stop fly by! 

My philosophy of the restaurant business is very simple.

First - Take care of your team.  Unless you are running a food cart, you will need a team to help you run your restaurant.  Take care of them, train them, coach them, pay them, praise them and celebrate them.

Second - Take care of your guests.  Every interaction must give your guests a reason to come back.  The competition is way too strong and the marketing is way too expensive, so it is a sin to waste a single opportunity to dazzle your guests every minute of their visit.

Third - Take the money to the bank.  As the saying goes, if it isn’t fun and it isn’t profitable, what the heck are you doing here?  If it is fun but it isn’t profitable, it’s a hobby.  If it is profitable, it will support you and it will be much more fun!   

This blog is about the third part, take the money in the bank.

Almost every person that gets into the restaurant business is a “people” person and is gregarious enough to take care of their guests and to manage team members.  And if they are following a dream to a have a certain concept with favorite menu items, we are not going to be able to change their mind.    

Taking the money to the bank is an entirely different manner.  The bookkeeping and accounting for a restaurant is tedious at best and overwhelming at the worst.  Far too many operators quickly discover that as long as they write a few checks every week, the guests keep coming, so they can have the fun without the tedium of keeping track of the financial aspects of their restaurant. 

Unfortunately, this is the prime reason that 90% plus of restaurants fail in the first year.  If you don’t know what it costs you to operate and you don’t keep track of the money that you are spending, you will lose everything.   And it happens over and over again, year after year.  Sadly, the operator doesn’t believe that it is preventable. 

We certainly know of restaurants that will have challenges to be successful, either from odd concept choice, lack of guests or poor menu choices, but if a smart operator understands exactly how revenue they need to keep their restaurant alive, they can formulate a plan to make the restaurant profitable.  And still have fun!

That is the purpose of the information presented in this blog.  We talk about the tools and knowledge that have guided success in the restaurant business, both for us and the thousands of operators that we have worked with over the years.  The topics we present and the tools we discuss will work, they are tested and refined, often over years of real life use.  They are proven drivers of success, in all different types of concepts.

We are not accountants, nor are we attorneys, so don’t expect dense subject matter or deep theories.  We hope that you are already using an accountant to help you comply with regulatory agencies and banking convents.  We also hope that you have an attorney for legal matters, from the simple contract review to the complex lawsuits.

If you are smart, your accountant will be producing key financial documents, at least quarterly.  If you are the ambitious sort, you may even have setup an accounting software package, to help you manage some of your restaurant’s financial matters.  If you have taken these basic steps, congratulations, you are getting a handle on what it takes to be successful. 

If not, stick around, because we will be helping you!

What we will present and coach is how to use the every day numbers that come out of restaurant operations to manage, build and monitor the fiscal health of your restaurant.  The things that we do, the tools that we use, are relatively simple to use.  Our experience shows that the average operator will have less than 10% of their workday to devote to fiscal administration.  We have designed our tools to give you calculations very quickly, once they are setup. 

If you are an excellent time manager you might be able to get more administrative time over the course of your work week.  As soon as you are able, you should plan and set up your work week so that you can devote the time necessary to build the profits of your restaurant.  It will rarely be a time without interruption, but with discipline you should be able to get several hours a week.  We have lots of hints and tips to help you get the valuable time set aside.  

Some of the tools that we discuss require you to invest some time to establish information for your tracking and calculations, but once you have invested the time to get things set up, maintenance is usually pretty simple.  The first time that you set up the inventory form, it will take you a while.  But once it is set up, it is very quick to enter the numbers and calculate your food cost.  It is definitely worth it to invest the time in setup of your inventory control and food cost sheet, because the pay off is to quickly calculate your total food cost of sales for the accounting period.    

Other tools are a lot simpler to set up and monitor.  You just harvest the numbers from your POS system or your invoices and you can quickly calculate the baseline number that your should be a part of your tracking. 

So if you are interested in running a profitable restaurant, you are in the right place.  There may not be a lot of AHA! moments but there will be some solid information on things that you can do to make sure that your restaurant is profitable.  

Thanks for visiting Restaurant Ownership By The Numbers.