1. Set Goals
Knowing what your concept’s averages will be important.
Food costs goal are different for each concept. We help you set goals you should achieve for your concept. By doing so, you will achieve profit. Paper and chemical cost are a factor and averages 4-6% for the industry.
Setting proper liquor, beer and wine goals for your concept is important to achieve profitability. Alcohol cost goals are also different depending on concept as well as particular beverage mix. Example: nightclubs must run a lower beverage cost percentage than a restaurant to achieve bottom line profitability. Restaurants must have their bars costed correctly to have another profit center for their bottom line.
Labor goal setting is crucial to the success of a restaurant. Labor must be managed daily. You must set sales goals that you have to achieve to make your labor cost percentage. There are only 3 ways to achieve the best labor costs possible in the industry.
- Manage the schedule
- React to sales
- Menu production (to get rid of all the unnecessary labor as possible)
When you schedule unnecessary labor you are also affecting two other areas: higher payroll taxes and higher workers compensation insurance.
Overhead is an important number but not one that can be controlled weekly. Raising sales will leverage this number and it is important to monitor this number monthly at a minimum. Re-evaluating certain things you spend money on within your overhead is important to do at least every six months such as credit card processing, business insurance, natural gas etc. Profit Helpers can do an overhead evaluation for your concept; to see what percentage you are spending in each cost area and compare it to industry averages. This can save you thousands every year.
- BUILDING / OCCUPANCY
Building costs are another important number, but like overhead there’s not a lot you cant do to change them outside of increasing sales to leverage them. Building costs across the United States averages 7-10% of sales. Target should be 5-7% or below.
Having daily and weekly conversations are imperative. Waiting for your P&L to come every 5 or 6 weeks simply does notwork! Having conversations in the shortest period of time is key. Having something as simple as a spread sheet will save you thousands in loss. There are also low cost solutions out there that will get you this information at any frequency. Avero is a fan favorite and very inexpensive. They are very user friendly and work with many Point Of Sale systems. There are many more to chose from.
Tracking month-to-date averages of all your cost areas will help in making better decisions in ordering as well as labor. Having your numbers is one thing. Executing action plans to get specific areas back on track are key. The faster you stop the bleed the faster your Bottom Line Profits will increase.
Within weeks, you will find yourself with the answers to crucial questions such as…
- How much did we spend this week in cost of goods and labor to produce sales?
- How much labor are we spending per day to produce sales?
- Why is my cash flow tight at the end of the month?
- Where am I losing money?
- Is my inventory being stolen?
- Is my menu a labor cost killer?
- Is my menu profitable?