Restaurants are really no different than any other kind of business. You need to drive sales, and control costs. That’s it.
Oh, I guess I should say more than that…
How to go about that really is the test, isn’t it? Let’s have a quick lesson in that thing called a restaurant. The prime costs in a restaurant are labor, food, and beverage. It is a universal idea that those costs should never exceed 65% of the sales.
That doesn’t mean you would ever be satisfied with 65%, it simply means that if you go above that figure, there will be nothing left for profit. remember there are other concerns, such as, rent, utilities, insurance, the list goes on and on. So every percentage point you go above 65% is a percentage point taken away from profit.
Never be satisfied
If you get that percentage down to 58% for example, that means there is 7% more that can go toward profit. So, keep working on keeping that food cost down, that beverage cost down, and that labor down.
Having controls and systems in for your food is a great starting point. Having a system in place for ordering food so that it is not wasted is always a good idea. Make sure you are ordering what you need, based on historical data that can tell you what your expected usage will be. Over-ordering and under-ordering can be quite expensive. Make sure you are ordering what you need–with a little pad–to control that.
Take inventory on a regular basis. Once a week should be good. That way you can be sure that food is being rotated and not going bad. it will also help keep theft down–sorry that happens quite a bit in restaurants –your own beloved employees will steal from you.
Make sure you have someone who knows what they are doing checking in the product. A detail oriented person. And then get that stuff put away fast. Don’t let it sit there all day. It will go bad. It will disappear.
The same is all true for beverage. Having separate systems and controls in place for that makes a lot of sense. For some reason (hmm, alcohol) beverages tend to vanish more than other things. Treating the bar as a separate business is always a good idea.
Lock it up
Lock up that wine. That beer. Those spirits. Limit who has keys and access to it. This will help you get control of that.
Have standard recipes for the drinks. That way you know if you are getting the 20 drinks you should out of each bottle.
There is no way around it. If you want to control labor costs–usually the biggest expense in a restaurant–you need to take advantage of your salaried employees. Sorry, Mr. Chef, you are probably going to have to work the line. At least sometimes.
Sorry, Ms. General Manager, you are going to have to come down from that office and run that front door. Sorry, Mr. Sommelier, you are going to also have to wait on tables from time to time.
These are just a few small ideas on how to control the costs in your restaurant. In fact, I have hardly touched the surface. Besides the million more ideas I have on this subject, there is also the problem of how to interpret results. It is one thing to be able to recognize problems, but what it means exactly, and what to do about it is the real challenge.
This post is already longer than I like them to be, so we will have to explore other ideas and how to boost those sales another time. I have many ideas for that…