Do the Math

I have mentioned before in this blog, as well as to my consulting clients, and to my students, that it is all just one big–not too big–math problem. I recently wrote a post about cost structures and how every place is different when it comes to finding their profit.

https://tabletalkpdx.com/2015/10/23

This is just another way to look at that…

Does it add up?

Well, let’s see. How many seats do you have in the place? What do you expect to be your average check amount? Do you seat your full dining room just once? Twice? More?

Do the Math

If you have 40 seats in the place and you seat them on the average twice in an evening, and your average check is $40, and you are open 6 nights a week, you can expect to sell around $19,000-$20,000 a week. That’s 40 x 2 x $40 x 6…

Let’s start there. If you sell $20,000 in a week, what are you spending on labor?

Labor

How many servers do you have? How many line cooks? A dishwasher? A host? How many hours do they typically work in a week? What are you paying them per hour?  What salaries are you paying in addition to the hourly employees? Are you taking a salary?

Do the math

If you sell $20,000 a week, what are you spending on food? You don’t know? Find out! Do inventory regularly. Make sure product is not disappearing whether it is through theft, or through spoilage and waste.

Do the math

What is your rent? How much are you spending on utilities? Do you have tablecloths (I hope not)? What are your insurance premiums for the business? Are you providing medical insurance for employees? How much does that cost? Do you have a marketing budget?

Do the math

I find it easiest to start with 100% and go down from there. It is much easier to work with numbers between 1 and 100, than to get confused by all of those big numbers. If you look at everything as a percentage of your sales, it makes it more simple to control.

Is there something left at the end of the day?

I don’t know, do the math. Our goal is to have profit–nothing wrong with that. In fact, you have a responsibility to your employees to have a profit. If you have a profit, you will continue to stay open, and your staff will continue to have jobs…

Extras

Once you have done the math, you can now start to consider other things. If you find that you are earning a regular profit, you might start looking at other possibilities.

Are you now in a position to give bonuses? Some kind of profit sharing with your employees?

I recently consulted with a place that wanted to start providing health insurance for their employees. Cool, right? However, they realized that it would seriously cut in to their profit. Rather than give up on the idea, they decided to look in to ways to increase their profit, that way they could provide the insurance, and maybe even give out a raise or two, and/or some bonus $$$.

Do the math

So, I say unto you, do the math, figure it out, add it up and make sure that it results in some dough in your bank account.

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