Financial Tools

[Jim]

Do you use any tools to meaure your sales, trends, customer counts? If so, is it something you designed or was it outsourced? Or perhaps part of your POS system?
Currently, I am working a program that tracks sales/customer counts by the hour, day, week-over-week and month-over-month. In doing so, I was wondering what worked for you? What tools do you find useful for your particular establishment? What numbers (other than the obvious) mean the most to you? Does Average Hourly Sales mean anything to you? What about Food Cost per Meal or Profit per Capita? Your input will help me better determine what all I should be including in the scope of my program. Thanks!

[kuan]

Good Micros support can do wonders for your business. OTOH, don't get too caught up in ALL the numbers. Some POS systems allow you to input recipes. So theoretically, you can track trends like amount of poultry used in relation to menu items sold which use poultry. So at the end of the day, you can look at your tape, go in the reach in, count the chicken breasts, look at how many you sold, and figure out how many the kitchen threw away or ate. In fact, you can even set them up to do your purchasing for you. That's what you need, a robot running your kitchen

Kuan

[Pete]

It is so easy to get caught up in the numbers, especially since numbers can be interpreted different ways. Such as food cost % vs. dollar to the bottom line. The only numbers I have really cared about, from the front of the house are sales-tracked by shift, total covers per shift and a food break-out (how many of this and how many of that were sold) per shift. I feel that those are the only numbers I need (others may feel differently) to keep track of what is happening in my restaurant.

[Jim]

Come on, Chefs!?! What numbers do you look at to operate your business? Certainly not just Food Cost, I hope! And FOTH gang, what do you use to analyze your business? Do you trend? Hourly? Weekly? Come on... there are some smart folks out there... share!!!

[ShawtyCat]

Ah Jim...it seems that you have been seeking an answer for this question also.

I thought that somewhere between knowing how much it costs your business to create one of the dishes on your menu and establishing a profitable selling price, labor & equipment costs and waste were also factored in. Not to mention theft, repairs, maintenance and other miscellaneous expenses. I am just not sure of the exact way many folks factor in such expenses (even though I have seen a few P&L statements) and still make a profit.

I know they are a variety of ways to do this, such as: factoring in the expenses, adding a percentage of your total expenses to your selling price etc. Question: If your property taxes go up do you have a preset formula to calculate exactly how much will have to be added to your prices in order to balance this expense? I would love to know what works best without having to hire a Financial Analyst . That Business Management and Accounting course at the community college is looking mighty appealing.

A curious question: Do you have any expense cutting tips in effect? Opening your business from 5am till 10am, and again from 12pm until 11pm, in order to prep for the lunch and dinner crowds? And by the way, with all the accounting scandals going on, who audits your Accountant/CPA? And do you find that since a restaurant is considered to be a Small Business, the IRS tends to audit them more frequently? I know self-employed folks get audited more than folks with an employer.

I personally wouldn't mind getting up close and personal regarding my P&L statements etc. Isn't it beneficial to an owner to understand his/her business and to know whether the business is making or losing money? Better to fix a small leak than try to plug a giant hole on a sinking ship, don't you think?


Jodi

Hmmm...just saw the FOH question. Does anyone take inventory for FOH? Missing/broken dishes etc. Wouldn't it make sense to check your numbers on a monthly basis? Create a P&L Statement template on MS Excel or some other spreadsheet program and just input the information. If you link it to a pie chart it will give you a visual of how everything is being alloted. Doing this on a weekly basis seems just a little too time consuming.

[davewarne]

Hi,

I've run a restaurant as chef/patron for 20 yrs. In the final analysis I've settled on paying as little as possible for everything ( without compromising the quality I want ) and charging as much as I can get away with. Think about it. That's what you're aiming at anyway. I've spent hours on the computer and I've produced reams of paper but it never really told me anything I didn't know anyway.
I was taught to use a set markup of 3 times at college e.g 33% food cost 67% Gross profit. If I used that now I wouldn't last a month. Some places I know work on 20% food cost. So buy cheap, sell dear.

Dave

[Jim]

So, I guess what we are saying is that cost of goods (i.e. food cost) is the only focus. Does anyone measure 'sales per hour' to determine if there are certain hours that are less optimal than others? What about labor costs? I haven't seen how anybody is effectively staffing... or are we just filling time slots? Just curious as to how everybody analyzes their business, other than if they are in the red or black at the end of the month.
Thanks to everybody, thus far, that has contributed!

[kuan]

Originally posted by ShawtyCat
If your property taxes go up do you have a preset formula to calculate exactly how much will have to be added to your prices in order to balance this expense

Well, that's not the way it should work. Your food costs can go up, your labor, utilities, anything can go up. One thing we forget is that customers should never bear the cost of doing business. Prices are set by the market, and all things remaining equal, the $4.99 pizza will outsell the $5.99. You do like everyone else does, take a paycut.

Kuan

[ShawtyCat]

This is why I'm interested in the answer to this question! This part of the restaurant biz is so obscure...and very hard to understand. Unless you have an Accounting Degree or took a Restaurant Mgmt course.

So you are saying that if utilities go up you should try to find a way to cut the cost instead of passing it on to the customers. Right? So in essence, unless its an increase in the price of an ingredient or anything used directly to create a dish, it shouldn't be passed on to the customer? Just factor in the cost of utilities, property taxes etc. as a loss (aka expense) on the P&L and leave it at that then?

I am really trying to understand this. I keep trying to figure out how restaurants make an actual profit...with all the expenses and cost of food (waste and comps included).

Jodi

[kuan]

Originally posted by ShawtyCat
So you are saying that if utilities go up you should try to find a way to cut the cost instead of passing it on to the customers.

You can't pass the cost on to customers if they aren't willing to foot the costs! It's hard enough trying get some people to tip, imagine what would happen if they have to pay $0.05 more for their coffee!

I say better to try and increase sales, but that's what you should be doing everyday anways. The first thing everyone does is cut hours or perhaps a whole position. It's the most immediate and the results can be seen immediately. We've had this discussion before I think somewhere on the boards with mixed opinions.

Kuan

[kuan]

Originally posted by ShawtyCat
I keep trying to figure out how restaurants make an actual profit...

Well I can tell you how Enron did it

Kuan

[ShawtyCat]

You're funny Kuan.

Ill have to do a search for the post you mentioned. Would be an interesting read.

[BillyG60]

In the Last Restaurant That I worked at as Exec, I saved a Ton of money by having a properly trained staff. Not only is food not wasted, the quality and consistancy of the food will be better also. I tied in a bonus for my cooks with the monthly food cost avereage. It didn't take long before foodcost not only went down, but the moral of the kitchen staff was better and they took pride in the dishes the were creating.

[panini]

Kuan,
I must respectfully disagree with' the customer should never bear the cost of doing business'. All factors must come into play when pricing. It is pretty old fashioned to think that you just triple your cogs to achieve a profit. Personally, my cogs have remained constant for 2 yrs. now but my supplies have gone up 8% and my labor has hit the 31% mark. My insurance has doubled in all locations and a rent increase is forth coming to 24.sq ft in the retail space.
I really need to run a 14% food cost to make monies, If I used the old system I would be gone in six months.
We track hourly sales and I have reams of numbers spit out by my programs but my important tool is my original business plan which we update every quarter when doing quarterly payroll filing.And we always have our monthly forcast. I have always said that the cooking or baking is only about 30 % of being in, or running a business. This thread is the reason I preach to newbies to back up that culinary degree with some business.

[chefboy2160]

OK , here is what I do to keep it simple in this new age of computers , and I used to do this manualy before .
Use excel spread sheets and keep them up to date daily . it only takes minutes and you can keep a different sheet on your computer for whatever breakdown your company wants . This gives you the tool to know were you are at all times with your money and can break it down to the TTTTTTTTTTTTT . If you do not know how to set up an Excel spread sheet I am sure someone in your orginazation does so just ask for help . I used to balk at the idea of a computer in the kitchen but this change has made my job much easier .
Your friend in food , Doug .........................................