The majority of the cost of most entrées comes from the “protein” component – meat or fish. Chefs try to maintain a consistent portion size, usually based on weight. Despite consistent portions, the cost will fluctuate depending on the raw purchase cost and the butchering yield. Even if you don’t have recipes fully documented and costed for every menu item, as a bare minimum, you should know the portion cost of the protein component of every plate. Also, you need to track the number of portions in inventory at all times. This will allow you to identify major cost problems that may be occurring.
Continue reading “Make Butchered Inventory Perpetual”
Rest assured, today’s post is not about tax evasion. But, it does have a very important implications. If your food recipes use any alcohol, it’s important to account for it properly.
Your food cost of sales should include all of the costs that are incurred in preparing the food menu items. Sometimes, restaurants forget to include the costs of liquor, wine and beer that are used in food dishes. Food costs are understated and alcohol costs are overstated. No big deal to the bottom-line, but it does affect the margins for each category, which are considered in your decision-making.
But there is a far more important reason.
Continue reading “Cooking the Books”
While there are some signs that we may be emerging from the recession, I think you’ll find that consumer behaviour has been changed, perhaps for many years to come. Even your “well-off” customers are much more price conscious that they have ever been before. Actually, they are more value conscious. In order to “survive and thrive”, you have to continuously monitor your restaurant’s value proposition.
While there’s more to the value proposition than your menu and prices, these are the two aspects that can be adjusted fairly easily in the short-term. These are also the two areas that most restaurateurs fiddle with first, when times get tough. We could probably add labour into the mix, too.
Recessions always harm the restaurant industry. People lose their jobs (or worry that they will lose them), cut back on meals outside the home, and spend less when they do go out. Most restaurants experience a drop in both volume and check averages, often severely reducing (or eliminating) their profits. To cover their fixed costs, restaurateurs will try everything to keep the customers they have and steal their competitors’ customers. Most start with price reductions, either through coupons and discounts or with across the board price reductions. It doesn’t take long to realize that quality or portion sizes have to be reduced to maintain profitable margins. Easier said than done!
Continue reading “Cost Control is the Key to Survival”
I’ve purchased several POS systems for my restaurants over the years. As an accountant and restaurant owner, I think I can give you a bit of practical advice when it comes to implementing a POS system in your restaurant. I visited a few web sites to see whether this topic had been adequately covered and found that there are still a few useful things to say. This article fills in a few of the missing details you should know about.
Most advice is written by people associated with a particular POS developer or a firm that implements such systems. Do you think they might be biased? I do. Based on my experience and research, all of the leading POS systems have very similar capabilities. Many provide the usual management capabilities in the standard package. Others provide functions commonly employed in a basic bistro style operation, and require you to purchase additional modules, if needed, such as inventory control (ingredients), menu engineering (recipes and costing), labour scheduling and time control, reservations, delivery, pool table rentals, etc…
Continue reading “POS for Thought”
I’m sure all restaurant consultants and accountants advise their clients to count inventory regularly. Depending on how many menu items and ingredients in use, and how many times you count inventory, this simple procedure can represent a very significant time commitment. Let’s take a closer look at inventory counts and see whether they’re worth the time and effort.
Continue reading “Counting Inventory a Waste of Time?”
I confess, the title of today’s post was the best I could come up with to try and make internal controls sound interesting. Truth is, the mere mention of internal controls makes most accountants’ eyes glaze over. While they may not be “fun”, they certainly are profitable. I’ll be writing extensively on the topic in the future, because the lack of effective internal controls will eventually destroy otherwise sound businesses. It’s a tough task, but I will try to keep the discussions practical and avoid theoretical, technical details.
Internal controls are the backbone of your operations. They help ensure that things get done the way they are supposed to and help ensure the accuracy of your financial reports. They include both preventive and detective controls. Whether you know it or not, you already have some internal controls in your restaurant. The question is how good are they?
Continue reading “Internal Controls for Fun & Profit”
On this blog, I mainly talk about controlling costs in restaurants. When we look at sales taxes that restaurants pay, we rarely consider them to be “costs”. Sales taxes are considered “trust” taxes. Restaurants, retailers and other businesses that charge sales taxes are really collecting them on behalf of the government. This means that sales taxes are not revenues and the remittance of sales taxes is not an expense.
So, it should be obvious that restaurants don’t have sales tax expenses. However, many restaurants do have sales tax expenses! I’m going to tell you how.
Continue reading “Do You Have a Sales Tax Expense?”
I’ve been scouring the net for useful information on a variety of topics related to restaurant cost control. I have to tell you that it is a pretty discouraging task. The vast majority of the web sites and blogs offer very little useful information for a restaurateur who wants to manage his or her operations better. Many blog articles are far too simplistic to be of any use. It is a waste of time reading (or even scanning them)! Others offer a huge number of articles, videos and templates, but usually require you to sign up as a “member” (i.e. customer). A quick review of their offerings suggest that you are not likely to get your money’s worth. A few sites offer advice that is, well, wrong. I hope to correct this deficiency, with an ongoing series of blog entries on this site. In the mean time, you might consider Joe Dunbar’s blog, Food Cost Control. Joe’s blog is one of the best I’ve come across so far. Maybe I have a soft spot for his site, because he’s so analytical!
Today’s topic is restaurant costs.
Continue reading “Restaurant Cost Percentages”
Recently, the Canadian Restaurant and Foodservices Association (CRFA) published three calculators to help restaurateurs determine the effect of the new HST, effective July 1, 2010, on their prices. The calculators cover wine, spirits and beer. I’ve included the links, below. Perhaps a short note is necessary to help you use them properly. They are set up for “typical” value, medium and premium priced examples. Unfortunately, you aren’t able to change the net cost figures, but they will give you an idea as to the effects on your prices and the price that your customers will be paying come July.
Continue reading “How the HST Will Affect Your Prices & Margins”
Wine inventory is different from food inventory in one very important aspect. Wine turns over a lot slower than food. In other words, it stays on the shelf longer. While food must be sold quickly, or it perishes, wine often improves with age.
The size and composition of a wine list depends on the type and style of restaurant. Higher priced, fine dining restaurants tend to have larger wine lists and include higher priced wines, while casual dining restaurants feature a smaller selection of reasonably priced labels that appeal to a larger audience.
We usually categorize wines by varietals, countries and price, and often show the wines by-the-glass separately. This is helpful for the customer trying to make a selection, but it is much less useful to the owner/manager. There are at least four different categories of wine, and each has its own unique profit profile and implications for analyzing costs.
Continue reading “Wine Cost Control”