Part I in this series focused on fraud and theft up to the point your inventory becomes available for sale. As we found out, lots can go wrong during the purchasing, receiving and inventory safeguarding processes. These frauds and thefts involved uncooked food or unpoured alcohol. Now, let’s uncork a bottle and turn up the heat.
Today, I want to discuss some of the major thefts that happen during “normal” operations. These thefts involve cooked food or poured alcohol. These are the ones that take place “right under your nose”. Today’s post examines food theft.
Continue reading “Restaurant Fraud & Theft – Part II”
Today’s post asks, are all thefts equal? I’ve listed four common forms of theft in restaurants and bars. If the amount of theft is equal in each case, is the cost to the restaurateur the same? If you think each one has the same impact on the restaurant or bar, read on.
Continue reading “Are All Thefts Equal?”
Technomic, Inc. is seeking independent and regional Canadian restaurant owners and managers to help them with a study on the current business environment for restaurants in Canada.
If you qualify and complete the survey, you will receive an Amazon.com code for $10 (Canadian) that can be used for purchases on their website. If you prefer, this amount may be donated to charity instead. Total participation is limited, so please click on the link below today!
I hope you will take the time to complete the survey, so that we can improve the general lack of Canadian restaurant market information. Once the results have been tabulated, I’ll be reporting on some of the key findings.
IT NEVER HAD A CHANCE TO BE SOLD
Today’s post covers fraud and theft of stock items before they are sold or used in your establishment. These types of fraud relate to purchasing, receiving and inventory stock keeping. Subsequent posts will cover additional types of fraud and theft. These posts discuss one of the most important issues facing restaurateurs.
Any theft of product for sale can result in significant sales and income tax liabilities. So significant, in fact, that it could put your restaurant or bar out of business. My restaurant tax blog, Canadian Restaurant Tax Advisor, has a wealth of information about restaurant tax audits and their dire implications for you.
Continue reading “Restaurant Fraud & Theft – Part I”
Most restaurateurs know that theft is a problem in the hospitality industry, but very few know how much is going on in their own establishments. According to the U.S. National Restaurant Association, approximately 4% of all revenue is lost to in-house theft. The latest figures from Statistics Canada, NPD Group and the CRFA, indicate that the average profit margin for Canadian restaurants was only 4.4% of operating revenue! Based on these figures, approximately one-half of your profit is lost to employee theft.
As if that isn’t bad enough, the cost of missing alcohol is only half of the story. Increasingly, restaurants and bars are learning that they have substantial tax liabilities resulting from stolen alcohol. I urge you to learn more about this insidious practice, here. It’s no wonder that 35% of restaurants fail because of employee theft!
Continue reading “Restaurant Theft Findings”
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?”