It is almost impossible to compare a restaurant’s operations with industry averages. Organizations like the CRFA aggregate the smallest mom-and-pop with the largest chains to get their averages. Not many restaurants are “average”, anyway. Just about all industry statistics are based on surveys, not actual operating results. Even though such surveys are anonymous, who wants to put down that their cost of sales is 40% or more? So, the results are often skewed.
There is another way of compiling restaurant operating results.
Continue reading “How to Compare Your Restaurant”
“What I like to drink most is wine that belongs to others.”
Today’s post looks at alcohol related thefts once the alcohol has made its way to the coolers and shelves in the bar. These types of alcohol theft are broad categories. Within each there are many scams, too many to list. As I have discussed many times on this blog and my tax blog, alcohol theft has dire tax consequences for a restaurant. In Canada, the total cost of the theft can easily be twice the cost of the stolen alcohol. That’s why it is so important to minimize theft in your operation.
Continue reading “Restaurant Fraud & Theft – Part III”
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?”
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”
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’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’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”