those that answered 'no' should skip this and go straight to show #2!
for the rest of us, here's my chef's eye view of the mysteries of restaurant finances:
the 5 steps we use in our restaurant, that absolutely WORK are:
1. do a 'profit and loss' statement/report EVERY MONTH. although any accounting program will issue a report at the touch of a button, there are a few things to get sorted before you have an accurate report. most importantly you need to do a 'stocktake' at the end of every month. the program will then be able to add you month's purchases and deduct the stock that was there at the beginning to generate an accurate food and beverage cost.
2. understand EVERY LINE. sounds a bit glib, but true. depending on who does your books, the likelihood of entries needing explanation is high. no point in a report if you don't understand it!
3. get naked in the shower with other restaurant owners. or to put it another way - use 'benchmark' figures. these are territory specific, so get hold of some for your area. they are figures of other restaurants, just like yours. they'll give you a great idea of how you, ah, compare against others.
4. use the benchmark figures to make your own 'percentage compass' . get help with this if you need. the aim is to build a list of dream expense percentages. remember that the most important way of reducing the food cost percentage, for example, is to increase sales without spending more on food. it could look something like this example :
food and beverage 30%
general and admin 6%
marketing 2%
operating 5%
employment 35%
occupancy 7%
net profit (owners wage) 10%
owners invest return 5%
so play with the percentages! so long as they equal 100% you've got the start of a plan. already you can see how some lines need explanation, e.g. whats covered in 'operating'? I have a car lease, where do the repayments fit in? how do you work out owners investment return? chances are you'll need to sit down with someone 'in the know' to complete this, but once you do....
5. commit to achieving those goal percentages. this is a massive topic! i love the interaction between the sales and the expenses. put your prices up and reduce your expense percentages. but put them up too much and don't make as many sales! hmmm, there's a lot to think about in here. we'll be looking into all of this in upcoming episodes.