How to get your restaurant out of the RED and into the BLACK
Food cost formula
Beginning Inventory + Purchases – Inventory on Hand or Ending Inventory = Cost of Goods Sold (COGS). COGS divided by Food Revenue = Food Cost Percent
Do frequent inventories, recommend weekly over monthly. Why do weekly inventories? The longer you put off the inventory the more money you may lose.
By conducting weekly inventories you will see how much you are losing in a short period of time. You will be able to address and correct any inventory discrepancies quickly losing less money.
Labor Cost
Teach all managers, supervisors and key holders labor cost awareness. Managers should on the hour monitor labor by retrieving from the POS the labor summary report and the restaurant total sales.
The labor cost formula is: Total dollars spent on labor divided by restaurant sales. Hold your restaurant managers accountable. Send employees home or put them on break during your off peak times.
Give the employees extra work assignments such as detail cleaning when it is slow.
Non-Fixed Expenses
Stagger all lighting and equipment for both the front and back of the house by using what you only need, such as:
Electric: if you are not in the room turn of the switch.
Kitchen: only turn on one grill and one fryer on. If your restaurant has a second grill and fryer and your restaurant is busy, then it calls for 2 grills and 2 fryers to be operational.
Check for cheaper electric company providers.
Check all freezer and refrigerator gaskets for wear and tear, replace when needed.
Phone Calls
Long distance phone calls are for business only. The manager’s office should have local and long distance, everywhere else local phone calls only. Monitor your phone bill for suspicious calls.
Gas Stove Tops
Never crank the gas knob up all the way on high flame. Compare the gas usage from last week, month and year. Check for cheaper gas company providers.
AC/Heat
Set the AC/Heat thermometer to 72ºF. Secure the thermometer in a plastic wall lock box to prevent tampering.
Restaurant Equipment
Do regular preventive maintenance on all restaurant equipment for the front and back of the house. By doing frequent preventive maintenance on all front and back of the house equipment you will add longer life to them and not to mention you will spend less money on repairs.
Encourage all employees to properly use all equipment properly. Hold employees accountable for damaging equipment.
Hiring Employees
Hire top performers and employees with sense of urgency. Always conduct reference checks prior to hiring any employee. If you are hiring managers or employees who will be exposed to cash and sensitive materials, then do an background check and credit check. There are a lot of dishonest candidates ants such as managers and regular staff that will falsify information on the application hoping you will not contact their past employers. Weed these troubled employees out asap.
Terminating Employees
Always have a paper trail on all your employees in-case of an unemployment hearing or lawsuit. The burden of truth is on the employer to prove why the employee is no longer working for you.
Training Employees
Training is an Investment not an Expense, Develop an awesome training program. Train the trainers, then hold them accountable in training everyone else.
Time and Money is the Key
Spend the time doing the above and you will save money in the long run, if you do not you will have cash in the trash.