I am shopping for a couple of books to assist my son in using the myriad operating reports that he gets from his accounting people, his point of sale system,etc. I have read that the National Restaurant Assoc assembles data for various restaurant types and sizes for comparative analysis, but I haven’t been able to track down just how to aquire that info… My guess is that you guys go about analyzing your performance on a comparative basis–using month-to-month, year-to-year comparisons for your own costs and sales, and some of you probably utilize national averages in comparisons for deviation analysis.
His operation is an Indi pizzeria/Tavern, and he has not yet started delivery (opened in July of this year). It is a sit down table service operation, with a full bar, pizza and bar food.
The target would be to be able to assess food costs, labor costs, overhead, liqour/food percentages, etc. etc.----and of course magins for the various categories. I would appreciate any input, and thanks in advance for your help.
As a former USMC Auditor, you’re on the right track! Trend analysis is an effective tool, but it only shows you history…if you have a bad month it it to late to react…you must pro-act as well…keeping a log of food purchases and their ratio to sales will be a help…
A new business should also take a physical inventory each month as well…
I use QuickBooks & take a spot check inventory on my major items more frequently and compare those trends…that will help stop/slow down month end surprises…
Analyzing labor trends in the various departments is effective too…how many labor ‘hours’ are required for the dollar sales… where is that trend heading…how many server hours vrs how many cook hrs for those dollars…
There are many, many things to look for…some even track the dough balls made vrs the pizza boxes used…thats quite fun to determine the inconstancy…
But in the end…you can track too much data & it may become useless…some folks here track some purchases in different categories… I prefer to track only food in my food cost & paper supplies & cleaning in their respective categories…others will include boxes etc in their food cost…its a personal choice, but from an auditor’s point of view I would rather track like items in like categories…
The bottom line is to make money…high food costs, high labor costs & high consumables will kill the business in no time…you can have high food costs if your labor is low and vice-versa…many folks here will try to keep food & labor costs below 65-75%…even that figure will vary from members here…
McDonald’s has a 45%+ food cost (so I’m told) but their labor cost is in the low teens…
Remember…sales volume covers all sins…but it also covers all the lost profit…
pro-active… monthly inventory - how do those two go together.
Ideally you should be doing daily inventory. This will enable you to QUICKLY:
a) understand your usage
b) control over usage
c) identify theft (of both inventory and other methods)
d) help with ordering
Absolutely NO POINT in doing this monthly if you actually want to use this info to do anything proactively. What is the point of finding out you’ve been, say, over-portioning cheese for over a month?
If I’m out at the end of the day then I want to know why and make it an issue for the managers to find out and deal with.
If you’re short say 2 cases of cheese at the end of the month then was it over portioned or did it leave in the back of one of your managers car’s and how on earth are you going to find out if it was in the last 30 days?
So my advice to you Piedad, sure identify trends but a) compare them to an intelligent and researched acceptable band i.e. food cost 26-28% or whatever and b) measure the trends as often as possible (hopefully daily) and c) check the trends often (hopefully daily).