How to Manage Your Restaurant’s Critical Numbers

Running a successful restaurant business is no mean feat, whether it’s a fast-food joint or a full-service restaurant. Costs gobble up about 90% of total revenue generated in the restaurant industry, leaving you with approximately 10% as profit.

Being haphazard about financial statements and restaurant management is therefore not an option. If you don’t have the resources to hire the peerless Jim Laube of the fame, keep reading. This guide unravels the secrets of analyzing worksheets, liabilities, and sales reports, in a bid to manage restaurants’ critical numbers.

1. Know Your Restaurant’s Costs

The total cost of running the restaurant will help determine the total sales required to keep the doors open. Costs include direct and overhead expenses—taking care of these will ensure the restaurant operations keep running smoothly.

Successful restaurant owners keep the numbers discussed below at the back of their minds. The numbers help them determine the total sales they need to generate during a specific period. Some of the critical numbers include:

a) Food cost

It refers to the overall cost of acquiring ingredients. The food cost percentage refers to the value proportion of revenue spent on buying food and beverages.

Keep a close eye on the overall cost and cost per plate for menu items. It’s best practice to set prices from your cost per plate figures.

b) Labor cost

This is the total cost for all workers’ compensation, including overtime, sick pay, taxes, and vacation pay. It would help to aim for a 30 to 35% labor cost.

c) Daily sales

Daily sales are the total amount of money your restaurant brings in a day’s shifts. A sum of the days you’re open in a month will add to your month’s sales.

d) Prime costs

You derive prime cost by combining all the costs discussed above, including overhead costs like utilities, social media, and restaurant marketing. Good bookkeeping and a detailed prime cost report will help you accurately calculate your cost of sales.

To stay on top of finances, you should calculate the weekly prime cost. Creating templates for filling in items should make the process faster and relatively pain-free.

e) Break-even point

This is the point where current sales in a given period equal expenses, so sales above this point are profits.

f) Monthly profit

An independent restaurant brings in monthly profit every month after accounting for expenses. The healthier the profit margin, the better your restaurant is doing.

2. Inventory

Keeping an up-to-date inventory is critical in the food service industry. Ensure you have enough special menu items in stock to satisfy your customers at all times.

A sound inventory system will make it easy to check averages to avoid overstocking or running out of items. Pair it with the point of sale (POS) system to keep a tight lid on stock movement.

Calculating the inventory turnover ratio will help determine what menu items are popular. In addition, it will alert you about restocking frequency. An excellent fix for this is a metric display, perfect for monitoring inventory efficiently.

3. Cost of Goods Sold

Having a good grasp of your menu costing is essential in the restaurant business. Your COG gives you a clear picture of what goes on to a plate. The more you understand your food and beverage costs, the better your operations and bottom line can be optimized.

That means having a sound POS system, proper inventory management, kitchen portioning, and the right pricing strategy. When you manage the restaurant’s critical numbers to such details, you will have an easier time as a restaurateur.

4. Revenue per Seat

This is the average amount spent by a single customer at your restaurant. It helps visualize how well customers are utilizing the floor space. Similarly, it can help determine if it’s worth having your business in that spot.

Revenue per seat can also deduce how well the staff is at sales and help calculate future projections. The metric is essential for planning, marketing, and positioning your business.

5. The Rate of Table Turnover

Table turnover is the length of time a guest takes in your restaurant. You have a high turnover rate if they sit down, get quick service, eat, and leave to release the table. That means you can serve many guests in the same space, improving efficiency and raising total sales.

The turnover rate will also help prep your kitchen for service as you already know what to expect. It also guides you when answering reservation requests, as you know the average times guests take. Using a digital menu board will make ordering faster, improving the table turnover rate.

Final Word – Tracking a Restaurant’s Critical Numbers

Restaurant owners must keep track of food, labor, inventory, marketing, and management costs, which can spiral out of control if not accounted for. Managing the restaurant’s critical numbers ensures it runs efficiently, improving your bottom line.

Christopher Stern

Christopher Stern is a Washington-based reporter. Chris spent many years covering tech policy as a business reporter for renowned publications. He has extensive experience covering Congress, the Federal Communications Commission, and the Federal Trade Commissions. He is a graduate of Middlebury College. Email:[email protected]

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