Driving Profit: Part 6 of 6 - The Recipe

The business model for running a restaurant in Canada has changed over the last few years.? And many operators are still trying to figure out the right mix for their establishment.? But, like all classic dishes, the base recipe for restaurant profit hasn’t changed.? Only the methods, and a few of the ingredients, have.?

And always remember, nothing ever goes exactly to plan.? But having a plan, and measuring your actual results against that plan, will make your adjustments easier and more successful. ?

The Recipe for Driving Profit

Prep time: 1 dedicated day, every period update.?

Cook time: 1 hour weekly and monthly to skim and adjust seasoning

Ingredients:

1-2: focused owners or managers

1, whole: motivated team of employees

1, crushed: rolling forecast

1, sprinkle: of supporting tools such as inventory management software, menu engineering template, scheduling software, cashout/tip pool software

1, reviewed: set of reliable, regularly recurring, financial statements

?Method:

1.????? Understand the 5 drivers of restaurant profit (# of customers, average cheque, COGS, Labour cost, Overhead)

2.????? Use your menu engineering, historical financials, and known fixed costs to generate a forecast/budget

3.????? Use your new forecast to tweak your business model ensuring you can provide the quality of product and service your customers are expecting while achieving your profit goals.???????????

4.????? Review your target variable costs once more to test for reasonableness and confirm they will actually lead to a profitable business!

5.????? Establish your leading indicators that you can review weekly to keep you on track.? Things like covers per labour hour, avg spend per meal period, menu mix percentages, upsell item quantities sold, etc.?

6.????? Compare your reliable monthly financial statements against your forecast to determine, in dollars, the difference between what you actually achieved vs what you were trying to achieve.

7.????? Make plans to improve your biggest dollar opportunities.?

8.????? Repeat step 5 weekly, and steps 6 and 7 every month

9.????? Update your forecast as needed (but at least twice a year)

Chef’s special notes:

We talk about dollars, percentages, and statements a lot here at Foolproof Bookkeeping.? Because that’s the language of accounting.? In the operations of a restaurant the trick is to translate that into metrics your team will understand.?

• Help your front of house team understand how each interaction is an opportunity to build a relationship that creates a new regular, or losses you a customer forever.?
• Help your servers understand how upselling makes for a better experience for the guest and a bigger tip for them
• Your chef and bar manager can manage COGS using recipes, menu engineering, and inventory management.?
• Labour cost isn’t static.? And if you struggle with it you should explore alternative approaches like evaluating covers per labour hour
• Overhead is not the responsibility of your team.? It is your responsibility.? If you waste money in your business on subscriptions you don’t need, you are wasting money that could be in yours or your team’s pockets instead.

Be happy.? Life is short.? That’s why unhappy customers don’t come back and tell all their friends how terrible your restaurant is.? We want to be happy.? If you’re not happy, and you’re not trying to make your staff and customers happy every time you walk through the doors, then why are you in the hospitality business?

When you're ready to drive consistent profits in your restaurant or bar, we're here to help: Foolproof Bookkeeping

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