Measuring success or failure of a system that improves decision making is challenging in many respects. But, the Same Store Sales (SSS) metric can be useful, especially when applied to a long period of time, and across thousands of restaurants. SSS is caluclated as a percentage change from last year to this year, and only uses locations that are open for both years.
Successful restaurateurs need to have extensive KPIs and they must be able to quantify everything. Data scrutiny and analysis is an ongoing process. Restaurant CEO's need to have their restaurant information distributed and analyzed by different personnel that will empower their businesses to increase revenue and improve customer service. However, operators can be misled by information received solely from their POS systems (sales, reservations) or BOH systems (inventory, food costing, labor scheduling). They need to be able to get a look at the bigger picture.
Nowadays, the CFO in the restaurant industry performs multiple functions. In addition to finance, and regulating costs, the CFO is in charge of restaurant development and making tactical decisions ranging from marketing initiatives to growth plans. The modern day CFO has to have the ability to forecast market fluctuations, analyze restaurant benchmarks against peers, and have some knowledge of IT systems and IT investments, ensuring that there’s a return on these investments.
They must outline metrics so that restaurant data can be interpreted in real time to set business strategy and make intelligent decisions.
Are your promos being used to commit fraud?
The majority of restaurants have utilized some type of promotion in order to build revenue, introduce a new product, drive traffic or reward loyal customers. In short, your restaurant business is providing a coupon offer in return for more / specific customer interaction. This give and take process generally works well. However, while it may be increasing traffic and driving sales, your business may be losing hundreds, heck even thousands of dollars due to fraud and you may not even know it.
The Data Is In
The word on restaurant sales has been out in the public for a while now. Same store sales are down for many segments. And for some of the most recent months, the industry overall is down.
Two factors lead to negative same store sales: declining customer traffic, or customers spending less on each visit. It has been well documented that restaurants have been increasing their prices over the past few years. The National Restaurant Association measured price inflation at 2.7% in July 2016, while the average cost of ingredients fell -3.5%. The increased margin dollars have helped some restaurants cover the increases in labor.
Save Time, Save Money
Is time really money? I think so, you only have so much time in a day. If you could save time by making your job more efficient, then you can effectively save money. Improving business efficiency can be achieved through exception based reporting.
Our clients love us and we love them right back! We're constantly amazed by their ingenuity and accomplishments. Their ideas and requests are what keep us on the leading edge of restaurant business solutions. Periodically we like to shine the light on our clients, their accomplishments and what they're doing to increase their restaurant profit margin.
Controlling food costs is essential if you are interested in restaurant profit margin. I'd like to discuss a few options for implementing controls over your food costs. In practice, there are many ways you can create a control. Let's start with a definition:
According to a website affiliated with the NRA, "The seven stages (of food cost control) are purchasing, receiving, storage, issuing, preparation, cooking, and service."
If you include retailing and selling under service, I agree. If your controls over food costs do not cover the activities of selling, or retailing, you are not seeing the entire picture.
Be careful when researching food cost controls. There are too many sites that think food cost control is simply the formula for calculating Actual Food Cost as a percentage of sales. While this formula is useful as part of a control, by itself it is simply a measurement.
Topics: Restaurant Finance
This is the first of a series of posts on the topic of restaurant food costing and perpetual inventory systems, which in most cases are two parts of a typical restaurant back office (BOH) system. I'd like to collect your input on today's question:
Another Bite Out of Your Restaurant Profit Margin
It’s certainly not easy to own and operate a successful restaurant chain in today’s day and age. Take for example, a recent story about a small restaurant that placed a "minimum wage fee" on their customer receipts. The move was intended to shed a light on the raised minimum wages. While some customers understood and sympathized with the owner, others reacted harshly. Perhaps this was not the best way to handle minimum wage hikes.
Between high food costs and energy inflation, the unavoidable losses due to fraud, potential increases in state unemployment taxes, the ACA and now the imminent wage increases, restaurant operators are fraught with worry, more than ever, over keeping their doors open and their businesses profitable.
Topics: Restaurant Finance