Running a restaurant is no simple business financially. How do you make sure you are getting the most bang for your buck and allow as few resources as possible to go to waste? While restaurants are not known for being excellent at streamlining their finances, take heart! There are tried and true methods of doing so. Here are some feasible tips to get started.
Trim the Fat
No, we don’t mean the fat on your pork chop special – although you should do that too! Restaurants can have many pockets of unnecessary spending that you as manager can figure out how to control or eliminate for the most efficient spending. Plus, you will will free up capital for when you want to try something new or enhance an aspect of your restaurant.
For starters, be vigilant about one of your biggest expenses: staff payroll. Don’t over-staff and end up paying employees to stand around on a quiet day. Also, maintain a transparent policy about staffers giving notice about switching shifts so you reduce how much overtime you end up paying.
Look for extra drains on your finances to eliminate as well, such as lights on in rarely used rooms and getting rid of menu items that sit on the shelf. Once you start looking, you’ll be surprised by how many areas can be optimized.
Managing Daily Cash Flow
One common mistake many restaurants make is knowing how to properly manage cash flow, or the amount of money coming in versus the amount going out of their business. As much as you can, don’t depend on credit for over a week when buying food from suppliers. This will help you prevent overbuying, leading to mounting debt. As a bonus, some suppliers offer a discount for paying with cash. Everybody wins! Also, track food and drink sales on a daily basis. That way, you will always have a finger on the pulse of your cash flow.
Keep Tracking Simple
Streamlining your tracking system itself helps with streamlining your cash flow in general. Make sure to keep a cash flow statement and check it daily and meticulously to see how it is lining up with your budget. However, use only one source to track expenses instead of, for example, tracking them from both your cash flow statement and passbook. Instead, match both together to get the final numbers, but do not use them interchangeably.
It’s easy for the finances of any businesses with lots of expenditures to get out of control. With some simple and consistent vigilant practices, your restaurant can streamline costs so your restaurant can consistently thrive.
Challenge: This week, take a look at the popularity of your different menu items and cut ingredients and dishes that more frequently have to be thrown out than are sold. Don’t be biased, even if you would order them in second!