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How to put your finances in order when you're a restaurant owner

So you started a restaurant business because you're passionate about food. But it's important to understand that running a successful food business requires a good understanding of your sales, expenses and profitability. In other words, you need to be on top of your finances. 

Here are four great tips on how to manage your financial situation when you have your own restaurant:  

Track your inventory and food cost

It may be best to track food costs on a daily basis so you know where they are each day. E.g. if you start noticing that food costs are 5% too high, you know that you’ve had a soft month and have been selling too much of this or probably not enough of that.

It also helps to look at what menu items are not selling so you know if you will need to make adjustments on ordering, dishes, and the menu to compensate for food costs.

Here’s a helpful video about how to calculate food cost percentage.

Menu item sales report

This report tells you what your customers like and will be very useful for your chefs and kitchen managers as it allows them to plan better daily specials and prepare only popular, best-selling dishes.

This is also the best way to find out what you need to place on your menu to increase sales, directly influencing what customers want to order and how much they are going to spend.

Here’s a sample of a Restaurant Weekly Sales and Labor Report from Restaurant Resource Group.

Hourly staff labour report

Having an hourly labour report will improve your work scheduling. Keep track of the total hours a staff worked, the category of his/her task, and part of the day. Since labour is one of the biggest costs in running a restaurant, having an hourly labour report will give you an idea when you will go over the budget of hours and if a staff member will have to go over his scheduled hours and work overtime hours.

Go easy on the discounts

Giving up on discounting will have an immediate effect on your bottom line. If you always offer discounts, what’s the point of having a regular retail price? Discounting costs you money and it gives people the impression that your normal prices are a rip-off. Discounts will devalue your product.

Think about rug retailers that are always advertising massive discount sales on TV. How often do they say, for example, “up to 80% discount on all floor stock! Final clearance sale! Old stock has to be sold ASAP! Trouble is, people become oblivious to all these sales when they become the status quo. They cease having an impact. They are no longer believable.

Rather than discounting, simply offer more add-on value instead. You could consider something like “buy a coffee – get a free slice”, “Spend over $10 and get a free coffee”. Freebies are far more tangible and effective than a hard-to-prove discount.

Remember: “Selling is not about price. It’s all about value”

These tips was first published on alsco.com.au's  100+ more tips on restaurant planning strategies article. Alsco offers cost-efficient rental services that are tailored for your business. including first aid kit rentals and training services, linen and workwear, and hygiene systems.

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