RESTAURANT PROFIT PICTURE
There are four main control areas in the restaurant profit picture.
27-32¢ goes to operating costs
60-70¢ of every dollar sold goes to Prime Cost (COGs + Labor)
Revenue, inventory, and labor control systems can be broken down by separate departments in the restaurant, such as kitchen, bar, service, and front desk. These departments usually have their own inventory, schedules, and operating standards.
Once standards have been developed, realistic expectations can be calculated for inventory and labor costs, based on the actual daily sales mix for each department. Control is used to measure the performance of each department manager and the general manager.
Management should be held accountable for the revenue and expenses it can control. A Control System will identify procedures, expectations, and responsibilities.
Revenues and expenses are controllable if they are influenced by management. Inventory and Labor are the largest controllable expenses. Direct Operating Expenses, Utilities, Marketing, and R&M, are usually controllable. Occupancy costs and Non-operating expenses, such as interest, are usually not controllable.
We use a systematic approach to developing and implementing control systems for restaurants called the BULLSEYE PROFIT PROCESS