Using Critical Numbers to Manage Restaurants

Restaurant operations often begin with carefully considered business plans and marketing strategies, but dining trends change, unexpected challenges arise and profits could begin to disappear even when owners follow their business models assiduously. Agile restaurateurs monitor how their restaurants are performing to spot trends and find ways of reducing waste and increasing profitability. Reports help managers adjust projections based on the best available data and make operational changes to facilitate success. Restaurant owners or designated managers get critical information from studying various reports and key numbers.

Reports that Facilitate Proactive Management

Reports don’t just tell what happened; they identify areas where management action and fine-tuning policy can turn even lackluster sales into profitable activity. Reports help managers reduce labor costs, price menu items competitively, remove items that aren’t selling and change marketing strategies to attract bigger spenders. These reports include daily, weekly and monthly figures that provide keen insights:

  1. Daily Reports
    The daily sales report is the primary source of marketing and accounting intelligence, yet many restaurant managers only look at the total sales. Hourly reports, number of customers, average size of parties and whether food is sold on-premises or to go are important information for planning. Daily restaurant reports should include the following information:

    • Labor and payroll data
    • Complete food inventory
    • Optional daily accounting of supplies and paper goods
    • Information about repeat customers
    • Number of reservations and total tables served
    • Customer preferences among daily specials and regular menu items

    Some larger restaurants order certain inventory items daily or make trips to local farms, big box stores or produce markets for fresh, sustainable foods. Monitoring inventory daily prevents surprises and allows managers to maintain tighter inventories, a hallmark of the most successful restaurant operations.

  2. Weekly Summaries
    Weekly summaries help managers plan strategically based on typical daily sales expectations. Weekly reports provide information for scheduling lean but adequate staffing for a restaurant. Most restaurants order weekly food deliveries from food service companies, suppliers and alcoholic beverage wholesalers. Smart managers calculate prime costs weekly instead of monthly. Prime cost should never run higher than 65 percent for table-service restaurants or 60 percent for fast food eateries. Prime operating costs include sales less returns, food and supply costs, labor, rent, utilities and prorated yearly expenses.Controllable expenses allow mangers to make quick adjustments to deal with high costs. Consider recalculating menu item costs on a weekly basis to avoid surprises. Change unprofitable or poorly selling items to increase sales or profits. If not tracked on a daily basis, supplies and paper goods should be inventoried weekly.
  3. Monthly Profit and Loss
    Monthly reports supply a clear picture of overall profitability, sales trends, utility expenses and marketing costs. The National Restaurant Association provides a Uniform System of Accounts for food operations that make it easier to compare monthly numbers with industry averages from similar types of restaurants. Using these reports increases the credibility of a restaurant’s financial projections when raising operating capital from lenders or investors.

Using POS Systems to Automate Reports

Point-of-sale systems automatically monitor activity and generate reports on an hourly, daily, weekly and monthly basis. Benefits for managing operations include the following information that POS systems track:

  • Labor and payroll data
  • Hourly sales
  • Checking averages by server, time, date, and carryout orders
  • Recording information about repeat customers
  • Tracking menu items and specials sold
  • Managing reservations lucratively
  • Keeping informed about how customers pay
  • Implementing customer loyalty programs
  • Generating monthly profit and loss statements

Simple steps can save money, and running a tight inventory can save between 2 and 4 percent in food costs. Simplify monitoring and management by learning which reports to review each day, week and month to respond proactively when prices, staffing or customers’ buying habits change.