Many restaurant owners and managers do not understand the difference between their fixed and variable costs. The problem with defining fixed and variable costs in a restaurant relate to their connection with sales. In addition, reasonable assumptions have to be made in order to delineate between fixed and variable costs in the food service industry.
This article will explain the difference between fixed and variable costs in a restaurant, provide examples of both and educate the reader on proper analysis procedures to create baselines for improvement. I am a big believer in the feedback loop method of business operations in order to maximize profit and reduce overall stress for the owners and management team.
Subscribe to this website for as little as 99 cents for a one week pass. The food service industry section of this site has several articles related to identifying costs, ratios etc. Other sections of this site educate the reader about multiple principles, legal issues and a lot more. If you own or manage a restaurant, this site is a must. Click on the register button in the menu bar above and select the One-Time membership level and gain access to all the information you need to run a restaurant.