Restaurant industry standards are a hierarchy of financial and production standards. Restaurant industry standards are reviewed and evaluated for the small business owner in this section of the website. Learn more about how small business restaurants make money.
In the mid 90’s, the Internal Revenue Service created an audit guide specifically for pizza establishments. Today, this guide along with the Retail Industry Guide, specifically Chapter 4 which covers the examination techniques for the food service industry is used to audit the typical family style pizza restaurant. If you own a pizza restaurant, this article is designed to prepare you for an audit.
A well organized and understandable restaurant profit and loss statement can provide infinite value to a restaurant owner. The best format to use allows the owner to understand his prime costs, total variable costs and the required contribution number necessary to cover fixed costs and desired profit.
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.
In the restaurant business, alcohol is the single best margin generator. If you are going to have a profit, this is where the money is made. As an owner, you need to understand the value of alcohol sales and the associated costs. This aspect of operations not only generates high contribution margins, it covers its share of costs and ultimately adds to the bottom line.
Purchasing equipment for a restaurant is a daunting task. There are three phases to successfully purchase restaurant equipment. The first is planning, see How to Purchase Equipment for a Restaurant – Planning Phase for more information about this phase. The second is research, go to How to Purchase Equipment for a Restaurant – Research Phase for an understanding of this phase. This article covers the third phase of purchasing equipment, using business finesse to negotiate the best deal.
This is really an extension of planning. If done properly, this will take a few weeks of work for a new restaurant. The key is to go through your list and look at the different models for the needed equipment that are out there. Yes, it is OK to look at the new models because you want to look at the features the newer models have that you will not see or come across as you look at the older models.
The top two costs associated with owning a restaurant is labor and food. Controlling these prime costs in effect is the bottom line in your business. How do you control food costs? First identify the correct quantity and quality of food you serve.
There are two costs that stand out in the restaurant industry. Food and labor comprise more than 45% of the typical expenses of the restaurant. No other expense comes close to these two costs. This article is dedicated to controlling the labor costs in your food service operation.
I have always been impressed by those that provide meals to our society. Overall, I don’t think they charge enough, but that is just my opinion. It also comes out in the numbers. I have reviewed the books for over 40 different types of food service operations.
