DAILY OPERATIONS
1. Watching your food costs weekly instead of monthly
During inflation with grocery price increases of 30% over the past 2 years, it is important like never before to watch your prices like a hawk. Most restaurants overpay their vendors. The vendors often raise their prices in expectation for shortages or other supply interruptions even if these shortages never happen. While most vendors would reduce their prices to match the market, not all vendors are quick to change back…especially if you have never questioned your vendor’s pricing before.
Instead of looking at prices monthly when catching price increases, watch your prices weekly to catch changes that could decrease your profits and adjust accordingly. Either negotiate with vendors or raise your menu prices
2. Use recipe costing and price your menu for profitability
Doing a recipe plate costing allows your culinary genius to translate into financial delight. We recommend checking menu profitability with your bookkeeper at least periodically.
Your restaurant bookkeeper should know how to cost out dishes. Net yields of each item, converting different units of measurements and arriving at a cost of a dish is something that requires some experience and a unique ken of knowledge. Generally, the cost of a dish should not exceed 25% – 30%. However, it is different for each dish type, salads usually have much lower cost to sales ratio and a good employee should know how to upsell and offer higher margin dishes. Curious? Contact us now…
3. Know your Prime Cost and calculate it regularly
Prime cost should be your #1 KPI. It includes all those things you pay for on a day-to-day basis that keep your restaurant running, namely Labor + Food Cost. Basically, it’s the products and people power needed to keep you in business.
4. Perform quarterly supplier reviews and compare supplier pricing to local and national prices
If you’re not performing supplier review, you’re missing the boat. It’s your opportunity to talk to your vendors about quality, prices and terms. Take control of your food costs by sitting down with your vendors semi-annually, asking for price cuts on most popular and valuable inventory items. Have your bookkeeper prepare a descending dollar report for all your vendor purchases. General rule of thumb, the top 20% of your purchased items are responsible for 80% of cost. So, it’s worth digging in.
5. Create a baseline price for your most common ingredients, so you can easily catch price spikes/jumps
Understanding your food costs is a top priority for your restaurant. Create a baseline price for ingredients based on market research and prior supplier purchases. Use this to catch supplier pricing increases that eat into your profits.
ACCOUNTING
6. Get rid of paper invoices and automate your invoicing processes
Greasy invoices are a messy stack of environmental waste, not to mention an endless data entry. They are also a massive time suck. Automate the process. Throw away the boxes of invoices. Capture and record invoice images, dollar amounts, line item detail, and all your existing supplier information with KPI Accounting.
7. Use a 4-week accounting period instead of monthly
Instead of using the typical 12-month calendar as most businesses do, the 4-week accounting cycle consisting of 13 accounting periods of exactly 4 weeks (28 days) is more appropriate for restaurants, which syncs with the weekly cycles used in most restaurants and provides for more meaningful period comparisons on your P&L.
8. Review your accounting on an accrual basis instead of a cash basis
Accrual basis accounting gives you a more realistic idea of income and expenses during a period of time, therefore providing a long-term picture of the business that cash accounting can’t provide. Cash basis should not be used if you have AP (bills from vendors) or AR (Invoicing customers for catering ).
9. Reconcile bank and credit card balances every month
Reconciling bank and clearing accounts monthly ensures that common errors, omissions are corrected in your QBO as the year marches on. No one enjoys the daunting task of cleaning up 12 months’ worth of transactions at the end of the year. Cleaning up or catching up books once-a-year is not only irresponsible but very costly anywhere from $2K – $10K depending on number of transactions, accounting processes and how detailed you need it to be. It makes much more sense to hire the bookkeeper to work on your books regularly which will ensure that all necessary tasks are completed regularly at the end of each period.
10. Choose an accountant who specializes in Food and Beverage
Not all accountants are the same. The bookkeeper you hire to manage your restaurant’s books should have a thorough understanding of the industry and how to best serve your restaurant’s accounting needs. Need a restaurant bookkeeper, email KPI Accounting at david@kpiaccounting.com
11. Have your accountant allocate payroll between (FOH) and (BOH) employees
Breaking out payroll by specific roles, such as cashiers, chefs, line/prep cooks, dishwasher etc. allows for more detailed record keeping, which allows to see what areas need trimming
INVENTORY
12. Educate your staff on the importance of inventory and how to do it right
Food costs typically account for around 30% of a restaurant’s budget. It’s important to educate your staff on why inventory is taken and the correct way to take count, whether that’s through an app or an inventory count sheet (not recommended). Ask me to improve your inventory tracking processes.
13. Create a weekly or monthly inventory schedule
By creating a daily, weekly, or monthly inventory schedule, you’re creating an expectation for your team. An inventory schedule also creates accountability for your inventory team: all inventory and shortages must be accounted for.
14. Identify one person to be your "receiver"
By designating a team member to be your receiver, you can dramatically reduce inventory errors, increase efficiency, and lower your food cost. Not only should you train this person on how to effectively receive the products you order, they should also know how to code invoices, mark items missing, and how to redirect ordering when there are errors.
15. Assign employees to count and input inventory
Similar to identifying one person as a receiver, employees should also be designated and assigned to your inventory team. Each employee on your inventory team will be held accountable by your receiver for any inventory count errors.
16. Hold less than 1.5x your Cost of Goods Sold in inventory
The Food and Beverage industry is cash dependent. You must have a tight grip on ordering and inventory attrition. Hold less than 1.5x your COGs in inventory. Don’t lock too much cash in a quickly spoiling inventory. Another downside of excessive inventory – theft. Using cookie analogy, ask yourself if it is easier to notice when one of 3 cookies disappears or 1 of 20?
17. Calculate your inventory COGS, usage, and days on hand
You make important decisions about your restaurant’s future every day—and those decisions should be based on data. It’s important to have a real-time COGS, usage, and days on hand calculation. This helps you run your business more efficiently.
18. Watch out for significant increases or decreases in food usage
Suppliers increase and decrease prices daily. Keep track of what prices you’ve paid in the past and compare those to market price. This can be done with a spreadsheet or inventory app (recommended)
19. Perform daily spot checks on your most popular and/or expensive items
Spot checks are an easy way to catch theft by employees or proactively prevent having to 86 a dish or tell your loyal customer you’re out of his favorite appetizer. In between your weekly inventories, perform daily spot checks on your most popular items. It will help you stop shortages before they get out of hand.
CUSTOMER SERVICE & HOSPITALITY
20. Make sure your manager or GM is visible and interacts with guests
Your manager or general manager needs to be available for guests and employees. Train them to interact with guests regularly. A simple “Is everything going okay?” or “Do you need anything else?” can go a long way for customer service.
21. Assign ownership of online review sites to a reliable, customer service-centric employee
Online review sites, such as Yelp or Google Maps, are often the first place someone checks when looking at ratings and reviews. Designate reviews to a reliable, customer -centric employee and make sure all complains are addressed properly and timely. Important -Take time to thank customers for positive feedback.
22. Handle all guest complaints in a timely fashion (daily or weekly)
It’s important someone on your team reads and interacts with all complaints in a timely fashion. Consider complaints a new chance to redress the situation and convert a disgruntled customer into a loyal patron. It takes a lot of work, patience, and creativity to do it consistently each week. If a customer leaves a review, then there’s an expectation of engagement on the part of the business. A response is not optional, regardless of the content, its nature, or length of the review.
23. Keep your dining areas clean
It goes without saying that a dining area should always be tidy, clean, disinfected. The dining area is the face of your business. Create daily, weekly checklists for both FOH and BOH.
24 Make sure to have a signature dish on your menu
Customers increasingly want to enjoy something they can share with others, and signature dishes give them that kind of unique experience. Signature dishes often create a buzz and word-of-mouth traffic. It’s a win-win for both the restaurant and the customer.
25. Update your delivery and online ordering software
Door Dash, UberEats, Grubhub… they’re not the new thing anymore. If you haven’t updated your ordering software to be compatible with delivery services, you’re missing out on this avenue… on average you can expect at least 10% increase in sales when employing third party delivery platforms. Be aware of different treatments of sales tax by Doordash vs UberEats. One collects and remits on your behalf while another collects but sends backs for you to report and remit sales taxes.
EMPLOYEE MANAGEMENT
26. Hire employees who fit your restaurant’s culture
Cultural fit means that employees’ beliefs and values are in alignment with their employer’s values and company culture. The first step in hiring for cultural fit is to be able to relay what values, norms and practices define your business.
27. Hire managers who reserve time to train and teach their team
When hiring managers, it’s important you set the expectation of training staff. Make sure your managers are setting aside time every month or quarter to review training guidelines and evaluate performance.
28. Communicate with staff and ask for their feedback
As the owner or GM of your restaurant, it’s important that you regularly communicate with your employees. What kind of feedback do they have for the restaurant? Use the feedback to make improvements when necessary.
29. Hold quarterly training meetings for important restaurant processes
Your employees will undoubtedly forget some of the training they went through. Hold quarterly training meetings to refresh their minds and get over the “forgetting curve”, keep abreast with trends and laws.
30. Train employees to offer quick service
Set expectations: Do you track time from door to table? Time from placing order until food served? And how many times do they check with the customer during their meal? There’s no definitive answer, but set expectations for your employees and train them to offer quick service.
31. Make sure your delivery wait times are short
Long delivery times… they’re almost as bad as 86ing a customer. Set expectations for your delivery times and shorten the wait as much as possible. Customers expect quick delivery… the longer they wait, the more likely they are to leave a damaging comment.
MARKETING
32. Make sure your website is updated regularly, user-friendly and ADA compliant.
In order to give your customers the best experience possible, make sure your website is updated regularly, user-friendly and ADA compliant
33. Schedule social media post at least twice a week
Social media will help you build your recognition in the community, build a loyal following. Post content consistently and engage with your audience.
