4. Ratios are a great way to help us analyze what is
really happening on a financial report. They
make numbers relative.
Cost $
(or
Sales Cost %
expense
$)
5. A Ratio is most
useful when it
is compared to
a standard or
base figure
6. The comparisons that are
most often utilized are:
To
To
previous
industry To budget
accounting
standards
periods
7. The first
Annual
indicator of
revenue
profit potential
$/total square
is the size of
feet= Sales per
your
Square foot
restaurant
9. Income Statement
• Revenue
• Expenses
• Net Income
Balance Sheet
• Assets
• Liabilities
• Owner’s Equity
Cash Flow
• In and Out Flows of Cash
• It’s about Timing
10. Income Statement
Cost of
Revenue Labor Other
Goods
• Check • Food • Salary • Fixed &
average and • Liquor, Beer • Hourly Controllable
cover count and Wine • Related Expenses
• By Outlet • Sub Payroll • Net Income
and Sales accounts Costs • Dollars and
Category give greater Percents
detail
11. Actual Cost of Goods Formulas
Beginning
of the
Month
Inventory$
Purchases
= Actual
Cost of
Goods
Sold
-End of the
Month
Inventory $
-
+/-
Transfers
12. Prime Cost
In excess
of 65%
makes it
= Prime
COG + Labor very
Cost
difficult to
be
profitable
13. Prime Cost Mgt.
Weekly
Labor
Inventory Purchases Sales
Cost
Value
Weekly Prime Cost Report, leave out inventory to calculate a Daily
Flash Report
14. Consider a Daily Flash as an Alternative
Purchases
• To Day • To Day
• To Date • To Day • To Date
• To Date
Sales Labor
15. Every % Is one
point
saved in
more %
prime point on
cost
Your
bottom
line
16. Controllable Profit = Revenue- Prime
Costs-Controllable Costs
Tracking your controllable profit
encourages the management team to set
up systems that hold people accountable
without being side tracked by fixed
expenses that they have little control over
17. Industry Averages
Prime Cost Labor Controllable Expenses Occupancy
• 60-65% but more realistically • Salary- 8-10% • Includes • 8-10%
57-62% • Hourly 18-23% Operating, G&A, Marketing
• Related Payroll Costs 3-5% and R&M 18-20%
18. Balance Sheet
Capital
Expenses
Cash on Inventory Accts Taxes
&
Hand Levels Payable Due
Principal
Payments
19. Balance Sheet Calculations
Current With
Ratio- Quick Ratio- information
current current from a
assets to assets less P&L, a
current inventory 1:1 Statement of
liabilities 2:1 Cash Flow
20. Double Entry Accounting
Debits (one the left) must equal Credits on the
right
Debit balance accounts: Assets and
Expenses
Credit Balance accounts: Liabilities
and Revenue
21. Check journal entries before they are
posted, are they posted to the correct
account?
Make sure that invoices are not double
booked
Check that all credit memos have been
received
22. Best Practices 1/3
Separate Bank
Weekly
Accts for Taxes
Inventory
Collected
Number of
Prime Cost
Days Worth of
Reporting
Food on Hand
28 (or 35) Day
Accounting
Cycle
23. Best Practices- 2/3
Review
Follow the
Journal
US of A
Entry Detail
Timely Show
Financial Historical
Reporting Trending
Leverage
Technology
24. Best Practices- 3/3
Labor
Costed
Productivity
Recipes
Reports
Negotiate CC
Theo COG
Processing
Calculations
Every 2 Years
Be a Student
of the
Industry
25. Shrinkage
There are
opportunities
for loss in
each phase of
the product Lowering
cycle inventory
levels is one
way to better
manage
products
26. Number of Days Worth of Product on Hand is a
great way to track inventory levels
Ending Number
Average
Inventory of Days
Daily FC
Value $ on Hand
27. An important step in determining
what your cost of goods level should
be is to determine your theoretical
cost
28. Ideal Cost
Based current
purchase and menu
prices
Without any loss
Waste, theft, over portioning, spoilage or
cash control issues(operational
inefficiencies)
29. Theoretical Cost of Goods
Recipe Cost Menu Price Theoretical
X # Sold X # Sold Cost %
30. • No restaurant can boast that their actual COG percent
and theoretical COG percent are the exact same
• Closer these two numbers, the better the operational
efficiency of your business
.
• 1.5-2.% variance is usually acceptable
31. The degree to which these systems are employed is a
trade off in
time and
resources it
takes to
implement them
countered by
the savings that
can be realized
if employed
effectively
32. Managing Credit Card Fees
Check the
• Educate Bill • Shop
Yourself on • Make sure Processors
the process you can read
the
statement
Negotiate Research
33. In the end…..
Control Your
Financials Engineering
Product
• Choose the • On a regular • More frequent
ones that fit basis inventories
• Accurate • Manage guest • Prime Cost
• Hold people preferences reporting
accountability
