Archive for April, 2007

Factors Affecting Inventory Control

With today’s food costs running as high as 33% of gross sales in some markets, there is no margin for error when it comes to managing costs. An effective cost-control program must be multifaceted in order to close all of the profit-draining holes that exist both in the front and the back of the house. Any comprehensive cost control system must take into account several factors, including inventory and portion control, just-in-time ordering to avoid spoilage, vendor price comparison, accurate receiving procedures, waste, prep and pull procedures, compensation, and coupons control.

Of course, quantitative techniques, or “number crunching”, is a basic step in the process of reining in food costs and keeping them under control. The ability to create a budget and track all expenses against that budget provides an accurate snapshot of actual food costs and other overhead, but it does little to identify all of the factors that contribute directly or indirectly to those expenses. Likewise, knowing your average ticket and table turnover statistics provides a good foundation for sales and revenue forecasting. Use a budget in conjunction with measurements and ratios for an accurate idea of how to improve your restaurant’s profits.

Labor costs could be as much as 30% of your expenses; TimeForge can help streamline and minimize labor costs through effective employee scheduling.

How to Quickly Minimize Labor Costs

There are a minimum number of employees necessary to open a restaurant up for business every day and close it down at night. Anyone else that is generating payroll expense during any particular shift should be there because their presence is in direct relationship to the current shift’s business volume, not because their name showed up on the schedule. Payroll costs are not a hard-and-fixed expense. They can and should be as variable as the number of covers on any particular day.

Understanding key ratios and effective scheduling principles can bring runaway payroll costs under control quickly and easily. Likewise, understanding how to implement portion control and a variety of other cost reduction methods are an essential part of every restaurant manager’s day-to-day responsibilities.

Labor costs could be as much as 30% of your expenses; TimeForge can help streamline and minimize labor costs through effective employee scheduling.

Expenses Can Be Overwhelming

As in any industry, labor accounts for a large percentage of overhead in food and beverage establishments. Similar to how product inventory represents a large part of operating costs in the retail industry, food and beverage costs contribute heavily to the operating costs of restaurants.

There does not seem to be much room for profit when you add food and beverage costs to equipment and technology costs, rent, utilities, insurance, advertising and marketing costs, and franchise fees. With all of the expenses of running a restaurant, it is a wonder that there is any room for earning a profit without chasing away customers with excessively high prices.

Using specific labor management practices (qualitative controls, minimized labor costs, inventory controls, and employee procedure controls) can help you to maximize your profit by minimizing your expenses.

Labor costs could be as much as 30% of your expenses; TimeForge can help streamline and minimize labor costs through effective employee scheduling.