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Restaurant inventory software is a fast and efficient way to get a better handle on your restaurant inventory processes. If you’ve tried using the inventory module in your POS system and ended up with nothing more than a countdown of what you have sold, then you know the frustration of overpromising. Watch this video or read below to learn what restaurant inventory software should do for your restaurant.

Restaurant Management Tip - What to Look for in Restaurant Inventory Software #restaurantsystems - YouTube

Look for these four things

There are four things you should get out of your restaurant inventory software.

  1. First is it has to do the arithmetic. It has to give you your cost of goods sold.
  2. Second thing your restaurant inventory program should do for you is store your batch recipes for the most accurate food cost.
  3. Third thing it should do is allow you to do shelf-to-sheet inventory.
  4. Finally, the fourth thing your restaurant inventory software should do for you is allow you to scan invoices so they are accessible in a digital form. This makes everything more accurate, pricing up to date and your inventories are more accurate with the correct prices.

If your restaurant inventory software doesn’t have these four elements, you are not getting an accurate take on your food and pour costs.

Why restaurant inventory matters

What does cost of goods sold refer to? In the most basic terms, cost of goods sold is “the cost of the product used to generate sales.”

The cost of goods sold calculation is used to calculate a cost of goods sold percentage for a given accounting period. The cost of goods sold calculation is also most valuable when it is broken down by categories, i.e., food, liquor, bottle beer, draft beer and wine. This is more effective when broken into categories because if, for instance, the pour cost is high, you can determine where the problem is. You can react by examining your draft system for problems due to foaming issues, because your draft numbers are high. Otherwise, if liquor pour cost had all categories lumped in one figure, you would not know where to look for the problem without redoing all of your work.

You can’t create your recipe costing card unless you first create a batch recipe costing card for the items that make up a menu item. For example, let’s say you sell an “All American Burger.” It comes on a roll with cheese, bacon, caramelized onions and toppings. You have to account for these items as well. The batch recipe includes bacon by the slice, caramelized onions, burger setup (two slices of tomato and a single leaf lettuce) and six-ounce portion bag of potato wedges. These are all ingredients, side dishes and product conversions that need to be cost out properly to complete the item recipe costing card.

Shelf-to-sheet inventory involves setting up your inventory count sheets according to the order your inventory appears on the shelf. This ensures accurate counts based on accurate sizes. This also allows you to be fast.

Scanning invoices so you have digital versions gives you an automated way to track inventory, pricing and ordering.

To determine your usage for cost of goods sold:

  • Take your beginning inventory
  • Add your purchases
  • Then subtract your ending inventory

If you would like to learn more about restaurant inventory and how restaurant inventory software can help your restaurant, read our free special report, Breaking Away from the Insanity: How to easily take control of your restaurant and make more money. Download it here. Be sure to visit our YouTube channel for more helpful restaurant management video tips. 

The post Restaurant Inventory Software Tips appeared first on The Restaurant Expert.

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Comp vs void is an important distinction for restaurants and will impact your food cost. Watch this video to learn the difference between a comp vs void and why they’re used incorrectly all the time.

Restaurant Management Tip - What Is the Difference Between a Void and a Comp #restaurantsystems - YouTube

Too many times people in restaurants use the terms comp and void interchangeably and the intention of what the action is becomes unclear. Restaurant employees just end up selecting whichever one they like the best, not caring what the impact is on the business. More often than not, they’re being used incorrectly.

Comp vs void defined

A void is an item that wasn’t made, wasn’t delivered and shouldn’t have been on the ticket. (two hamburgers instead of one)

A comp is an item that was rung up on purpose, made on purpose, delivered on purpose and maybe it’s a free meal because you love the customer and says, “Hey man, let me buy your dinner.” Or someone hated their meal and you decide not to charge them. It still shows up on the ticket, but the dollar value charged is $0.

I see one mistake a lot. Confusion over whether to void an item or comp it.

Comps are items or discounts taken off the bill on products that are actually delivered to the table. Items that are not made and taken off the bill are voids.

Why it matters

So why is it so important to understand the difference between a comp vs void? Because how you book gross sales, comps and voids affect so many other calculations in your operation that are necessary to run profitably. If you do it incorrectly, you are making decisions based on faulty intelligence, ultimately making bad decisions that will cost you money.

Think about it this way: If you are voiding items that are delivered to the customer instead of recording them as a comp, you will reduce your gross food sales. These voids make it so that the sale never happened.

By reducing your gross food sales, your food cost calculation will show that more food left the shelves without a sale. This will have the same effect as wasted or stolen products, depleted inventory with higher food cost.

The kitchen runs on recipe costing cards that say if you sell an item at the price set in the menu, and they follow that recipe to a “T,” with no waste, no theft and no spoilage, they will run an ideal food cost percentage based on item-by-item sales mix.

If you void food sales that have been delivered to the guest, rather than comp them, and the sales amount does not show up in gross food sales, it will look like the kitchen manager or chef isn’t controlling costs.

The same is true if you record the sales in the gross food sales category AFTER the comp amount has been removed. In the case of a 50-percent-off coupon, the result will be doubling that recipe’s cost of goods sold percentage.

This too will look like the kitchen manager or chef isn’t controlling costs.

If you would like to learn more about things like comp vs void and how to lower your food cost, read our free special report, Breaking Away from the Insanity: How to easily take control of your restaurant and make more money. Download it here. Be sure to visit our YouTube channel for more helpful restaurant management video tips. 

The post Comp vs Void: What’s the Difference? appeared first on The Restaurant Expert.

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Have you heard you need to use an industry average to measure labor cost in the restaurant business? Or, do you use the same labor cost target every day or every single month? What if I told you those are myths that are killing your profitability and leading to your scheduling problems? What if I told you that if you measure labor cost against your own numbers, you can change your bottom line and control your second biggest expense? Watch this video to learn how to properly measure labor cost, calculate your labor target and control it.

Restaurant Management Tip - How to Fix Your Restaurant Scheduling Problems #restaurantsystems - YouTube

When it comes to how to measure labor cost, there are a lot of sources out there giving you average targets for labor hours and labor cost. But your restaurant is not average. You have to pay attention to the needs of your restaurant, from hours for prep and having enough staff for the busiest days.

Do you have a budget? If not, stop and go back to my videos and watch all my videos about how to make a budget and how to use a budget. You can start with, “How to Start a Budget.” Your budget is where you’re going to find your total labor cost, which is just your hourly and salary numbers – no taxes, no benefits, no insurance.

Over the course of a year, you should see a varying labor cost. Your slow months will likely have a higher labor cost because you’re at your minimums but not bringing in extra sales. In your busy times, your customers maximize your staffing.

Once you get your total labor cost, you’ll move to your scheduling. In this video, David demonstrates how to schedule using his online restaurant management software, SMART Systems Pro. Using this restaurant software, David shows you to allot your labor before you’re over hours because you’re using your total labor cost from your budget.

This video is a great look at how software can make doing these activities faster and more efficient – plus more accurate. Don’t leave yourself scrambling at the end of the week, cutting hours on your busiest days because you over budgeted hours at the front half of the week, on the slowest days.

Restaurant scheduling software is a great way to establish your monthly target, your weekly targets and proper scheduling. If you want to change your bottom line and control your second biggest expense (besides no customers), you need to be budgeting your labor cost.

If you would like to learn more systems to help you figure and measure labor cost, read our free special report, Breaking Away from the Insanity: How to easily take control of your restaurant and make more money. Download it here. Be sure to visit our YouTube channel for more helpful restaurant management video tips. 

The post How to Measure Labor Cost appeared first on The Restaurant Expert.

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You’ve heard portion controls cut food cost, but you’re not sure how to enforce them in the kitchen. Or maybe you’re not sure how to explain to your kitchen manager or chef that portion controls ensure food cost doesn’t get out of hand. Watch this video or read below to learn how to effectively use portion controls in your restaurant.

Restaurant Management Tip - Why Portion Controls Are So Important to Food Cost #restaurantsystems - YouTube

Let’s say following the recipe costing cards, knowing your menu mix and what your customers actually purchase, you can figure out your ideal food cost – assuming you have no waste or theft or spoilage (which there is always a little of this). Then let’s say you’re having a hard time hitting that target, even though all the other pieces are in place. Look to your portioning because even over portioning by as little as 10% can throw your food cost off.

Yes, food costs are always rising. But if you have the proper systems in place, such as recipe costing cards, you can absorb those costs. Stop screaming at your food distributor for your out-of-control food costs. Instead, get a mirror. Part of your food cost problem is you!

It’s time to clean up the processes in the kitchen. It’s time to use food portioning systems.

Here is why food portioning is important. If you run a 30 percent food cost and over portion by 10 percent, you will raise your food cost to 33 percent.

If you’re using recipe costing cards, but your kitchen isn’t following them – using 6 ounce portions when the recipe calls for 4 ounces – you’re losing money. If you aren’t holding everyone accountable to the recipe costing cards, you’re losing money, I guarantee it!

  • Some examples of portioning techniques:
    Always use measuring cups and understand that eight fluid ounces is not the same as eight ounces by weight.
  • Make sure to always have a properly calibrated scale. A pound of butter will register 16 ounces if your scale is working properly.
  • Reusable plastic deli cups are great for stacking and they’re waterproof, so you can use them to portion fish.
  • Use standardized vessels if you are portioning on the fly.

Do some portion testing with the staff. Make the dish you are questioning in three different sizes, if the larger portion is the way to go for the dish, just price accordingly. Avoid cutting back on those dishes that the staff feel should be bigger; they will just make it bigger when you are not looking.

Just like with any system, you have to make sure portion controls are being followed. Hold your managers and your kitchen accountable. It’s the only way to control your food costs.

If you would like to learn more systems like portion controls to cut food cost in your restaurant, read our free special report, Breaking Away from the Insanity: How to easily take control of your restaurant and make more money. Download it here. Be sure to visit our YouTube channel for more helpful restaurant management video tips. 

The post Use Portion Controls to Cut Food Cost appeared first on The Restaurant Expert.

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If you want to control labor cost in your restaurant, it’s time to tackle the full-time equivalent. (This has nothing to do with mandated health care.) What does it mean and why is it a valuable term to know to control labor cost? Watch this video or read below to learn how full time equivalents are used in restaurants and can help control labor cost.

Restaurant Management Tip - Audit Your POS System to Lower Restaurant Labor Cost #restaurantsystems - YouTube

Outside of mandated health care, full time equivalent (FTE) came from the early days of manufacturing. It’s the number of people it takes to equal one full-time person. Full time is based on a 40-hour workweek. For the purposes of figuring out the number of full time equivalents you need for your restaurant, let’s work with 40 hours as the measurement for a full-time person.

This is the secret to avoiding overtime in your restaurant. It’s also the secret to having qualified, trained employees in your restaurant. Follow this tip and you can stop settling for warm bodies and start hiring good people who will do the job right and also control food cost.

The answer is to always have two more full time equivalents (FTEs) than you need. An FTE is whatever number of people it takes to equal one full-time person.

For back-of-house staff, such as cooks, dishwashers, etc., one FTE equals 40 hours. If you have two part-time cooks who both work 20 hours a week, together they equal one FTE. So for every back-of-house employee who can work 40 hours, they equal one FTE.

For front-of-house staff, such as servers, hosts, bussers, runners, etc., one FTE equals five shifts. If you have two part-time servers — one who can work three shifts a week and one who can work only two shifts a week — that’s five shifts and together they equal one FTE.

The reason to use shifts and not hours for front-of-house is most restaurants have servers who will never work a total of 40 hours a week, even if they work all seven days. Every front-of-house employee who can work five shifts a week equals one FTE.

Flexibility is one of the attributes of the restaurant industry. Hourly workers like the ability to change their schedule from one week to the next to take advantage of vacations, events, friends and family in town, and parties, to name a few. With this in mind, even the most perfect manpower plan can be thrown an unexpected curve.

Want to control labor cost in your restaurant? Want to reduce your turnover? Start paying attention to your FTE.

If you would like to learn more systems to control labor cost, read our free special report, Breaking Away from the Insanity: How to easily take control of your restaurant and make more money. Download it here. Be sure to visit our YouTube channel for more helpful restaurant management video tips. 

The post Control Labor Cost with FTEs appeared first on The Restaurant Expert.

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If you want to cut labor cost, there is one place you can look right now. Check your employees’ pay rates in your POS system. When was the last time you did that? Never? Watch this video or read below to learn what I’m talking about and why it’s important if you want to cut labor cost.

Restaurant Management Tip - Audit Your POS System to Lower Restaurant Labor Cost #restaurantsystems - YouTube

Time equals money!

Want to cut labor cost? Look to your time clock. It’s a prime area where restaurant owners get robbed on labor cost. Theft happens at the time clock whenever you are not looking!

You must, and I mean MUST, audit your timekeeping in your restaurant point of sale (POS) system.

This means checking and adjusting employee information in your POS to match what you currently pay each employee and make sure they are assigned to the right job codes.

For example, you might have hired a cook at $10 an hour two years ago who currently makes $11.25. Your payroll company knows that, but your POS probably still shows the cook at $10. You also have employees that work multiple positions, such as a server at $5 an hour and a server trainer at $8 an hour.

You need to make sure this is accurate and have the employee punch in and out in the correct job codes for budgeting to work. This audit will cut labor cost.

Employees can easily steal from you by the hour and it adds up. If you want to make sure your money is safe, stop getting robbed at the time clock, pay attention to what people are supposed to be punching in at.

Control it today and cut labor cost today.

If you would like to learn more systems to cut labor cost, read our free special report, Breaking Away from the Insanity: How to easily take control of your restaurant and make more money. Download it here. Be sure to visit our YouTube channel for more helpful restaurant management video tips. 

The post Cut Labor Cost in One Easy Step appeared first on The Restaurant Expert.

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Lower food cost 2-3% overnight with one simple system. In fact, it’s an industry insider secret your restaurant food distributor probably doesn’t want you to know about. Watch this video or read below to learn how to lower food cost with one simple system.

Restaurant Management Tip - 1 Simple System to Reduce food Cost Overnight #restaurantsystems - YouTube

One of the best ways to make sure you’re stretching every dollar and lower food cost is to order a descending dollar report. You can get this from your vendor. It shows what you spent the most money on down to the least amount of money. This isn’t necessarily in volume, but in price per item. It’s not that I ordered 10 cases, it’s that I spent $1,000 — which could have been 1 case. Based on these figures, you can try to find like or better products at cheaper prices, which can have a huge impact on your business and your bank account.

Don’t beat up your distributor and demand lower prices. (That’s a prime vendor agreement – covered in another video tip!) Instead, take a look at what you’re purchasing and if you change some of the item, can you lower food cost?

Go to your broad line distributor, or all of them, and request a descending dollar report, showing you what you spend the most money on to what I spend the least amount of money on.

Your top 10 items that you purchase represent 50% of your purchasing.

Order a descending dollar report from your vendor to review what you spent the most money on down to the least amount of money. This isn’t necessarily in volume, but in price per item.

Based on these figures, you can try to find like or better products at cheaper prices, which can have a huge impact on your business. For example, you can take something you usually spend $3,000 a month on and get it down to $2,500. I’ve had members cut their spending by 5, 7, even 10 percent.

Watch the video above for a thorough explanation for what the descending dollar report is, how can you get it from your vendors and how it to use it as a tool to lower food cost.

If you would like to learn more systems to lower food cost, read our free special report, Breaking Away from the Insanity: How to easily take control of your restaurant and make more money. Download it here. Be sure to visit our YouTube channel for more helpful restaurant management video tips. 

The post Lower Food Cost Overnight with 1 Simple System appeared first on The Restaurant Expert.

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Are you looking for how to create a restaurant budget, yet you’re having a hard time finding the right resources? You’re on the right track because you understand the importance of having a budget. Not everyone in the restaurant industry does. Every other industry works from a budget – yet it’s hard to find resources for restaurants. Without a budget in your restaurant, how do you know how much money you should be making? Watch this video or read below to learn how to create a restaurant budget.

How to Create a Restaurant Budget - Restaurant Business Tip #restaurantsystems - YouTube

If you don’t know what targets to hit in your restaurant, how do you know what success looks like? How do you provide enough for your family and keep your employees employed. A budget takes you from a reactive mode – constantly putting out fires and dealing with cash emergencies – to a proactive mode where you can plan for profits.

In this video, David shows you the process of budgeting using his Budget Creator Pro software, what his Members use for budgeting.

First you need to gather your sales for the last year. Start with any month – don’t wait to do a budget until January. You need a budget for the next 12 months starting whenever. Your budget is your plan for success going forward.

Watch the video above for a step-by-step demonstration for how to create a budget with software, to make it automatic and easy to adjust. Your budget is a living, breathing document and will be adjusted. With software, that makes it even easier to keep up with your budget.

If you’re sick and tired of getting to the end of the year and not having the money you expected, create a budget! If you’re ready to do it, we have a great special report that will take you through the exact process of creating a restaurant budget. I’ve broken the report into three parts.
– Part 1: Forecast your restaurant’s sales
– Part 2: Create the budget
– Part 3: Populate the budget

A restaurant budget is a document that keeps you headed in the right direction. Sure, you’ll make some missteps that may have to be corrected. Sure, you’ll encounter some unexpected events and expenses that will throw your budget off course. That’s normal. That’s business. Frankly, that’s life.

But without a restaurant budget, how do you know what to aim for, what goals to set? How do you know when you’ve exceeded your goals?

A restaurant budget will help you recover from unexpected road blocks and plan for potential challenges.

But the number one reason you should create a restaurant budget for your business is because it allows you to plan for profitability!

You probably get up every morning with the idea that you want to be profitable. But what kind of roadmap do you have to guide you there?

A restaurant budget is your map on the journey to profitability. It determines what you need to reach your goals and how to get you to your destination – successfully.

Once you have a budget, you won’t have to rely on your instincts and guesses anymore.

Erase your fear of budgets today and take control of your restaurants’ financial future.

If you would like to learn step by step how to create a budget, read our free special report, Erase Your Fear of Budgets Forever. Download it here. Be sure to visit our YouTube channel for more helpful restaurant management video tips. 

The post How to Create a Restaurant Budget appeared first on The Restaurant Expert.

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Are you looking for how to create a restaurant budget, yet you’re having a hard time finding the right resources? You’re on the right track because you understand the importance of having a budget. Not everyone in the restaurant industry does. Every other industry works from a budget – yet it’s hard to find resources for restaurants. Without a budget in your restaurant, how do you know how much money you should be making? Watch this video or read below to learn how to create a restaurant budget.

How to Create a Restaurant Budget - Restaurant Business Tip #restaurantsystems - YouTube

If you don’t know what targets to hit in your restaurant, how do you know what success looks like? How do you provide enough for your family and keep your employees employed. A budget takes you from a reactive mode – constantly putting out fires and dealing with cash emergencies – to a proactive mode where you can plan for profits.

In this video, David shows you the process of budgeting using his Budget Creator Pro software, what his Members use for budgeting.

First you need to gather your sales for the last year. Start with any month – don’t wait to do a budget until January. You need a budget for the next 12 months starting whenever. Your budget is your plan for success going forward.

Watch the video above for a step-by-step demonstration for how to create a budget with software, to make it automatic and easy to adjust. Your budget is a living, breathing document and will be adjusted. With software, that makes it even easier to keep up with your budget.

If you’re sick and tired of getting to the end of the year and not having the money you expected, create a budget! If you’re ready to do it, we have a great special report that will take you through the exact process of creating a restaurant budget. I’ve broken the report into three parts.
– Part 1: Forecast your restaurant’s sales
– Part 2: Create the budget
– Part 3: Populate the budget

A restaurant budget is a document that keeps you headed in the right direction. Sure, you’ll make some missteps that may have to be corrected. Sure, you’ll encounter some unexpected events and expenses that will throw your budget off course. That’s normal. That’s business. Frankly, that’s life.

But without a restaurant budget, how do you know what to aim for, what goals to set? How do you know when you’ve exceeded your goals?

A restaurant budget will help you recover from unexpected road blocks and plan for potential challenges.

But the number one reason you should create a restaurant budget for your business is because it allows you to plan for profitability!

You probably get up every morning with the idea that you want to be profitable. But what kind of roadmap do you have to guide you there?

A restaurant budget is your map on the journey to profitability. It determines what you need to reach your goals and how to get you to your destination – successfully.

Once you have a budget, you won’t have to rely on your instincts and guesses anymore.

Erase your fear of budgets today and take control of your restaurants’ financial future.

If you would like to learn step by step how to create a budget, read our free special report, Erase Your Fear of Budgets Forever. Download it here. Be sure to visit our YouTube channel for more helpful restaurant management video tips. 

The post How to Create a Restaurant Budget appeared first on The Restaurant Expert.

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Do you wonder what makes up the prime cost formula in the restaurant industry? How do you calculate a restaurant’s prime cost formula? What is the prime cost formula? Watch this video to learn or continue reading below.

Restaurant Management Tip - What Makes Up Restaurant Prime Cost Formula #restaurantsystems - YouTube

Prime cost in the restaurant industry is different than in other industries. I want to be very clear what prime cost is for the restaurant industry. The prime cost formula is your total cost of goods sold (to be calculated properly requires weekly or monthly inventories to calculate use because purchases divided by sales are NOT accurate), plus your total labor cost, including taxes, benefits and insurance, then divided by your gross sales (sales before discounts, not including sales tax).

Cost of goods sold is not your purchases divided by your total sales. You have to have inventories. Beginning inventory plus purchase minus ending inventory gives you use.

If you don’t take accurate weekly or monthly inventory, you have to look at a year’s worth of purchases divided by a year’s worth of sales.

Labor cost includes taxes, benefits and insurance. It’s not just their hourly wage that comes out of your bank account, but the taxes, benefits and insurance that comes out with each hour of an employee’s wage.

Divided by sales? Well, which sales? You should be using gross sales – watch this video to learn about the difference between the gross and net sales.

If you have a restaurant that does $850,000 a year or more in gross sales, your new prime cost target is 55 percent or lower!

That means for a restaurant that does $1 million a year in sales operating at a 65 percent prime cost, thinking they are doing well, there are 10 points on the table, or $100,000, in bottom-line profitability. This money is available if they are willing to do the work to get it.

And the crazy part is the higher your sales, the lower that number can go. I am currently working with more than 300 restaurants and many of them now operate at 50 percent, 42 percent and even as low as 34 percent! They are achieving these low prime costs without changing product quality or levels of service.

If you would like to learn more about the prime cost formula and how to use systems to hit your target prime cost, read our free special report, Breaking Away from the Insanity: How to easily take control of your restaurant and make more money. Download it here. Be sure to visit our YouTube channel for more helpful restaurant management video tips. 

The post Work the Prime Cost Formula for Your Restaurant appeared first on The Restaurant Expert.

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