The Restaurant Expert is a coaching and teaching company for independent restaurant owners, offering several tools that will find the hidden profits in your restaurant. To teach independent restaurant owners how to operate with systems to help them make more money and live a balanced life, and to bring them together to share ideas, challenges and successes in a safe, friendly environment.
What is the restaurant prime cost calculation? What numbers go into the prime cost calculation? Watch this video for an easy breakdown this number, which I call the most important number in your restaurant.
Restaurant Management Tip - Answer to What is the Restaurant Prime Cost Formula #restaurantsystems - YouTube
The one number all restaurants must know to be profitable is their prime cost. The prime cost calculation is made up the total cost of goods sold and labor cost.
So what is the prime cost equation? The prime cost calculation? It’s very simple. It’s total cost of goods sold plus total labor cost (including raw labor, taxes, benefits and insurance). Take that number and divide it by gross sales before discounts are taken out, not including sales tax.
That is the formula for restaurants.
So, you calculate your prime cost. Then what? Well, if your total prime cost is higher than 55% and you make $850,000/year or more in sales, then you have room to trim, which is room for more profits.
How do you get to those additional profits? With systems that control your prime cost.
2. Recipe costing cards
3. Purchasing systems
4. Scheduling systems
It’s one thing to know what your prime cost it – it’s another to learn how to control it.
NOTE: True cost of goods sold can only be calculated when you take inventories to find the value of every product you have on your shelves at least once a month, preferably once a week. This is required because to know your cost of goods sold, you take your beginning inventory and add all of your purchases (even if they were not paid for) to get your total available to sell. Then subtract your ending inventory to find out what product was used in that period, or in other words, left the shelves between those two inventories, whether it was sold, wasted, spoiled or stolen. Product used divided by gross sales gives you your cost of goods sold percentage. Gross sales is defined as the ring at the register before discounts are taken out and not including sales tax (sales tax collected is not a sale).
If you don’t take inventories for value, the way you find our cost of goods sold percentage is to take the past 12 months of purchases and divide them by sales for the same 12 months. While this is not a perfect number, it’s pretty darn close because the difference in starting and ending inventories will not really change that number much.
To learn more about the restaurant prime cost calculation and how to reach it in your restaurant, read our special report, Breaking Away from the Insanity: How to easily take control of your restaurant and make more money. Download it here.
What is the best restaurant software solution? Why do you need restaurant management software? How do you choose the best software for your restaurant? Do you need multiple restaurant software tools? Is there a software that works for independent restaurant owners and doesn’t cost chain dollars? So many questions! Watch this video for a comprehensive explanation for the best restaurant software solution that is essential to cutting and controlling costs in your independent restaurant.
Restaurant Management Tip - The Best Restaurant Software and Why You Need It #restaurantsystems - YouTube
I used to live by spreadsheets. I could create spreadsheets for every measurement. But it started to get to a point where I was getting overwhelmed by the number of spreadsheets I had and trying to keep up with the updating of the spreadsheets. Also, it was really hard to keep track of the spreadsheets – Chef saved it on her computer, and I couldn’t get to it. The GM had it on his computer, and I couldn’t get to it.
Worse than having multiple versions on different computers, I had managers manipulating formulas – on accident and on purpose – making it so that I was reviewing bad numbers and didn’t even know it.
It became a nightmare and that’s when software became the obvious solution.
The first software you must have is point of sale system – a POS system. It is the most important piece of equipment you will buy for your restaurant. It is NOT the most expensive cash register you’ll every buy. It also generates extremely important reports and is full of data that you can use to run your business and make more money.
After your POS system, you need back office software. The best restaurant software solution will cover you for scheduling, manager log, ordering, inventory and many other needs. When it comes to selecting the best restaurant management software for you and your restaurant’s needs, you have to ask yourself what do you want to achieve.
There are many restaurant software systems out there that handle restaurant components separately – scheduling for instance. You and your employees can use a scheduling software, but that’s all it’s going to cover. Or what inventory? You could use an inventory software – it might even tie in with your POS system software. But again, all it’s going to handle is counting your inventory. You’re going to be entering data into all different programs, just like when you are using spreadsheets.
Rather than look for individual restaurant management software programs that solve individual challenges, you are better served by a complete restaurant management software program. You need an all-in-one system. If I were you, the best restaurant software solution includes a daily manager log to know exactly what’s happening in the restaurant from sales to employee issues. You also want cash controls and that every penny is making it to the bank. Do you balance? This information contributes to your inventory and food/beverage cost management.
There’s a place in your restaurant where you’re losing thousands of dollars… your back door. Your back door is where you do a very important segment of your business – it’s where you order and receive your product. One simple restaurant ordering and receiving system can save you around $500 per week. In this video, David offers a step-by-step system that will help you stop bleeding cash.
Restaurant Management Tip - Easy Receiving Procedures to Lower Food Cost #restaurantsystems - YouTube
A lot of restaurant waste results from poor receiving procedures. For example, do you look at the bottom of that box of tomatoes to make sure they’re just as fresh as the ones on top? Do you check to make sure the meats you’re putting in our cooler are at the right temp? Do you double check that you’re paying for what you’re getting in terms of weight?
Your distributor is not in business to make sure you’re profitable. They’re concerned with their own profits and count on delivery efficiencies and getting rid of the food they have on hand. Don’t give your distributor the benefit of the doubt and trust that everything is fresh or weighed right. Even if your distributor is the most trustworthy business in the world, everyone makes mistakes.
The goal of following the restaurant ordering and receiving receiving system is to ensure you don’t have restaurant waste and lost money. Protect yourself.
To stop bleeding cash at your back door, when checking in your delivery, follow these steps:
Check invoices for accuracy against your PO (hung at the back door) for each item, quantity and prices. This is your opportunity to make any adjustments to your bill before you pay more than your were quoted.
Weigh products: Have a large scale in your receiving area if you don’t have one… go get one!) and check it routinely for accuracy. Remove products from packaging and/or ice before weighing and compare to the invoice weight. If there are any discrepancies or problems with products that have to be returned, have the driver make note on the invoice or fill out a credit memo immediately, before signing the invoice. Remember that once you sign an invoice, you are responsible for payment as shown on the invoice.
Check temperatures of any refrigerated products to make sure they are not out of the safe zone. The most expensive chicken wings in the world are those you accepted that have already turned.
Check products for quality and condition. For example, you’ll want to open the case of tomatoes and dig down to the bottom. This way you can make sure the bottom of the box wasn’t packed with bad product before you accept them.
Train a few key people on these important receiving procedures, and you can save up to $500 per week on deliveries.
For more systems like this restaurant ordering and receiving system, 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.
One of the most common questions we get asked is, “What is a good food cost for a restaurant?” Another common one is, “What is the average food cost for a restaurant?” Here’s the deal – your restaurant is not average, especially if you’re an independent restaurant. You can’t determine a good food cost for your restaurant based on some industry standard.
Your restaurant food cost is determined by what’s right for your restaurant. So, how do you determine a good food cost for a restaurant, one that is right for your restaurant?
Watch this video to learn how.
Restaurant Management Tip - What Is a Good Food Cost for a Restaurant #restaurantsystems - YouTube
To find a good food cost for your restaurant, the first place we have to start is with an explanation of the one number you MUST know to make any money in your restaurant: restaurant prime cost.
Prime cost is the combination of your cost of goods sold (food and beverage cost) and your labor cost, including taxes, benefits and insurance. The ideal prime cost is 55%.
It doesn’t matter how you break those points up between the two categories as long as you get to 55%. That means your labor can be 30% as long as your cost of goods sold is 25% and vice versa. Any combination works, as long as you stay at or below 55%.
YOU have to develop a budget that tells you what your actual costs are and what your ideal costs are.
There are many moving parts including your recipe costing cards that tell you what your ideal food cost is and your menu mix that tells you what people are actually purchasing tells you what your food cost should be.
When you have all three, you have the path to determining what a good food cost is for your restaurant.
Let us help you find these numbers in your restaurant. TheRestaurantExpert.com offers restaurant management software that helps you automate these processes so you can keep your prime cost in check, ensuring you make money in your restaurant.
For more ideas for finding a good food cost for 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.
Do you want to how to find good restaurant employees in today’s low unemployment environment? Are you struggling to find employees? Are you struggling to get employees to stay? Watch this video to learn how to find good restaurant employees no matter what the unemployment rate!
Restaurant Management Tip - How to Find Good Restaurant Employees #restaurantsystems - YouTube
Right now there is a very real struggle in restaurants to find good employees. It’s a common issue, but right now it is especially sharp because of the low unemployment rate in the US. It’s sitting at about 4.3% right now and makes it harder to find and retain employees.
Watch the video for tips on finding qualified employees who are a good fit for your restaurant and your restaurant’s culture.
Here are five ways to find good employees for your restaurant.
First, I want to point you to job listing sites that go the extra mile. I have had fantastic results in working with ClearFit. This service incorporates a profile to the job description and has applicants take a personality test to ensure everyone is good fit for each.
Second, when you’re looking for restaurant managers, Indeed.com is a great source.
Third, line employees are found on snapajob.com.
Fourth, even with these recommendations, there is no iron clad way to ensure you can find good employees for your restaurant. Get back to basics. Ask the people who come into your restaurant like your liquor distributors and food distributors and other restaurant vendors.
Fifth, and lastly, build up an employee referral program.
In today’s low unemployment environment, you always have to be looking, so be sure to always be collecting applications.
For more ideas for how to find good restaurant employees and how to develop a great training program, 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.
Do you ever wonder where to get training for restaurant owners that is quality and supportive? Are you looking for the same kind of support the chain restaurants receive from their corporate offices? It is possible for independent restaurant owners to receive training and support. You’ve come to the right place to learn where to get training for restaurant owners to become a better owner and a better manager.
Restaurant Management Tip - Where to Get Restaurant Owner Training #restaurantsystems - YouTube
If you’re looking for training to become a better owner or a better manager, to make more money and get your life back, to work on the business and the managers work in it, we’re what you’ve been looking for.
There are many advantages to being an independent restaurant owner, including not having to pay a percentage of your gross sales back to some home or corporate office. Of course, one of the downsides is having to source your own training for restaurant owners.
Where can get you quality training for restaurant owners? Look no further than TheRestaurantExpert.com where we specialize in coaching and training for independent restaurant owners. We offer full-scale restaurant management software along with the free training and technical support you need to be successful. And don’t forget about our regularly scheduled restaurant training seminars and restaurant workshops designed specifically for independent restaurant owners!
The goal is for independent restaurant owners is to work on their businesses while having restaurant managers know what is expected of them and working in the business.
Our unique combination of training, coaching and software is everything you need as an independent restaurant owner to be successful, love your job, get your life back and make money.
TheRestaurantOwner.com is successful at doing this for you because we have seminars and workshops, online restaurant management software and direct access coaching.
We train you on systems, give you the systems, look at your numbers, help you understand your numbers and give you the tools you need to make those numbers work for you.
TheRestaurantExpert.com is here to help you and give you the training you need.
To learn more about our special opportunities for training for restaurant owners, please visit our Training and Seminars page. You’ll find a great selection of training for restaurant owners, from one-day seminars about prime cost to a 3-day comprehensive workshop focused on teaching you everything you need to know to run a restaurant.
Have you ever wondered, “What is a restaurant owner’s job?” What exactly is the work you should be doing? Do you wonder how you’re supposed to do it all? The secret is… you need work ON your business and not IN it. Sound impossible? Watch this video to learn how it’s done.
Restaurant Management Tip - What are the responsibilities of a restaurant owner #restaurantsystems - YouTube
All restaurant owners face the same challenges – doing it all. All around the world, hundreds of restaurant owners, all wondering, “What am I supposed to do?”
Restaurant owners work in the kitchen, take deliveries, work on the line, greet guests, serve as a restaurant expo, managing the business and so much more.
I want to fire you.
A restaurant owner’s job is to work ON your business and not IN it.
If you’re managing your business and find yourself scheduled to fill certain roles, you have to make some changes.
Here are the three parts of a restaurant owner’s job:
Where should your numbers be for you to make money? You need a budget. Take your last 12 months, look at your sales, your cost of goods sold, your labor and then project the next 12 months. Then we look at what systems you can implement that will help you achieve those goals.
Whatever your goals, including a 55% prime cost, systems and a budget will get you there. It takes time, systems, attention and tweaking where necessary.
You have to get butts in seats so you can fill the joint. That way everyone makes money. Everyone is happy – you, guests, employees. You’re making money. Get out and fill seats.
Another part of a restaurant owner’s job is to be a coach. You need to make sure to work with your management team to teach them to do the things you’re doing such as inventory, prepping, seating guests, etc.
Yes, sometimes you have to step in. But you shouldn’t be scheduled to do any of those jobs. People should be doing it for you and the restaurant. Put systems in place for everything that needs to get so that it’s trainable and then it makes employees successful. You coach them through that all and then you have the time to work ON your business.
The end goal is to be a leader. Not all of us are born leaders – but if you follow these three directions, you’ll become a leader. The responsibilities of a restaurant owner are to be a leader and lead your business to success!
To learn more about the roles and responsibilities that go with a restaurant owner’s job, 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.
Every restaurant is looking for ways to stretch the restaurant labor dollar. A great way to save thousands of dollars in labor is to watch out for one specific mistake. Watch this video to learn the one simple trick to cut restaurant labor cost.
Restaurant Management Tip - Easy Trick for Cutting Restaurant Labor Cost #restaurantsystems - YouTube
First,grab a piece of scrap paper, go to your schedule and write down which employees are coming in at what time and in what position.
Because you should see two things:
1. Make sure no one is punching in too early, or early enough to bump someone into overtime if managers aren’t paying attention.
2. Make sure each employee is clocking in under the right position.
In many restaurants, employees hold multiple positions and get paid different pay rates. For example, one employee could be a server and a server trainer. Or a server and a supervisor. A line cook, a prep cook and a dishwasher. It does not matter if you have multiple positions with multiple of pay rates. What matters is that you can lose thousands if people are punching in at the wrong pay rate. If no one pays attention to this, you are screwed shift by shift and labor dollar by labor dollar.
Teach your managers to write down who’s coming in and then go to the POS system and see who is punching in at what job code. Confirm they are using the right codes for the job they are doing that shift.
The one trick to stretching your labor dollar and controlling labor costs requires putting your managers in charge and paying attention!
Don’t let your employees get away with manipulating their job codes at the time clock. You can save thousands by keeping your honest employees honest.
For more ideas for stretching your restaurant labor dollar, 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.
Do you want to know to develop good line cooks? Do you want to stop paying a line cook that doesn’t even want to work and isn’t a team player? Are you tired of line cook issues in your restaurant? Watch this video to learn how to develop a good line cook while also decreasing your labor cost and becoming more efficient in the kitchen.
Restaurant Management Tip - How to Lower Labor Cost with Line Cooks #restaurantsystems - YouTube
This idea actually comes from a Member of TheRestaurantExpert.com. They’ve been doing it for years and it’s brilliant.
When you hire your line cook, start them out at your lowest level station, pay them a minimum starting salary such as $12/hour, train them and then certify them. In this case, let’s call that station the fry station. As soon as that fry cook excels and is “certified,” start teaching them a new station – in this case it can be a salad station or cold station. Train them and then certify them in it and give them a bump in pay, such as 25 cents or whatever you can afford. The point is you are giving them a bump in pay.
After two stations have been certified, move that line cook over to station after station, for however many stations you have, training and certifying them each time with a bump in pay.
Next thing that line cook knows he or she is making more money and feels confident about their abilities to work in the kitchen.
This might seem to you like this solution increases your restaurant labor cost, but it’s actually the exact opposite. Now on a slower day you have someone who can work multiple stations. So instead of having multiple cooks on the clock working individual stations, you have one cook who can be efficient on multiple stations and save you money. On a slow day or night, I can cut someone and have the confidence the kitchen will be covered because the people left on the line can do multiple stations.
You get more efficient because those line cooks become more valuable, as they are full trained and certified in every position.
Use this idea to decrease labor cost and develop good line cooks.
For more information about training and the impact it can have on your restaurant’s bottom line, 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.
Year after year I speak literally all over the country, sometimes even internationally, teaching restaurant owners how to reduce restaurant prime cost. The crowds range from small groups of a dozen to rooms filled with 300-plus people. No matter the size of the room or the location of the presentation, you will hear one sentence out of my mouth with almost 100 percent certainty: “The two most important systems any restaurant should have in place are budgets and recipe costing cards!” (I usually add to that, “what are the two systems most independent restaurants don’t have in place? Budgets and recipe costing cards!) If you have seen me speak, you have likely heard that point made.
Most people who hear me speak about recipe costing cards conclude, “I MUST GET MY RECIPE COSTING CARDS COMPLETED ASAP!” They then only focus on completing their recipe costing cards and ignore some simple systems that result in incredible savings – savings that can accrue and reduce restaurant prime cost while working on recipe costing cards. Here are some examples of the things a restaurant owner who only focuses on recipe costing cards misses out on:
Daily systems that save money daily: By completing a simple 15 minutes of work a day in daily paperwork (including manager logs and sales results), and I mean daily, our Members start using the purchase allotment system. This one system alone puts you on a path of ordering on budget each and every order, allowing you to give up control of ordering without giving up control of your checkbook. This system can easily save you $11 per day, and the ONLY way it doesn’t do that is if you don’t use it. Download a free daily paperwork checklist here.
Reducing food cost by 2–3 percent in 30–60 days: Restaurant owners who use two clipboard systems, along with the use of the purchase allotment system, will see a reduction in their actual food cost by 2–3 percent almost overnight. The first clipboard system I am talking about is a key item report. It’s a simple count sheet that prevents theft of expensive items or items you want to closely track. The second clipboard system I am talking about is a waste sheet. By simply documenting all food items that have been dropped, burned, spoiled, stolen, double ordered, etc., you can proactively manage your kitchen because when you see a problem, you get to fix it that same day instead of waiting for your numbers from the accountant to find your food cost is too high 15 days into the next period. Which means you’ve probably made the same dumbass mistakes for the past 45 days, losing money hand over fist, and now you have to fix it when it’s almost too late. In the case of our Members, the only ones who have not seen a 2-3 percent drop in their food cost when using the purchase allotment system, key item report and waste sheet are those members who don’t use them!
Stop bleeding labor cost: Restaurant owners love to talk about scheduling and many think the trick to saving money on labor is somewhere in the schedule. I love online scheduling (available through our restaurant management software), but it doesn’t make you money. What makes you money is when you add one more system: the labor allotment system. While the purchase allotment system allows you to give up ordering without giving up control of your checkbook and order on budget, labor allotment takes about 10 minutes to complete, allows you to adjust your schedule to start the next week on budget rather that bringing people in to play grab-ass at the time clock, costing you thousands in wasted labor dollars. To be more specific, grabbing your actual labor numbers from last week – labor dollars spent and labor hours worked – and adding it to your target labor budget for next week, the system will tell you exactly how many hours you have to schedule and how many labor dollars you have to spend for each position to schedule next week on budget. Don’t be surprised when you start seeing a huge improvement to your bottom line when you aren’t wasting money at the time clock. For our average Member, this is another 2–3 percent to their bottom line!
Do the simple stuff, too
Yes, I want you to work on your recipe costing cards. I want you to spend the 40–60 man hours it takes to set them up properly. But what I don’t want you to do is ONLY work on recipe costing cards. Take a look at the top of this article. I said you could drop your food cost by 2–3 percent with 15 minutes of work, along with two clipboard systems. I said the average Member drops their labor cost by 2–3 percent by simply editing schedules to be on budget. There’s 4–6 percent on the table just doing the simple stuff first.
Don’t wait. Execute the plan I have set forth in this article and in three months you will have reduced your prime cost by 4–6 percent. Plus, you will have a new menu on tables in four to five months. This will save you another 3–7 percent. When you work with TheRestaurantExpert.com and use SMART Systems Pro, in six months, along with many other systems we will help you implement, you have the potential to reduce restaurant prime cost by 7–13 percent! You can just work on recipe costing cards and then give up after four or five months because you haven’t seen results, or you can implement these other systems and see real savings within weeks.
For more information about systems that reduce restaurant 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.