Profit Isn’t Luck - Its Control

For many years, I've heard Food and Beverage Operators say, We’re busy but we aren't making any money. The reality is sales alone don’t create profit. Profit comes from controlling the numbers that matter. 

In almost every operation, three major expenses determine if an operation succeeds or struggles. 

Food, Labor and Occupancy cost. 

Successful Operators don't wait until the end of the month to see where they stand. They monitor food cost, schedule labor based on a sales forecast. Top operators will control waste, manage purchasing and keep a close eye on every dollar. 

Food Cost 

The target for most operations should be 30%. Fine dining could be a bit higher. Proper purchasing is key. For example if you have $10k a week in sales and you want a 30% food cost, food purchases should not exceed $3k a week. This should be the first red flag. Controlling food cost is more than watching invoices. Recipes need to be  standardized. Portioning is controlled. Use a sales report to build par stock for inventory and ordering.  

Labor Cost

Labor hours need to be planned along with a sales forecast. Keeping labor under 32% is where you need to be. This can be achieved by comparing labor hours and sales after every shift. If lunch is slow and staff is heavy you can make up the difference by adjusting the dinner hours. It's also important to keep a daily sales log to compare sales on the same day for last year. 

Business changes throughout the day. Stop paying for labor hours you don't need. Also with a year to year sales log you can anticipate and get a more realistic idea of what the labor hours  need to be. Labor should be adjusted every week. 

Occupancy cost

This one is hard. If your  rent is more than 5% to 7% you could be heading for trouble. It is very important to make a realistic sales forecast. If your food and labor cost is perfect and your rent is 10% you could be in trou

Know Your Numbers Before They Become a Problem,

Successful operators don't wait until the end of the month to discover where they stand.  

They forecast sales, establish cost targets, monitor numbers daily and make adjustments while there is still to affect results. 

Profit isn't luck. Its control 

PDM Hospitality Solutions