Transcript CREATING A PROFIT REQUIRES STRONG CONTROLS
RESTAURANT ACCOUNTING
Mower & Associates, CPA 1833 S Millennium Way Suite 100 Meridian, ID 83642 (208)342-5905 [email protected]
Mower & Associates, CPA 1833 S Millennium Way Suite 100 Meridian, ID 83642 (208)342-5905 [email protected]
• • • • • • Mower & Associates is focused on increasing restaurant profitability.
M&A offers management solutions for single and multi-unit restaurants. M&A takes responsibility for payroll, accounts payable, financial reporting and tax preparation off your plate.
Plus, you have electronic access to restaurant-specific spreadsheets and forms.
We personally help you analyze your reports to find more profit.
Give us your data from anywhere around the U.S. and we will help your restaurant prosper.
MORE CONTROL MORE PROFIT
CONTROL Weekly P&L Purchasing and Receiving Costing the Menu Menu Engineering Perpetual Inventory Controls Scheduling and Motivation Techniques Bar Controls Reducing General Expenses Installing computerized POS System Employee Incentive Programs Fraud Detection Preliminary Profit Impact Less Additional Costs Net Profit Impact POTENIAL PROFIT IMPACT 2% 1% 2% 1% 1% 2% 1% 1% 3% 1% 1% 16% -2% 14%
ATTENTION TO DETAIL HIGHER PROFITS In a restaurant grossing $2.5 million, if each server sold two more desserts per night, profit would improve 43%.
A steak house with a 4% profit, can double profit to 8%, with careful cutting of meat.
In a restaurant with $500,000 in sales, if every employee comes in ¼ hour later, savings would be $10,000 per year.
A pizza restaurant doing $3 million in sales, can save $80,000 by accurately weighting each cheese portion.
Mower & Associates Restaurant CPA
FINANCIAL STATEMENTS
TOOLS for PROFIT BALANCE SHEET Summarizes Assets, Payables and Net Worth Key accounts on balance sheet Cash - must agree with bank balance Inventory - must agree with physical inventory count Payables - if there are no payables, the balance sheet and P&L are wrong STATEMENT OF PROFIT OR LOSS This statement shows Sales, Expenses, and Profits Use accrual accounting not cash accounting
Mower & Associates Restaurant CPA
QUALITY FINANCIAL STATEMENTS
• Who BEST prepares restaurant financial statements & tax returns?
• • • CPA firm specializing in restaurants Bookkeeper Any CPA Firm • • • • • • Common Problems with Restaurant Statements None Restaurant Chart of Accounts Cash rather than accrual accounting Unorganized detail No interest on P&L, but loans on balance sheet No physical inventory adjustments Sales tax reporting errors
Mower & Associates Paul Mower Restaurant CPA Review of Profit and Loss Statements WE ASK A LOT OF QUESTIONS ABOUT:
SALES COST OF GOODS SOLD LABOR GENERAL EXPENSES CASH FLOW
Restaurant Owner and Paul Mower, CPA Compare and Measure Sales
Comparisons
This Week to Last Week This Week to Same Week Last Year Compare to other Restaurants Sales per square foot
Trends
Customer Count Average Guest Check
Mower & Associates
BREAKEVEN SALES Step 1 Add up Fixed Costs Step 2 Add up Variable Costs Step 3 Calculate Breakeven Sales
Mower & Associates Breakeven Computation Breakeven Sales Fixed Costs Subtract Var Cost % from 100%=CM%* Breakeven Divide Fixed Costs by CM% Breakeven Sales 476,417 47.2% 0.00
1,008,691
*CM% = Contribution Margin%
Sales needed for Target Profit Fixed Costs Subtract Var Cost % from 100%=CM% Target Profit Divide [Fixed Costs + Target Profit] by CM% Sales needed for Target Profit 476,417 47.2% 50,000 1,114,553
COST OF GOODS SOLD If Cost of Goods are high, check for: Spoilage and Waste Purchase and Receiving Shortages Employee Theft Under reported Sales Calculate exact foods costs each period (weekly) Food cost occurs when the food is used, not when the food bill is paid Step 1 Count merchandise received during the period Step 2 Count inventory Step 3 If inventory increases, subtract the increase from purchases If inventory decreases, add the decrease to purchases Example Purchases Inventory Decrease $4,000 500 COGS $4,500
Restaurant Owner and Paul Mower, CPA Review Labor Costs • • • Factors that Affect Labor Costs Sales Type of Restaurant Capability of employees • • • • Analyzing Costs Compare labor costs to other restaurants Review labor on a daily basis Set goals for labor costs Labor Schedule based on Hourly Customer Count
Mower & Associates
DAILY LABOR SCHEDULE HOURS Customer Count M G R C H E F C O O K P A N T R Y H O S T E S S W A S H E R S E R V E R S E R V E R S E R V E R B U S B A R B A R B A R S E R V E R 9:00 10:00 11:00 12:00 1:00 2:00 3:00 4:00 5:00 6:00 7:00 8:00 9:00 10:00 11:00 Count Hours 1 6 23 5 3 12 30 8 3 1 1 93 114 9 9 8 1 1 9 12 11 9 5 9 8 8 6
GENERAL EXPENSES CONTROL EXPENSE Laundry and Linen Equipment replacement Supplies Advertising Full Service Fast Food STANDARD PERCENTAGE OF SALES 1.3% 1.6% 1.7% 2.1% 4.1% Utilities Office Telephone Insurance Credit Card Discount AMEX VISA Repairs Interest Rent Full Service Fast Food 2.6% 0.5% 0.5% 2.2% 2.9% 1.9% 1.8% 9.0% 5.5% 6.1%
THE MENU Menu Costing Menu Pricing Menu Engineering
MENU COSTING Steak Dinner Item Ingredient Steak Vegetable Baked Potato Sour Cream Butter Unit Ounce Lbs.
Each Quart Pound PLATE COST Unit Price 0.96
0.96
0.12
1.25
1.61
Portion 10 oz 3 oz 1 4 oz 2 oz Cost per Portion $ 9.60 $ 0.18 $ 0.12 $ 0.16 $ 0.20 $ 10.26
MENU PRICING
Three ways to price a menu
• Compare to competitors • Food cost percentage for target profit • Add profit, overhead and food cost for each item
MENU ENGINEERING • • • • • Rate each menu item A Popular and Profitable B C D Popular Only Profitable Only Unpopular and Unprofitable • Based on Rating • • • • • Eliminate items Change the price of items Refocus the menu placement Change the way the items are prepared Add new items to revitalize the menu
Menu Engineering
Mower & Associates
Menu Engineering
Description Column New York Steak Fajita Seafood fettuccini Sirloin Roasted chicken Eggplant Shrimp Salmon Fish & Chips Radiatore Pasta Snow Crab Seared Venison Hamburger Total Average % Total Total Menu Items Sold Food Cost Selling Price Per Menu Gross Profit Per Item Total Food Cost Total Menu Sales Gross Profit $ Food Cost % Popular Rating Profit Rating Overall Rating 17% 19% 10% 9% 7% 7% 7% 5% 7% 8% 3% 1% 2% A 200 185 95 85 65 70 65 45 68 78 25 7 20 B 2 3 5 12 1 7 3 5 4 3 4 5 5 C 17 10 15 13 D (C-B) 10 7 10 9 E (A x B) 1,400 555 475 340 F (A x C) 3,400 1,850 1,425 1,105 13 12 13 16 10 8 8 11 195 280 325 225 845 840 845 720 9 9 13 22 3 7 6 8 10 2 136 234 125 84 20 612 702 325 154 60 G (F-E) 2,000 1,295 950 765 H (E / F) 41% 30% 33% 31% 650 560 520 495 23% 33% 38% 31% 476 468 200 70 40 22% 33% 38% 55% 33% C C D D D A A A B B B C C A A B B B B C C C C D D D C+ C+ D D D A A B+ B C+ B C C 100% 1008 4394 12883 8489 34% 78 653
Value for your $
Mower & Associates, CPA
1833 S Millennium Way Suite 100 Meridian, ID 83642 [email protected]