Introduction:

It’s time to talk about restaurant budgets and how simple they actually are, plus how useful they will be in helping you hit your target costs.

I get this question a lot of times: “Why do I even need a budget in my restaurant?”.  It’s because a budget helps keep you in line and know where you need to make adjustments.

People often say budgets are too complicated and when I set up my first budget for a client I tracked every single line item.  It took me weeks to create and it was too complicated.  When it was all done I wondered why I’m tracking half of these expenses that don’t change like their gas bill. It stays the same the whole year, goes up a little bit in the winter and down a little bit in the summer, but mostly stays flat.   Not only does it stay flat they can’t control it so there’s no point of tracking it.

What you should be tracking in your restaurant budgets are Variable Expenses which are your:

1. Cost of goods sold (Items you sell: Wine, Food, etc.)
2. Labor
3. Direct Operating Expenses (E.g To-go containers)

Creating a budget:

This is a quick exercise to show you how simple it is creating a budget. Pull out a piece of paper write down $100,000 at the top, let’s assume you’re gonna do a hundred thousand dollars in sales in the next month.

Question: If you want your costs of goods sold to be 30% how much can you spend on purchases? If you answered $30,000 that’s correct, that’s how easy it is to create a budget. Same thing for labor, hundred thousand dollars in sales and a 30% labor cost which automatically means do not spend more than thirty thousand dollars on labor throughout the month and set up your schedules so they don’t cost more than thirty thousand.

Software Tools for budgets:

It starts to get complex when you have multiple different categories like Food which may be 60-70%, Beer at 10%, Wine, Liquor, etc. It’s time to use spreadsheets for this and they’ll get the job done but they can be messy. However, if you’re still using spreadsheets you’re ten years behind and you should be using software.

There’s a lot of different software tools out there you can use, but I have also created a tool called BACON where you can create a budget and then use it every month to track your most important expenses.

Click here to learn more about BACON.

Let’s make this your Profitable Year Ever!