Restaurant financial planning for the new year can seem like a daunting task, but investing the time now to budget effectively can make the difference between achieving restaurant profit or not. President of The Fifteen Group and expert Restaurant Accountant, David Hopkins, shares tips on how to budget effectively to see results.
Restaurants Owners Need To Plan
With the end of the year coming up, one of the questions that should be running through every restaurant owner’s head is, “How do I make next year better?”
The most important thing that you can do to ensure that next year is better is to plan for it to be better.
Many restaurants, and many businesses in general, survive through a year without any real game plan in place. If you want to be more profitable next year, then take the time to create a representative budget which details exactly how that is going to happen. Once you have completed the budget, if you are disappointed with the projected 12-month profit, don’t wait an entire year to see those disappointing results — make changes now!
Creating A Budget
When creating an extremely accurate budget, you need to have all of your information:
1) Prepared product cost percentages from your costed menu recipes.
2) Labour percentages from last year and a breakdown of salaried individuals.
3) Your operating costs and fixed costs from the previous year. (e.g. rent, utilities, insurance, etc.)
At this point in the planning, restaurant sales projections are the only real unknown. However, if you have been in operation for more than a few months, you can use your sales history to forecast monthly sales with some degree of accuracy.
While budgets can take many formats, attached is an example of the level of detail and style of budget that we at The Fifteen Group use and find most effective.
Example Restaurant Budget
If your budget is this detailed and prepared accurately, but the profit number isn’t meeting your expectations, then take the time to make changes now. Even if it takes 40 hours of effort to “re-work” the budget, if those adjustments can increase a $15,000 profit to an $80,000 profit, then that time investment is well worth it.
Some budget adjustments to produce a different result might include:
- Re-working price structure and food cost
- Changing managerial structure and salaries
- Changing operating costs (e.g. linen on tables, promotional initiatives, etc.)
- Changing hours of operation
- Seeing if you can tighten up labour scheduling
- Reviewing suppliers and finding better product pricing
At the end of the day, there is no point starting to work through next year, if you already know that you will be disappointed with the outcome.
If you are unsure about how to create a proper restaurant financial budget, or you are unhappy with the profit you have projected, please feel free to contact The Fifteen Group and let us see how we can impact your restaurant’s financial success for the coming year.
President of The Fifteen Group