If you’ve recently tuned in to our latest Podcast Episode of Operating a Profitable Restaurant, you were able to catch some valuable sound bites from our RSI Operational Specialists on none other than Year-End tips to set yourself up for a prosperous year. In the spirit of the Holidays and of course Year-End, we’ve tasked our trainers with giving the gift of knowledge for all to hear. Now listen up, our Operational Specialists do this on a daily basis; it’s their job to share their passion for and knowledge of the restaurant industry, so what could possibly be different about what we’d asked them to do for this month’s topic of Year-in-Review? Well, they put their brilliant heads together and came up with a list. A list that will make next year one where you find yourself in control of your business rather than being controlled by it… sounds like a pretty stellar gift to me. So cozy up, take some notes and with a bit of consistency and discipline next year, you will be able to demonstrate a superior ability to take care of your guests, your team and continuously bring money to your bottom line – cha-ching and Happy Holidays folks!!!
There’s no surprise that number 1 on our list is a word we use day in and day out at RSI. There’s simply no better tool for setting the course for your business than having an accurate, up-to-date ______ in place. Know what we’re talking about yet? Taking the number 1 spot on our 2016 Operational & Financial ToDo List is BUDGETS.
The use of a budget can increase your ability to take care of our guest, your team members, and manage your cash flow through the following ways:
- Allows you the opportunity to make adjustments for unforeseen circumstances (i.e. equipment breaking, R+M etc.)
- Assists you in maintaining consistent profitability
- Affords you the ability to be proactive as opposed to reactive (big time bonus to tipping the profit scale in the right direction)
- Allows you flexibility in staff training (happy team = happy guests!)
- Allows you to plan ahead for rewarding your team with bonuses and wage increases. Pro Tip? It costs more dough to bring on a new team member than adequately compensate your current team
- Affords you the ability to provide the proper tools for your team
- Assists you in understanding potential profit and how it relates to your debt servicing
NOTE: For more info. on restaurant budgeting, check out our Resource Center
Budgets don’t have to be complicated; in fact, they can be quite simple if you have the proper tools in place to assist you in managing your budget. RSI’s SLA Report (Sales and Labor Analysis) provides you with key metrics on a daily basis to better understand what you’re currently doing in Sales and Labor compared to what you had forecasted in those areas. This not only shows you what you’re doing well, but more importantly it’s a yellow highlighter on your areas of opportunity.
Second on our very merry list is PRIME COST CONTROL STRATEGIES. Whether you’re planning on increasing your menu prices or reworking the recipes of your existing menu items, you’ll need to look at your menu as if it were a stock portfolio. Do you keep the item, get rid of it, find a way to sell more of it, or simply change its price? Now is a great time of year to look back through your menu engineering reporting and identify your top sellers and their ability to contribute margin dollars for your business.
- Strategy 1: Track guest counts to identify whether you may have gone too far with a menu price increases
- Strategy 2: Determine how you can leverage relationships with your vendors
- Strategy 3: Be prepared before you sit down with your key vendor partners to ensure you are knowledgeable about purchasing trends and price volatility.
Having proper tools in place to keep a tight control on your prime costs is essential to operational efficiency and profitability. RSI’s 4R Report allows you to review the recipes of top menu items in each group to identify key product ingredients. Also beneficial to monitoring prime costs is RSI’s Invoice Analysis Query. This report enables you to track key inventory price changes and quantities purchased over time. It will allow you to speak intelligently with your vendor partners about various strategies for your franchise players: Examples include: The possibility of product substitutions, recipe enhancements or raising the menu price.
Moving down the list. It’s year end and the financial portion of our ToDo’s definitely take on more of checklist feel. This is largely due to the fact that there are typically dates associated with financial tasks; so in the spirit of checking things off the list, here we go:
- Balance Sheet Review: Determine balances that don’t add up or can’t be explained and reconcile your accounts. Pro Tip? Your house bank is out of whack if there are any decimals with change!
- Prepaids and Accruals: We discourage the use of prepaids and accruals because they’re typically what gets the most out of sync on a balance sheet. They are functionally outdated and give operators tons of non-revenue producing work to manage them. Pro Tip? Run your financial statements weekly detailing each paid expense and use a budget for the management of larger expenses.
- Daily Discount: One of the largest reoccurring expenses in your business is the fee that a credit card company charges. Many credit card companies allow you to have your fee taken out daily vs. one time a month, which is a very effective way for you to manage your cash flow since you no longer have to worry about a large lump sum coming out of your account at the beginning of the month.
NOTE: For more info. on restaurant cash management, check out our Resource Center
- W2 Readiness: Everybody and anybody who has worked for you needs a W2. Double check all employee info. is up to date as much as possible to streamline the process – use this opportunity to check all your HR files and ensure that everything is complete.
- 1099’s: If you have folks that need 1099’s, don’t wait until the last minute to try and get their social’s or federal tax ID numbers.
- Bank Reconciliation and the 7860 Account: You should never let anything go to 7860, if nothing else, let this be your New Year’s Resolution. Here are a few things we typically see getting tossed into the land of misfit toys (which should truly be an empty box):
- Debit Card usage
- Checks that aren’t recorded in RSI
- Deposit shortages
- Stale dated checks