Maintaining profitability is no joke in the restaurant business.
Margins are slim. Costs are everywhere you look. And managing all the moving parts – or a comprehensive restaurant budget – can be a nightmare.
But you’ve come to the realization that going at it half-baked just won’t cut it anymore – not in this industry.
So you’ve finally made the decision to lower your food costs and increase your revenue.
Maybe you’ve started calculating your weekly Cost of Goods Sold (COGS).
Or perhaps you’ve started paying attention to market prices on ingredients so you can get better prices out of your suppliers.
Or, who knows, you might’ve decided to invest in top-notch restaurant technology to streamline all your inventorying, invoicing, and accounting.
But time’s gone by. Your staff’s deep in their daily routines. Your busy managers are neglecting weekly inventory or keep forgetting to track ingredient prices.
Sure, the ceiling may not be collapsing and everything might be going par for the course. But, the status quo has taken hold and your restaurant isn’t progressing with the same vigor as it should be.
And as a result, your bottom line is plunging and your accountant just won’t stop hassling you, wondering why your restaurant’s swimming in a pool of red.
But keep cool and don’t get too worked up. There’s a path forward – a tried and true restaurant budget-building method that will keep your restaurant alive and kicking and that pestering accountant of yours nice and calm.
So get your finances and kitchen in order with our three-step guide to successful restaurant budgeting, before it’s too late.
Step 1 – Get Your Staff Together and Your Numbers Straightened Out
Weekly meetings with your managers should already be happening.
But, we get it. Things come up, and oftentimes they get tossed to the wayside.
But if you keep letting these meetings fall through the cracks, you’re putting your restaurant’s communications, teamwork, and sales on a fast track to oblivion.
Needless to say, keeping everyone in constant contact and working together towards common goals can do a lot for your company, including keeping your food costs low.
So set a day and time each week to meet with all your managers – both front of house and back of house.
Make it vital. Keep it on the calendar. Same day, same time, every week.
Outside of the X’s and O’s of budgeting, which we will get to in a second, these meetings can boost your team in many other ways.
It can be used as a platform for your managers to air their grievances, or share some from the employees. After all, nobody’s perfect, and neither is your restaurant.
Hear them out. But don’t let it get too negative or you’ll just end up with a riled-up staff feeding off the bad vibes in the room.
Keep it positive and productive by showing you’re committed to fixing issues surrounding your workplace.
Second, use these meetings as a way to examine and adapt your restaurant’s ways of doing business. Engage in regular sessions of brainstorming, adjusting, and updating.
Like we said, your restaurant will never be perfect. But this strategy can get it pretty damn close.
Finally and most importantly, your manager meetings should estimate and discuss the past week’s sales numbers, food spend, and food costs.
At first, keep it general. What did the overall numbers look like? What sold well? What didn’t? And what was in the right range?
Then, get down to the nuts and bolts – or the peas and carrots, if you will.
What ingredients did you spend the most money on? Which should you order less of? And how can you save money the next time around?
Pro Tip: Keep a constant watch on market prices so you never pay a premium on ingredients.
To round off this part of your meeting, look for any significant discrepancies in your orders.
Did something stick out to you or any of your staff this week? Maybe you paid a lot less for a specific ingredient. If so, try to figure out how to use it to your advantage.
Every leg up helps.
Right now you’re probably thinking this sounds like a whole lot of meticulous number tracking and record keeping. Well, you’re right. It is.
But intense dedication is the key to creating a sustainable and profitable restaurant.
So immerse yourself in the nitty gritty, and you’ll be surprised how far it can take you in separating your restaurant from the rest of the competition.
Step 2 – Budget Like a Boss
As you wrap up that weekly meeting, you’ll no doubt have a pretty solid idea of what the upcoming week holds in store.
So now, it’s time to create a sales estimate.
You’ll do this based on your previous numbers. Don’t go haywire, try to stick to what trends are showing.
Take any outside factors into account. Is it the week of Christmas? Is there a big game on Saturday? Are you catering any private functions?
From that estimate, you’ll build your restaurant’s food spend budget for the week.
But don’t cut corners and just throw out a number a few thousand dollars less than your sales estimate.
This isn’t exactly a science… But it should be treated like one.
Be sure to take your restaurant’s overall goals into account.
Want to cut your food costs or your COGS? If so, you’ll need to lower your budget and order smarter.
We think you’ve got the gist now. Informed, aligned, and accurate budgets drive successful restaurants.
Step 3 – Budget All Day, Every Day.
Congratulations! You’ve set your restaurant budget. Great work.
But don’t put your feet up just yet. There’s a little more work to do.
Your budget will require nurturing, monitoring, and a fair bit of guiding to see it through the week, the month, and the year.
You’ve got to keep a constant eye on what’s going into your customers’ stomachs and out of your restaurant’s doors.
Are you paying close attention to your invoices? Taking an inventory? Calculating and tracking how much you’re spending?
Yeah, you actually have to do all three.
You’ll also need to know your sales numbers at all times. Your POS should be able to help you on that one.
With this information, you and your managers can make even more accurate weekly spend estimates. This will make your restaurant’s budget even more powerful when it comes to helping you save.
You’ll finally be tuned in to all the moves needed to decrease your costs in the coming weeks.
Conclusion: Keep Your Budget Smart, Save the Cash You Need
When put into action together, these steps can make all the difference between a restaurant drowning in poor spending decisions and one that is cashing-in with a killer budget strategy.
But… It really sounds like a lot of work and hassle, right? It feels like a huge time investment that, frankly, you probably can’t handle as an ever-busy restaurant owner.
There’s the weekly inventories, the constant monitoring of market prices, and the mind-numbing digging into data entry.
When you put it all together, you’re adding hours to a work schedule where you can barely even find time for a much-needed meal.
It sucks. But knowing your numbers is vital.
Well, lucky for you…
Orderly can make budgeting for your restaurant a breeze.
In fact, you can kiss goodbye the countless hours you used to spend manually entering data, keeping your inventory, and tracking market prices. Orderly will do it all for you in a fraction of the time – and with more accurate numbers to boot.
Put simply, Orderly’s Budgeting tool can give you the numbers you need in just a few simple steps.
First, Orderly will walk you through your estimates from the previous week and compare those with the sales numbers you updated and the food costs that Orderly has found for you.
With those numbers at your fingertips, you and your managers can now quickly examine where your restaurant’s money is coming and going. This will streamline your (still vital) weekly meeting.
On top of that, Orderly will do the numerous calculations for you to keep your restaurant budget in line and you informed at all times.
Just enter your estimates in Orderly and monitor your budget’s progress directly on the app’s dashboard by snapping pictures of your invoices.
In short, you’ll always be able to quickly access your actual spend numbers compared to your budget goals – and adjust your spending on the fly as you go about the work week.
No more annoying manual data entry. No more fudged numbers. And no more guesswork. Just a tight, smart, and clean budget.
Not to mention a highly profitable restaurant, as a result.
What’s not to like?
So don’t wait around, see how Orderly can help you start saving today.