30 - 30 - 30 - 10

Process

The P & L
Bar Sales $300,000
Food Sales $700,000
Total Sales $1,000,000

Bar Cost $70,000 - 23.3%
Food Cost $230,000 - 32.8%
Cost of Goods $300,000 - 30%

Labor Cost $300,000 - 30%
Other Cost $300,000 - 30%
Total Expense $900,000 - 90%
Profit $100,000 - 10%

YOUR numbers should break down something like the example above. If your business is high in one area it must be lower in another. If your business is high in all three areas, you go broke.

Do you know what  YOUR percentages are in each category?

100 -30 -30 -30 = 10
If your goal is to make a 10% Profit, you cannot spend more than 90% of sales in the three major categories

Your combined Food & Beverage Cost must NOT exceed 30%
Your Labor Cost must NOT exceed 30%
Your Other Cost “Everything Else” must NOT exceed 30%

Every Restaurant is Different, you may have a high RENT or MARKETING expense and run 35% Other Cost. If this is the case you must reduce Labor and Cost of Goods to UNDER 30% to achieve a 10% PROFIT.

If Labor Cost is also 35% you will have to work extra hard to INCREASE SALES. Labor is always the hardest to control, especially in the start up phase.

You can only reduce your Food and Bar Cost so far before you begin to scare off customers.

Some operations can run amazingly low cost of goods or labor cost numbers, this is part of a smart design. Do not design a restaurant that is high in all of the major areas. If this has happened to you, it is time to completely re-think your concept BEFORE you go broke.

If you need help re-organizing or tightening your major cost categories, please contact me, I would Love to help
Peter Harman
foodguru@foodguru.com