(Budgeting, Cost Control, and Ratios)
This area is probably the most important and least understood area of the restaurant business. It is also a significant reason there is an 80% failure rate for the restaurant industry in the first five years. Effective budgeting and cost control are vital for financial stability. Monitoring food, alcohol, labor, and rent ratios, and calculating your monthly break-even point are necessary to ensure cash management and to generate a profit to sustain the operation of your business. Be mindful of seasonality and adjust your budget accordingly.
Understanding your costs, maintaining ratios, and monitoring plate costs are crucial to a restaurant profitability. Controlling these variable and fixed expenses and having visibility to the impact on your bottom line will ensure profitability. How well do you know your numbers?
Working with solid professionals to assist you in understanding your financials can be beneficial to ensuring you don't end up another statistic!
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