Article by Jeffrey J. Lavelle, President + CEO, Strictly Restaurants
Is your business ready for the Winter of 2018/2019? As you know, we have just 9 weeks until the yearend. Are you ready?
During these next 9 weeks we should be building up cash to carry us through the coming winter months. You ask, “how can this be done?” Well let’s start by looking at your Prime Cost. What is that? This is both Cost of Goods & Labor added together.
Prime Cost is an indicator of cash flow towards the bottom-line. Are you managing your business knowing and understanding what these two most important line items should (or should not) be?
- What is your True Food Cost?
- What is your True Beverage Cost?
- What is your FOH (Front of the house labor)?
- What is your BOH (Back of the house labor)?
- How do you measure these costs and where do you pull the percentages from?
These 5 items will give you your Prime Cost.
When was the last time you saw a True Profit & Loss Statement or the Balance Sheet of the Business?
Without understanding what your business is intended to do in terms of revenue and not having a clear understanding of what Prime Cost should be, you will not have cash flow.
With so many questions to consider, all while trying to run a restaurant, order supplies and hoping the schedules staff shows up, you need expert help. That help is from Strictly Restaurants™. Strictly Restaurants is a national Restaurant Accounting Hospitality Company with clients from New York City to Maui.
The President, Jeff Lavelle, with over 40 years in the restaurant industry has worked in all positions from his first job as Dishwasher to Controller/CFO. Jeff has handled accounting from manual systems to working with cloud-based software and various point-of-sales systems. Over the course of the last 25 years, Jeff has worked with revenue in the range from low hundreds to $45 plus million dollars, depending on the concept. Jeff has gone from pushing hotdog carts to owning his own Deli/Restaurant and now his own Accounting, Hospitality and Consultancy firm for the past 5 years. Jeff understands Branding, Cost of Goods, Labor percentages, projected prime cost to match the menu and concept price per person. With his extensive knowledge, Jeff can help you better understand what to expect in terms of On Projected Revenue and ROI (return of investment).
“Cash is King”, what does that exactly mean? The answer is simple: Profit. You sell an item and get a dollar, how much of that dollar do you get to keep after overhead is paid? Therefore, it is important to prioritize cash management now, as we have all experienced negative cash flow during the off-season periods.
In special cases, the winter will bring sales for some while other restaurants will regret being open. We all know you cannot make changes to your hours of operations, whether due to inclement in weather or declining revenue, without first blasting announcements on social media. If you didn’t Instagram or Twitter it, it never happened. We wouldn’t want that one customer, to pass-by, wondering if your restaurant is open.
Let’s jump start your reserves now:
- Projected Revenue
- Ala Carte Services
- Private Parties (confirmed deposits taken, and pending contracts)
- Food & Beverage Sales Mix (Ratio)
- True Food & Beverage Cost
- True Labor Cost per position – FOH, BOH and Mgmt
- Overhead expenses – Fix & Variable (Can we trim some?)
- Are you getting a Management Fee with cashflow allowing this?
- What is your true Accounts Payables?
- Do we plan on doing any overhead renovations during this slow period?
- Maybe plan on revamping the menu do we have the funds for R&D?
- If we cut labor how will it effect the overall performance of the business?
- Let’s review all contracts and see if we can get the revised to our benefits.
- How about Insurance Policies like Workers Comps- Are we paying as we go?
- Or lastly, how much are we paying to process our credit cards?
There is so much that goes on behind the scene that things could fall through the cracks. Restaurant Accounting is different as it is a moving-machine daily. Once someone walks in and turn on the lights, an expense is being accrued.
Cash flow means a healthy business and one that understands its obligations. Jeff Lavelle’s success is just that, knowing and understanding your business and its needs. Working with Strictly Restaurants is like working with all 3 of the following in one:
- Bar Rescue
- Certified Public Accountant
- Restaurant Impossible
The President is Jeff Lavelle but really, he is Strictly Restaurants. So give him a toll-free call at (844) 382-2228 or visit at their website and ask for a free consultation.
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