Ten Tip for Staying Within Your Budget

Many restaurant owners grapple with the two primary categories everyday: Trying to trim costs and staying within budget. For some reason not everyone realizes the importance of a budget and that the financial line they define cannot be crossed.

Budgets can either be our friend or enemy. Those printed or emailed Excel sheets are more than numbers to be used as guidelines, they are actual amounts of money given to a department to operate with. If a budget is ignored enough, you will go out of business.

I spent some time over the past week with a good friend who is facing a serious financial culinary dilemma. He has been operating his restaurant for 15 years, has a mortgage on his building and has lost a substantial amount of money or merely broken even since opening. His food is good, his customers love the place and the community supports him, although the recession has not passed him over and he is struggling today to keep the doors open.

Since he owns the building rather than rents he can't afford to just walk away since he would lose the building and the little equity he has in it. But, he can't afford to close for without the restaurant's income, albeit not enough to pay everything certainly pays the debt he has on the property.

His problems stemfrom constantly being over budget. His management pays little attention to any budgetary constraints and on a few occasions this past summer utilities have skyrocketed out of proportion for one reason or another. His payroll and food costs are both two to three points over budget most months and his utilities seldom come in where they should.

And, as we spoke more, it seems his staff pays little attention to the opening and closing check lists that are so vital to opening on time, closing efficiently, and staying on course.

Since his partner and manager is a relative, this owner faces some serious questions that need to be addressed immediately. The first, of course is how to stay within budget.

Here are ten tips to help stay within budget.

1). Food Costs: Making chefs and managers realize the importance of a budget is a mammoth task. One of the guidelines I used was to have an inventory done daily. This keeps the chef in line and allows for a food cost make up the following night through specials that offer a high ROI and better portion control. Of course you will get complaints from the kitchen staff about how much extra work it is. The answer is simple: If they would have stayed within budget, the procedure wouldn't be necessary.

2). Labor Costs: Managers and General Managers are the first to ignore shift cuts while hoping the night or day picks up. But while they are waiting for more customers to step in the door, the payroll clock is running. Plus, with enough staff on the floor, a manager's job is a little easier. Do a payroll analysis daily to make sure costs are in line. If they aren't, it is easier to bring them in line after a day or so than it is to deal with once payroll is processes. Of course they are going to complain about the extra work but the answer is simple: You should have stayed within budget.

3). Utilities, electric: Because of a genius in his kitchen who blocked the air vents with tin foil, my friend's electric bill doubled for three months in a row. The $6000.00 loss was staggering. Implement strict thermostat controls with each season. That may seem more difficult than it actually once was. A digital thermostat that can be locked is one of the greatest inventions for the restaurateur. They cost a couple of hundred dollars and can save you thousands. If the money isn't in your budget, dip into your pocket. It might be one of your best investments.

4). Utilities, Water. Water bills may seem like a miniscule expense. Well, they aren't. A constantly dripping faucet, a running toilet that nobody hears in a bathroom, that nobody uses and a running sink with the ever so lightest stream of aqua can add hundreds of dollars each month to an already top heavy accounts payable list. Plus, municipalities love to double the amount of any late bill and call it a finance fee. Water bills can increase quickly. And, they think nothing of turning them off just before the dinner hour.

5). Garbage and Trash pickup: It always amazes me how restaurants, whether busy or slow, always have the same trash schedule for the same amount of money. When times are slow, call the waste management company and discuss managing your waste. When the bill comes analyze it to see if it is based on pickup frequency or waste. Both can be trimmed to cut a few hundred dollars a month.

6). Specials; Are your specials too special? There are two types of specials: Ego driven and ROI driven. Anything with Truffles in it is an ego-driven dish. Meatloaf is an ROI driven dish. Make sure during the lean times there is more fat than truffles in your specials.

7). Daily Analysis: Nobody enjoys working the numbers daily. But doing so will give you a picture each day about how good or bad things are and will be allow you to change direction rapidly and develop plans and implement procedures.

8). Staff Budget Meetings: At your next staff meeting hand out budgets. Explain them to everyone. Inform them they are part of the process everything from a napkin to an extra pour of dishwashing soap effects the budget. Bring the people into the process and let them know they are responsible for the bottom line.

9). Portion Control: Whether food or alcohol, wine or beer, there needs to be parameters. If your kitchen s having difficulties with portion control put one person, with a scale in charge of cutting steaks, portioning meat for sandwiches, and monitoring the size of the cookies you bake. Your biggest commodity, your generosity, is often your deadliest enemy.

10). Lead by example. Fire the manager, replace the partner, and terminate the chef that continually crosses the budgetary lines. It will be the best thing you can do for yourself and your employees.