Check-ups aren’t always fun. We don’t necessarily look forward to that pointy tool the dentist sticks on our gums, or how much it’ll cost to fix that weird noise your car is making. But check-ups are necessary, and without them, we’d all be in pretty bad shape. And when it comes to restaurant operators conducting health checks for their restaurants, failing to do so leads to worse consequences than a root canal.
Restaurant financial health is more than keeping track of your numbers; it’s troubleshooting, planning and consistency. Restaurant health and financial planning is also deeply personalized; the strategies that may work for one business or one location might not work the same for you.
But how do we know what restaurant financial health looks like? How exactly do you perform a health checkup on your business? And do we get one of those cute Band-Aids at the end?
Before we dive into these questions, let’s take a look at a few signs it may be time to perform a health check-up on your restaurant.
Now that we’ve looked at a few check-up warning signs, let’s look at a few ways to turn those restaurant financial red flags into lots of green.
The first step in conducting a health check-up for your restaurant’s finances is taking a look at your current processes. Take a look at your current strategies for effective budgeting, document tracking, forecasting sales and money management. Are these strategies helping you stay on top of your finances, or are they falling short?
Next, double-check that your system includes realistic financial goal setting. Are your current financial goals specific, measurable and time-bound? Make sure you also take a look at the current financial planning and tracking tools you’re using. Are they up-to-date and efficient, or are they causing even more of a headache?
Lastly, take some time to receive staff feedback. Are your staff members trained to use the tools and systems effectively? Once you’ve got your list of yeas and nays of what’s working for your restaurant, you’re ready for the next step of this health checkup.
PS: If you’re in the market for a new RMS, check out our Switching Your RMS Checklist here.
Conducting a thorough audit of your expenses is crucial when doing a financial health check on your restaurant. Start by categorizing all your costs: fixed expenses like rent and utilities, varying costs like food and labor and discretionary spending like marketing or decor upgrades.
Look for patterns or areas of overspending, and identify opportunities to cut back without compromising quality. Don’t be afraid to get creative when it comes to cutting back on expenses, or categorizing based on needs, wants and nice-to-haves. Regularly auditing your expenses guarantees you’re never in the dark about where your restaurant stands financially.
Remember the Hamburglar? Think of waste the same way: a sneaky culprit who steals what should be going back into your pocket. Waste can quietly drain your restaurant’s profitability, so it’s important to keep your eye on it during financial health checks (and all the time, really).
Start by analyzing food waste. Are ingredients being over-ordered, improperly stored or discarded due to spoilage? Review and standardize your portion sizes to ensure that you’re not leaving money on the table. Examine your operational waste, such as excessive energy usage or inefficient processes that cost time and money. Reviewing and cutting back on your waste benefits your bottom line, leading to a healthier financial state for your restaurant.
Now you’ve got a better understanding of your restaurant’s current financial state, and some areas that may be cost-cutting friendly, it’s time to take a look at another crucial part of your restaurant’s financial health check-up: your budget. Take a close look at your current budget.
Does it align with your revenue, expenses, and financial goals? Are there any recent changes in your business, such as shifts in customer demand or rising costs? Regularly comparing your actual spending to your budget can help you spot hiccups early and begin taking action.
Similar to our last point, being in control of your cash flow is extremely important when it comes to conducting a financial health check for your restaurant. Use effective forecasting tools to ensure you’re never caught off guard by your sales, and familiarize yourself with the trends of your business.
Once you’ve got the trends down, you’re ready to use them to your advantage, such as introducing specials during historically slow periods. Additionally, focus on streamlining operations, such as optimizing staff schedules to match peak hours or reducing waste in food preparation, to minimize unnecessary expenses.
Sometimes it's not our situation, but our perspective and strategy that needs to change, and managing your business’s money is no exception. But with the right tools, an up-to-date plan and a budget deeply personalized for your business, you’re well on your way to not only conducting a financial health check on your restaurant but improving its finances overall.
Having a financially healthy restaurant doesn’t have to be a burden, and with consistency (and patience), you’ll start hitting your financial goals. With the right steps, you’ll end up with check-up results sweeter than that post-doctor's office lollipop.