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With the holiday season around the corner, every business is looking forward to witnessing a jump in sales numbers, the hotel industry remains no exception. The pandemic-induced lockdowns and subsequent social distancing norms have created urgency among people to return to some semblance of normalcy. More people are now keen to move out and dine. Restaurants are keen to cater to such patrons who are in anticipation of some light moments over food and drinks.
While the restaurant owners have been bracing for a smooth business, the industry has also been left fire-fighting with issues that remain external such as labour concerns, high inflation and supply chain issues. These issues seem to have kind of stuck out like a sore thumb for an industry that has been looking forward to an upbeat moment when it comes to doing brisk business.
Here are few statistics that show an overview of what can be expected in upcoming holidays:
- 11% of people will celebrate their first holiday normally, and the rest have already celebrated a 2021 holiday free from COVID-19 restrictions.
- 72% of people plan on getting together with their family and friends.
- Nearly two-fifths of consumers spend at least $100 on their Christmas food & drinks in any typical year. This year, over two-thirds expect to spend roughly the approximate same amount as they would have in the past, while one-fifth expect to spend slightly more
- On Christmas Eve of this year, approximately seven-tenths plan to spend the same as they have previously, while one-fifth expect to spend little more.
How can restaurant operators navigate the holiday season smoothly?
In a bid to navigate the holiday season smoothly, restaurant operators can gather insights by looking and analysing their own data. It is only then that they would find the tell-tale signs of which way the wind is likely to blow when it comes to either footfalls or sales numbers.
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There is no doubt that most restaurant operators are likely to have a few go-to reports, which they tend to review periodically. There are, however, few other reports which could provide the quintessential insight about the health of the business and could highlight the financial health as well as pressure points in the business that are likely to be witnessed in the forthcoming months. This way, a restaurant owner could feel insulated or remain unfazed by any shockers that are likely to emerge in the day-to-day running of the business. Here are five such reports:
Eye on the financial progress
While there are various ways to measure the success factor of a particular restaurant, one of the ideal ways to gain insight about financial progress is with a restaurant profit and loss statement, which is also known as a restaurant P&L statement. This financial tool highlights the sales and costs in a specified period.
An owner of a particular food joint or eatery is well aware of the value they gain from the restaurant P&L statement. For quite a while now, this monthly report has served the purpose of highlighting the performance of a restaurant. The only hitch here is that this report is generated at the end of a particular month for reviewing purposes.
However, if this monthly practice of reviewing on a monthly basis is changed to a daily exercise, then will it have any impact on the business? Experts from the industry agree in affirmation. According to them, reviewing the restaurant P&L report on a daily basis could provide a health report pertaining to the influence of overhead costs over the bottom line on a real-time basis. A restaurant owner can control the reins when it comes to any unexpected cost factor. It is also possible to make any adjustments if the situation demands so, there would be no surprises that are likely to spring in this regard. This way, a restaurant owner is likely to keep an eye on the profitability factor on a regular basis and ensure financial progress in an organic manner.
Restaurant menu analysis for profitability
A menu in a restaurant serves the purpose of building the first impression among customers. Undertaking a restaurant menu analysis remains crucial in ensuring the success of a particular food business. Such a report highlights the current selling price, cost and margin for each menu item and the quantities sold, the report can provide detailed insights on which items are selling the most and the least, which will help a restaurant owner to check how the items are moving in the restaurant.
The report also provides insights while assessing current menu items or keeping a track of seasonal offerings. A menu analysis also remains a health exercise in seeking out new opportunities that are likely to emerge. Apart from keeping track of profitability, menu analysis serves the purpose of undertaking a data-driven decision for a particular restaurant in case any need arises.
Closing the gap between actual and theoretical food costs
An area of constant concern for most restaurants is with regard to regulating food costs on a day-to-day basis. In fact, food cost control remains at the heart of profitability for every restaurant. In order to understand how a restaurant owner is managing food costs, then the first and foremost thing to understand is the restaurant's theoretical food cost.
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This includes current inventory costs of all ingredients for the food items sold. After this, one can look at the actual food cost that the restaurant has used for a particular period. An ideal food cost control for a particular restaurant would highlight an exact match between the actual and theoretical food costs. The difference between the two is the measure of efficiency while underlining portioning mistakes, wasteful preparation, or even pilfering. The sure-fire way to push profit to the bottom line is to identify the potential ‘profit leaks’ in an operation, find where they’re occurring, determine their root causes, and then put fixes in place.
Raising the accountability factor
A contract violations report could be run on a periodic basis to check if there are any violations on the part of a vendor. It remains an effective tool in keeping a tab on things while raising the accountability factor. This particular template helps to keep a vendor under check.
Developing efficiency through sales per labour hour formula
This remains one of the essential business metrics considering that labour remains one of the biggest expenses for any restaurant. It is, in fact, a significant part of the prime cost. The labour cost also includes various variables as well. An insight related to money a restaurant operator spends on labour to produce revenue is highlighted in this report.
Most restaurants track labour costs as a percentage of total sales. Scheduling issues of employees or any overstaffed shifts could be suitably indicated by looking at the sales per labour hour report. Keeping a track on the labour cost percentage remains a beneficial strategy for the long-term-basis that would aid in keeping the functioning of a restaurant healthy.
Summing it up
With the use of various technological tools, restaurants can look forward to introducing various cash flow management strategies. In the bargain, this would bring down overall costs of operations.
While keeping a focus on the abovementioned reports, a suitable budget can be formulated accordingly. Challenges are going to galore, no doubt, but remaining prepared well in advance remains the key. This would also be the deciding factor related to the profitability of the business during the holiday season.
