Restaurant Budgeting 101

Restaurant budgeting 101 is a great place to start when it comes to trying to figure out your restaurant’s numbers. I’ve never wavered that the two most important systems any restaurant should have are budgets and recipe costing cards. Why? Because they're critical to your success. Let’s leave recipe costing cards on the table for now and focus on restaurant budgeting.
#restaurantbudgeting #restaurantbudget #restaurantfinancialplan
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Welcome to my TH-cam Channel. I am David Scott Peters, a restaurant coach and speaker who teaches restaurant operators how to cut costs and increase profits with my trademark Restaurant Prosperity Formula. Known as THE expert in the restaurant industry, I apply my no-BS style to teach and motivate restaurant owners to take control of their businesses and finally realize their full potential. Thousands of restaurants have used my formula to transform their businesses. To learn more about me and my coaching program, visit www.davidscottpeters.com.
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Well, if your food cost starts at 38 percent, I'm going to tell you a typical restaurant runs seven to nine points above their ideal food cost.
If you start at 38 percent food cost and then use two very simple clipboard systems: a key item tracker, which reduces theft, and the waste tracker, which lets you shine a spotlight on the mistakes being made in the kitchen and front-of-house. Combine these two clipboard systems with my Restaurant Checkbook Guardian, otherwise known as the purchase allotment system, and you can drop your food cost two to three points guaranteed.
Using these three systems you can go from 38 percent to 35 percent. Managing these food costs is all part of managing your increasing labor cost.
Remember I told you the two most important systems are budgets and recipe costing cards? That’s the next step. Start working on recipe costing cards in month one. But because you're busy, because you're getting back into season, and we know it takes 40, 60, 100 man hours to get done, you’re going to say it's going to take your three months. In month one you start the process. Months two and three you’re working on them, and you finish in month four. Then you can do something called the Menu Profitability Monitor where you find out where your ideal food cost is. And then you’re going to menu engineer for profit and bring your food costs down.
Let’s say the Menu Profitability Monitor told you the goal is 26 percent actual food cost to make it. That means you need to aim for a 24 percent ideal food cost. This leads to menu, recipe and product examination. You’ll re-engineer an item itself, like getting rid of one ingredient and replacing it with another. You’re never buying down cheaper ingredients if it compromises the quality, but if it’s possible to go with something less expensive at the same or better quality, that’s good. You’re also going to change your mix and influence people to buy something else.
You go through all this rigamarole such as raising prices on certain items until you can create a menu through menu engineering that produces a 24 percent ideal or 26 percent actual food cost. This means you have line checklists and portion controls, and you’re using the Key Item Tracker, the Waste Tracker and the Restaurant Checkbook Guardian. You’re doing lots and lots of things to make sure you can bring that gap from seven to nine points down to two.
Then in month five, you put the new menu on the table and bring that food cost down to 26. You can’t just snap your fingers and say, “We've got to lower our food costs,” and then it happens. You have to create a plan for success.
Your budget is your proactive plan for success. You decide what systems you're going to put in place, how quickly you can put them in place and what your expected results are. And ultimately, you create your plan so that at the end of 12 months, you know how much money you're going to make or lose.
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[@angelaswyers2077]

Love the spreadsheet.

[@DavidScottPeters]

I love a good spreadsheet - always have. Any questions about it?

[@georgeanglin2283]

is there a breakdown somewhere for this "Restaurant Checkbook Guardian" I currently have a spreadsheet i made myself and am wanting to reflect if its correctly made or not

[@DavidScottPeters]

Hi George, I believe the only place I have the step by step equations listed out is in my book, "Restaurant Prosperity Formula, What successful restaurateurs do." You can pick up a copy if you feel it would help on Amazon -www.amazon.com/Restaurant-Prosperity-FormulaTM-Successful-Restaurateurs/dp/1642250392. Hope this helps. DSP

[@angelaswyers2077]

I own a small place and I try to keep things at Labor 20% food cost 20% Lease 20$, Other cost 20% Tax 12% Profit 8% And now trying to cut it down more. But I also have like five businesses in one. The canning businesses profits are more like 35%. Hot sauce 35%, Wholesale Breads 25% Very low labor ..