A Weekly Report Every Restaurant Should Prepare
If you're serious about making more money, you've
got to know how your biggest, most volatile costs are running, not just once a
month, but at the end of every week. In regard to controlling prime costs, once
a month is just not good enough.
The most profitable restaurants I've ever
worked with all track their prime costs on a weekly basis. They don't wait
around until their monthly or 4-week P&L is prepared to find out what happened.
And for their efforts in preparing a weekly report, they are rewarded handsomely
on their bottom lines.
Many of the large chain operators, prepare a
full Profit & Loss Statement each week. A weekly P&L is not feasible for most
independent operators, but knowledge of sales and prime costs each week is a
must for any restaurant serious about controlling their biggest and most
What Is Prime Cost?
Prime cost is cost of sales (food &
beverages) plus all payroll related costs, including gross payroll of all
management and hourly personnel and payroll taxes, benefits, workerís
Prime cost usually runs 60% to 65% of total
sales in a full service restaurant and 55% to 60% of sales in a quick service
You want to know your prime cost as frequently
as possible. If you learn about a problem with hourly payroll or liquor cost
from your monthly Profit & Loss Statement what can you do about it then? How
long has the problem been going on? By the time you get your financial
statements youíre probably half way through the following month and itís old
news. Think of all the money youíre probably already lost. If you know what your
prime costs are at the end of every week, when something is out of line, youíre
in a much better position to react quickly, cut your losses and get the problem
The most profitable restaurants in the country,
know their food and beverage costs at the end of each week. They also know how
many days worth of inventory is sitting on the shelf, as of "last night." If
thereís a problem, they know about it quickly and can respond accordingly.
Weekly food cost reporting changes the entire culture in the kitchen because of
the awareness and the sense of ongoing accountability it creates.
Another benefit of weekly food cost reporting
is that it also makes people very cognizant of their inventory levels. Itís very
common for restaurants to lower their food cost by 2 to 4 percent of sales
in just a few weeks by calculating food cost and tracking inventory levels every
The first step in calculating your weekly food cost is to keep a record of your
food and beverages purchases every day on what some operators refer to as an
Invoice Log. An invoice log worksheet is included in our downloadable Prime
Cost Worksheet file. It's just a process of posting your food and beverages to
the report each day and indicating what amounts are chargeable to your specific
food & beverage categories.
Donít forget about posting credits for any
product returns or invoice adjustments and be sure to log in cash
paid-out transactions for food and beverages purchases too. At the end of
the week youíve got your total purchases of food, liquor, beer and wine.
Hourly labor cost should be calculated
daily. If your POS or other timekeeping system calculates this for you, great,
then you can just enter your hourly labor cost daily or at the end of the week.
If you've don't get your daily labor cost daily, we've included a separate
worksheet within our Prime Cost Worksheet file so you can easily calculate it.
You just list your employees in the same order that you can get their daily
hours and then indicate each employee's hourly wage rate. Each day you can enter
the hours worked and the worksheet calculates hourly labor cost.
Below is the Weekly Prime Cost Worksheet. Enter the daily sales figures from
your Daily Sales Report and your ending inventory from an extended Inventory
Count Sheet. The beginning inventory is last week's ending inventory. You can
also add the number of covers served each day to get your daily and weekly check
Here's the completed Prime Cost Report comparing the current week results
with the prior week:
Many restaurants end their week on Sunday and have the report prepared by
noon on Monday. Inventory levels are usually at the lowest level of the week on
Sunday night (Monday morning) so thereís fewer products on the shelves to count.
Some restaurants that have the managers prepare
this entire report. Others have a bookkeeper or clerical person assist in some
way on Monday morning.
One suggestion. To make it easier to
post invoices, have your vendors, particularly the broadline distributors, give
you separate invoices for each major product type. Tell them you want a separate
invoice for just your food items, a separate invoice for cleaning supplies, an
invoice for paper goods and so on. This makes it very easy to log invoices into
their correct categories without having to break out the categories manually.
Also have them break down your food items by your food categories like meat,
seafood, poultry, grocery, etc.
If youíre serious about controlling your food
and beverage costs, knowing where you stand each week will definitely help. It
will be well worth the effort when you notice the difference on your
Click here to view
the Restaurant Operations Spreadsheet Library. Includes
all the Excel spreadsheets to accomplish the
weekly tracking of your Restaurant's Prime Costs.
Jim Laube is the founder and
He has a diverse 25 year career in
the restaurant business as a server, bartender, restaurant manager, controller
and CFO for a regional restaurant chain.