In a low-margin business in which sales can fluctuate, operators of consistently profitable restaurants don’t wait until the end of the month to learn how their restaurants performed.
To get meaningful, timely information, get a “Prime Cost report” at the end of each week. This should include costs of sales and all payroll costs, including management, plus payroll taxes and employee benefits.
The goal in most full service restaurants is to keep prime cost
at 65% or less. Quick service restaurants often shoot for a prime cost at or below 60% of sales. The costs of food, beverage and hourly wage often represent 90% of the total costs.
By calculating prime cost weekly vs. monthly, operators have a good shot at nipping problems in these areas quickly.
If the actual numbers on your P&L sheet differ from this significantly, you’ll be prompted to look for errors on the P&L or look more deeply into operations to find the errors.
