Basic Restaurant Management Procedures


The daily management of a restaurant includes managing labor and food costs, customer service, marketing and employee training. Effective restaurant management must strike a balance between a variety of goals and procedures. Here is a look into restaurant management, along with suggestions and guidance from seasoned restaurant owners.

The two main types of restaurant management activities that naturally exist are controlling the overall health of the firm and overseeing daily operations. It's beneficial to think of them as spokes on the same wheel since a high-performing restaurant needs to be strong in every area to keep on track. As crucial to a successful organization as calculating food expenditures is creating a healthy workplace culture.

1. Identify the costs of running your restaurant.

Knowing how to figure out your restaurant operating budget is important. To begin, it is important to know the difference between expenses and costs. Costs are payments that don't fluctuate and must be paid regularly. Expenses and Cost of goods sold are where any restaurant spends its money. The guts of restaurant management are figuring the fluctuating costs every day.

(i). Labor Cost

The cost of labor includes more than just the compensation given to hourly workers. In addition to salaries for full-time workers like managers and chefs, labor costs also include payroll taxes, bonuses, overtime pay, sick pay, and benefits. The easiest way to express labor expenditures, like all other management expenses for a restaurant, is as a proportion of overall sales. For instance, a daily labor cost of 21% to 25% is regarded as excellent in the restaurant industry.

(ii). Food Cost

There are two different food costs to consider: the price per dish and the total cost of the meal. Managers of restaurants should be able to calculate both since each number has a variety of applications. The best basis for determining your menu pricing is the cost of food per dish. Your overall cost of food offers you a better understanding of your profit margins overall.

(iii). Beverage Cost

Separating your alcohol, wine, beer, and non-alcoholic beverage COGS and sales is a smart idea. It is crucial to indicate on your invoices what category the things you have purchased will be used for if you want to make sure that your costing is accurate in a larger business. When calculating food and beverage bills at the end of the month, categorizing things as they come in will save you many hours of frustration.

2. Modify your operation to hit goals

Daily operational targets for labor and food cost usually come from owners and managers creating a forecast of expected sales. These numbers are essentially what percentage of your total revenue can you afford to spend on supplies and labor and still turn a profit. Industry-wide guidelines provide a good place to start. One of the all-time best things you can do to control costs is to increase sales.

Some industry-wide guidelines provide a good place to start.

  • Food cost: Between 21% and 30%
  • Labor cost: Between 25% and 30%
  • Prime costs (food cost + labor cost): 55% and 60%
  • Expenses: 30%

(i). How to Reduce Labor Cost

A restaurant management can take some specific actions to influence labour costs or food costs in particular. Let's say that while your labour prices fluctuate, your food costs are static. On the other side, you will pay more for your meals if your labour requirements are high but your food standards are really high.

(ii). Use Technology to Optimize Schedules

A POS system can show you your sales per hour easily, making this strategy a snap. A POS that syncs with your scheduling software can also enforce the schedule by preventing employees from clocking in early. Early starts can add up to thousands of dollars in a year.

(iii). Update Your Service Style

The fastest-growing business model is quick service restaurants (QSR). QSR restaurants give customers a QR code to a table before delivering the food to them. Another option is to give notification on their smart phone that let them know when their food is ready. Simply said, this kind of arrangement creates a single hourly labour cost centre.

(iv). Cross-train Your Team

Cross-training reduces your risk of being shorthanded when an employee is absent due to illness or is running late in addition to allowing you to reduce employees when business is slow. The easiest approach to cut labour costs in the back of the house is definitely through cross-training.

(v). Spread Side-work Tasks throughout the Day (and Week)

The non-service related chores that must be accomplished to keep the restaurant operating are referred to as "side-work". These include tidying the dry storage area, folding napkins, polishing glasses, and cleaning reach-in refrigerators. You can complete these chores while business is slow, saving labour hours at the start or end of a shift.

(vi). Avoid Break and Overtime Penalties

Some states mandate time-and-half pay for hours worked above 8 in a day. In certain areas, failing to provide employees with a meal break results in fines. To prevent incurring fines, check your local labour rules and keep an eye on the number of hours your crew is putting in.

(vi). Remember Your Payroll Obligations

Employers should aim for a daily overall labour cost of 20% or less if they want to keep within the 30% target range. It is normal to see daily labour costs break down to 12% labour in the kitchen and 9% in the dining room. Payroll taxes, unemployment taxes and workers' compensation insurance will cost employers 10% more than the cost of employee wages.