Hey there. Welcome back to the Restaurant Rockstars podcast. I am Roger. Now, normally I get some really great guests and we will continue with that, but this episode is all about how to make more money. And it’s just me telling you just that, how to make more money. It’s a brand new year. Time to put your house in order.

This will include immediately actionable and proven ideas to help you boost your bottom line. So before we get on with that, let me tell you about the Restaurant Academy We have six modules in there. So everything I talk about today is included in the Academy, including the templates.

But it starts with a startup roadmap. If you’re just starting a first restaurant, or if you want to grow an existing restaurant, everything you need to know to do just that. Make more money. Everything I talk about today is a module in the Academy. Increase sales and wow your guests. It’s a hospitality training program that uplevels salesmanship among your entire front of house team.

It also includes recognition and rewards programs that work. Drive new and repeat business is my marketing module, and it’s all about proven trackable marketing that again, you can tell if there’s a return on investment, what that is and where that business is coming from. Leadership, one of my favorites.

It’s about leadership, accountability for a kick a company culture, and then finally save time, money, and headaches. All this is included in the Restaurant Academy at restaurantrockstars. com. Now on with this week’s episode with me, how to make more money.

You’re tuned in to the Restaurant Rockstars Podcast. Powerful ideas to rock your restaurant. Here’s your host, Roger Beaudoin.

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Thanks for being with me. Again, this is all about how to make more money. So I’m going to present a series of important topics. If you don’t have these in place, you want to think about doing this. Now I travel the country quite a bit. I speak at major food shows across the country, and I meet customers of major food suppliers, and I’m at national restaurant shows, and I work with state restaurant associations, and I hear the same thing all the time.

over and over again that the financial systems are not in place in a lot of restaurants. They’re leaving lots of money on the table and this is what you can do about it. So let’s start with something near and dear to my heart inventory for a lot of restaurants. Hopefully not yours. It’s not about what’s next week’s order and placing that order.

It’s about calculating the true value of your goods on hand, both food and beverage, every single week for a four week period minimum. And I’ll explain why that’s important because you cannot take an accurate food and beverage cost and get your cost percentage unless you do this. But it’s also like leaving hundreds, if not thousand dollar bills all over your restaurant.

for anyone to take because your inventory represents a tremendous amount of value. It can be thousands and thousands of dollars at any given time. And if you don’t count it and calculate your food and beverage costs on that, you could be losing money every day for 30 days. And that’s why I recommend you go through this process at least four weeks in a row to find what I call your restaurant sweet spot in both food and beverage.

Let’s start with the process. The process. is a little bit of homework up front, but it’s so valuable because once the system is in place, all you need to do is just update it week after week. And it starts with an order guide. You would get an order guide from your primary suppliers and that includes every single food item that you purchase.

purchase from your major suppliers. If you have multiple suppliers, you can also use your invoices. But as an invoice or an order guide includes what you’re buying and how it comes into your restaurant. Is it a number 10 can? Is it a case? Is it a side of beef? Is it a block of cheese? And every single item comes in differently.

But all that information and what you pay for the larger unit is on your invoice or your order guides. Now, I have a template in the Restaurant Academy that outlines the process and procedure. It’s a two step process, but let’s start with arranging your goods. The most important thing in taking inventory is to count your goods when it is at the lowest level possible, and for most of us, that’s usually at the end of a busy weekend.

You go through a Friday and a Saturday and even Sunday, And then by Sunday, end of business, or early Monday morning, you’ve got very little inventory sitting in your walk in cooler, and in your sandwich fridges, and in your dry storage area, and behind the bar, because you’re taking food and beverage inventory.

But I don’t want you to confuse the two because it’s a separate process for your food. And a separate process for your beverages. So let’s just assume that you’ve got very efficient storage and you, on my template, you would list every single food item, starting with your walk in cooler, because that’s probably the biggest storage space, followed by your freezers, followed by your other refrigerated units, followed by dry storage.

So all of these are arranged on my template, and then you list every single item in the order that you would count it. Now let’s just use the walk in for an example. You open the door of your walk in, you walk in and there might, depending on the size of the walk in, you might have a shelf down the left side and a shelf down the right side and one along the back.

There might even be a shelf in the middle. So the whole point is to methodically take the spreadsheet with everything listed on it and take physical counts. Now you’re going to look at top to bottom, perhaps on the left shelf and go front to back, and then you might go the shelf in the back, top to bottom, and then the one on the side or in the middle.

You decide what’s most efficient, but everything should be ordered on the template. where you take your counts in the order that you would actually count it. And then you move on to your freezer. And if you have more than one freezer, it’s freezer number one, freezer number two, a couple of sandwich fridges.

Everything is numbered. Everything is very methodical. Okay, let’s go back to the order guide and the invoice for a moment. Everything has a price to it. Now, my template has a very simple calculation, and it’s automatically calculated, but the homework is you must enter the cost for the total unit. And then there’s another column where you break it out, so let’s just say something comes in by the case, and there’s four packages of pepperoni, for example.

in the case. Okay, if you pay 20 for the queso pepperoni, and this is just for an example, then there are four packs that are each worth 5. The template is going to automatically calculate the individual unit value of that case. And then when you count and you say, oh, I’ve got five. Bags of pepperoni, one full case and one extra bag, you put in the five, this template automatically calculates five times twenty five and your value is twenty five dollars.

Now when you go through this whole exercise for every food item in your place, the template is going to automatically calculate the value. At a given time, at the end of that weekend, a total value of every single food item that you have in stock. The only other thing I need to mention is there are certain things that are very challenging to count.

I call them PARs. Maybe you have spaghetti sauce in giant buckets, five gallon buckets, because you make your own sauce every day and it’s in the walk in. Okay? You need to assign a value to that, a rough value that doesn’t really fluctuate from week to week. The same with spices. We all have these big shelves with all kinds of spice bottles, and that might be 300 at a constant.

That is a par. So instead of going through the onerous process of counting the spaghetti sauce and counting the salad dressing and counting all the spices, we just assign a value that you think is reasonable, that doesn’t fluctuate. It doesn’t really fluctuate from week to week, and it turns out to be really accurate over a four week period.

Okay, let’s just assume we’ve done all this. You’ve taken your order guides, you’ve entered the items in the order you would count it, and then it’s automatically calculated the value. There’s a second step to this process. And it is how you calculate your food or your beverage cost. So I don’t mean to confuse you, so let’s slow down a bit.

You just took your inventory. You counted it, say, Monday morning. Now this is the most important thing because it’s very important to consistently count your inventory The same day and time, roughly, every single week, within an hour or two is fine, but the whole point is, you’re probably burnt out after a long weekend of working, Sunday night is probably not the time to count it, because accuracy is important, so let’s just say you walk in at, say, 7 a.

m., Monday morning, you’re fresh, you’re ready to count. The whole important piece is you need to have this whole process finished before the delivery trucks show up on Monday, because you don’t want goods coming in the door when you’re trying to count things. So you need to do this once a week, the same time a week, when it’s most efficient to do when you’re not tired, but before the trucks come in.

That is very important. So let’s just say you counted your goods for the very first time Monday morning, okay? And you got 5, 000 worth of value that the spreadsheet calculated for you. That is considered your beginning inventory. Now, a whole week is going to go by and things happen during the week.

You have purchases that come in the door, maybe two if not three. three times a week, maybe from different suppliers, doesn’t matter. I have another template, which is the second step of the process that actually calculates the food or beverage inventory. So you list all the purchases that came in during the week.

That is super important also. And then you take your physical counts exactly one week later, the next Monday at 7 a. m. Just for example, that is what we call your ending inventory. So now you’ve got two inventory counts. Your beginning inventory and your ending inventory. Now, the second process to calculate your food cost, there’s a formula and a separate template in the Restaurant Academy.

It automatically calculates your food cost based on this formula. Now, it starts with the beginning inventory. I think we just counted 5, 000. Then, the next piece is it automatically totals all of your purchases, provided you entered food only purchases every time something came in the door. Even if you went down the street to Costco and bought something or at the local supermarket, you have to enter it as a purchase.

But a lot of restaurants make the mistake of including rubber gloves and mop heads and plastic wrap and all these things. That is not food. If it is not edible and if it is not served to a guest, it is not counted as food. But takeout containers since the pandemic with online ordering and delivery and takeout and all that increasing and the takeout boxes when someone doesn’t finish their meal and they’re like, oh, can you box this up and take it out?

That is considered your food cost. So you should count your containers. So let’s just say you took your second count a week later, and now you got 6, 250. That’s your ending inventory. You’re entering all this information on the second template that calculates your food cost or your beverage cost, but we’re using food as an example.

Okay, so the formula beginning inventory plus purchases minus ending inventory equals what we call usage. What’s that? Usage is everything that you sold to a guest for full price, anything you sold to an employee at a discount, anything that got comped off a check, or voided, or thrown in the trash, or spoiled, or wasted, or even stolen.

Now don’t worry, you don’t have to calculate usage, this template automatically does that for you, because it’s beginning inventory, so Plus your purchases minus your ending inventory equals all those things that happened during the week. Now all you need to do is accurately enter your sales total. And I’m talking about food sales only here for that week.

And it’s very important that you don’t overcount. It should be for a seven day period. So if you take your physical counts Monday morning, you’re going to count end of day sales, Monday, Tuesday, Wednesday, Thursday, Friday, Saturday, and Sunday. And stop there. So when you go to your point of sale system, you’re entering sales Monday through Sunday, if you counted your goods on Monday or Sunday night.

Okay. That’s very important. And then the template automatically calculates your food cost. Now, why do you do it four weeks in a row? Let’s just say the first time you do this exercise, you type in all the data that I just explained to you, and it calculates. 32 percent food cost. You might say, great, that’s a good food cost.

I want that to be my food cost every single week. And then you go through the process a week later, and this time you get a 36%. And you’re like what happened there? And then you do it again. And this time you get a 29. And then you do it one week later, and you got a 30. You don’t know what your food cost is.

It’s all over the map. You’re looking for consistency. Once you hit a 32%, 32 1/2 %,

32%

You’ve got consistency, that’s your sweet spot. You don’t have a waste, a theft or spoilage problem if you’re happy with that food cost. That’s the two step process to taking inventory that gives you your food cost percentage. Same thing with beverages. I have a template for your master beverages. You list everything, your beers, your wines, your liquors, and all those things, and then all your supplies, your soda bibs, your grenadine, and your fruit, and all that kind of stuff, and the template automatically calculates that, and the same process and procedure for calculating your beverage cost percentage.

Beginning inventory plus purchases minus ending inventory equals usage divided by sales, and again, that would be P. Beverage sales only. Okay, so that’s the two step process for inventory. And yes, it is not walking around figuring out what your next week’s order is. This is a really important thing because again, it’s like leaving lots and lots of money.

And let’s just say you don’t take inventory. What if you think it is about placing next week’s order? You could be losing money every single month until you figure out, I’ve got a sweet spot and it’s 32%. Okay, let’s talk about the importance of labor costs, because food and labor are your two biggest expenses in your restaurant.

Okay, labor costs, that happens every week also, and labor is more expensive now than ever. I don’t need to tell you this, mostly in the kitchen, because most states allow the tip credit, and tipped employees obviously get paid half the minimum wage in many um, states in the country. But let’s just figure this out.

You might do payroll twice a week, you might do it once a week, bi weekly, monthly, however it works. You calculate based on, the payroll report comes whether you do it yourself or it gets delivered by a major payroll provider. You’ve got a bottom line and that might include your salary, your manager’s salaries.

All of your waged and tipped employees and all the taxes you pay, the FICAs and social securities and the state and the federal and all that kind of stuff. The bottom line is your labor cost, whether it’s weekly or every two weeks, you get the idea. I used to calculate that two ways. I used to take overall labor, and maybe that was 15, 000 for a week, and then I would go to total sales, everything we sold.

We sold food, we sold beverage, we sold retail merchandise. All those things got added in, and then the simple calculation was total labor. 15, 000 divided by total sales. Okay. And then we again looked for a sweet spot. We calculated this both ways, overall labor, and then kitchen labor because it’s the most expensive.

So then you separate from your payroll report. What are the kitchen employees? You would literally go to every single person and then add all that up. And the template does all this stuff for you. And you add up your kitchen labor only. And then you divide that by your food sales only, and that gives you a separate number of your labor cost in the kitchen.

Now I would compare this every single week, because I knew that when I was most efficient, my labor cost overall was 28 percent in my restaurants, which was awesome. Awesome. My kitchen cost was a little higher, but when it averaged out with the overall labor, my total labor cost was 28%. And if I knew that sales were a certain amount and I hit that 28%, and then suddenly a week later I had a spike, oh, it went to 30%, but sales were relatively the same, then I had to dig a little deeper.

So we have a template in the Restaurant Academy that allows you to dig deeper into the different departments and you find out, okay, where did the spike happen? And then you investigate, why did this happen? And this is how we can get back on track with our sweet spot. So that’s labor costs. That’s really important.

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Okay, there are labor abuses in the restaurants, as seemingly innocent as they seem. Now let me tell you a story. I go back in time when I owned and operated restaurants. And I used to do the early payroll calculation. I didn’t calculate the payroll, but I literally took the schedules and I reported people’s wages to a payroll company that processed it.

And that all came from a point of sale report. You’d print out your labor report. And then I noticed, I’m like, wow, I have all these people. I had 55 employees in my biggest restaurant, for example. And I noticed that out of those 55 people, I had about 20 plus people punching in early, anywhere from 5 to 10 to even 18 minutes early.

And I had to investigate. So people used to come in the door and I’d look at the schedules and I would compare the schedule time. That they were supposed to come in to the time they actually punched in, and I noticed that of these people that were punching in early, they did it consistently. What’s the first thing that people do when they walk in their into your restaurant?

They go right to the point of sale system. They enter their code and they punch in. Then I noticed they were. hanging up their coat, and the ladies would go into the bathroom, and they’d put their makeup on, and then they’d come out, and then they’d chat with their friends for a minute, and then they’d go to the bar, and they’d get a free soda, because that was a benefit.

And all these things were happening, and that’s where the extra 5, 10, 15 minutes was happening. And I thought to myself, we’re really good to people. We have recognition rewards programs. We have strong morale. It’s like we really care about our people, but that’s just innocent abuse, and we can’t pay for unproductive time

now, we knew that there were certain times that our leaders in our business would ask someone to come in early. Maybe the dishwashes, from the night before, there was an extra big stack of dishes and it was late and, the leader just let that person come home and then the person coming in, I mean, we had this, Balance where people just helped each other out.

But let’s just say people were called in early. I created a template also in the Restaurant Academy that said, listen, I explained to my people We’re really good to you. We got recognition rewards. We pay you well. We appreciate your efforts But we can’t have people punching in 15 minutes early, 10 minutes early here and there.

We will pay you for legitimate time But unless your name appears on what I call the schedule change authorization sheet that was signed off by your team leader because they called you in early, we won’t pay you for that extra time. Okay. And a point of sale system allows you to go in, edit the person’s time to the time the schedule said they were supposed to come in.

That was the first abuse that we put the stop to. That was costing me hundreds of extra dollars, every week. The second thing, okay, was I noticed, and you probably know this. The point of sale system literally goes through what they call a grind in the middle of the night, because all that data that happens throughout your service gets calculated at the end of the day.

And then the report is available after that grind. But if someone forgets to clock out, let’s just say someone was supposed to clock out at 10 PM and they forgot to clock out. That could happen. That point of sale is gonna punch them out when the grind happens. That could be 2am, 3am, 4am, who knows, and now you’re suddenly paying someone, unless you catch this, hours and hours of extra time that they didn’t actually work.

I found that out the hard way a long time ago, so keep that in mind. Okay, it’s important to have someone look at this stuff, analyze it, and scrutinize it. So that was really important. Probably the biggest needle mover that I can talk about to make more money. Is costing out your menu. Every single item in every category.

Now, I mentioned I travel the country a lot. I consult with clients, and it’s incredible that people just don’t keep up with costing out their menu. They haven’t done it in a while, or if it has been done, they don’t use the data. What’s the point if you don’t use the data? But it’s literally calculating what we call the plate cost.

What are the ingredients costing you? Forget the labor. We’re just talking about the ingredients to serve a menu item to a guest. What does that cost you? Okay. So that’s a process that’s super, super important to do. But once you have a cost sheet for every single item, your appetizers, your entrees, your desserts, soups and salads, if you have them, burgers and sandwiches, pizzas, all of those are categories.

You need a cost sheet on every single item that gives you a total list of what the ingredients are. Now, there’s some homework involved there too. I would work with your chef or your kitchen manager, or even if you do business with a large box supplier, they can do this for you. But get it done because it’s so important.

What I find out most often is Profits are all over the place. Now we talk about inflation all the time, right? Goods keep going up. It’s volatile. Chicken wings, eggs, avocados. It’s like there’s certain items that have just gone sky high. And if you have a Mexican restaurant and you rely on, chicken wings and avocados and cheese and all this kind of stuff.

And if the price spikes and you don’t know about it, if you don’t watch it, it’s like you’re suddenly losing your margins. And the whole point is to make money in this business. Okay. You’re in business to make money. All right. Let’s talk about that. Let’s just say that you’ve calculated your item plate cost.

It again, you go to your invoices, your order guides, and you reverse engineer how something comes in the door. If it comes in a case, and if there’s four bags of pepperoni in a case, you figure out how many pieces of pepperoni are in a bag. You get the idea. It’s simple math, but the template will calculate the bottom line for you.

And now, there’s three things that are important on a plate cost. template. There are the total ingredients, there is the menu price, what you charge your guest for, and then there’s the food cost percentage. So let’s just say you have a pizza, and the total of all the ingredients, including the box, the pizza box, because it goes out the door, let’s just say it’s 3.

50. And let’s just say you charge 15 on your menu for that pizza. And then, There’s two calculations that the template will do for you. It’s going to show you what your profit is for that dish. And the profit is simply, what is the cost, the ingredient cost, less what you charge the guest. And that’s your profit.

So if it’s 15 menu price minus the 3. 50 cost, there’s your profit. And then, Bye. The plate cost of, 3. 50 divided by 15 gives you your food cost percentage. What do you do with this data? Well, the very first thing is you rank them in every category from most profitable to least profitable. And what do I find most often?

Profits, again, are all over the place. And I see A profit difference in each category with the clients I work with. We call that the spread. And some appetizers might contribute a 2 profit. Another one might contribute a 5 profit. And now suddenly there’s a 3 spread between these appetizers. What do we also find that’s common?

Lower price. profit items are bigger sellers, more popular sellers, taking sales away from what you want to be selling. And now, every time you sell this versus that, you’re losing 3, 4, and more. It’s even scarier on the entree side. I see restaurants losing 10, 12, 15, and even more every time this sells versus that.

You might be filling your seats, you might have a busy restaurant, but you’re scratching your head wondering why. It’s my bank account not growing. It’s because your profits are all over the place. Chances are lower profit items are stealing sales from what you want to be selling. And that’s a problem.

I’m going to give an example. I worked with two recent clients. They both had businesses close to 3 million annually, nice little restaurant business. They were open for lunch. They’re open for dinner. They were both busy for lunch and dinner, extensive menus. We found out that Lower profit items were taking sales away in just about every category for lunch and dinner.

So of that 2. 9 million restaurant, I showed them, one of them, that last year they left a potential profit of 340, 000 on the table and what they could have made versus what they actually made. What an eye opener that was. The other restaurant was literally over 360, 000, even more of that 3 million in sales.

So what do you do? You go. Go. Once you know all this knowledge, you figure out ranking them by what’s most profitable. You train your staff. These are the most profitable appetizers. These are our most profitable entrees. Recommend these every table, every time. Now, there’s no problem recommending them.

If you’re proud of the food and you stand behind it and you know your guest is going to enjoy it, why wouldn’t you recommend what’s most profitable? You do that immediately. Then there’s portion controls. I can’t tell you how important it is to have portion controls. Portion control standards. Have a photograph first of what the plated dish should look like.

Have a spec sheet. If it’s a pizza, how many pieces of pepperoni go on that pizza? What are the ounces or the scoop of starch that goes on a plate? Desserts, same thing. I once saw a server putting two scoops of vanilla ice cream on an a la mode pie just because she thought she’d get a bigger tip. Okay, you need cost controls and portion controls to make sure you have consistent.

And you got to enforce it. And this all came about so many years ago because my first restaurant was a wood fired pizzeria. Now imagine I’m standing on the line. We had just opened. We’ve been open a couple of weeks. I had three different pizza makers on the line. We had one size pizza only because that’s the way they do it in Italy.

You can’t get a small, a medium or large. So we had one size pizza. It was very easy to check and balance that. And I just happened to watch these three different pizza makers. And They each made a pepperoni pizza and I counted. One person put 10 pieces of pepperoni in the pizza. The next person put 12 and the next person actually put 13 slices of pepperoni.

I went to my kitchen manager and I’m like, what is the spec call for on the pepperoni? She’s 10 slices. I’m like, I just watched. Two other pizza makers make multiple pizzas where they put 12 or 13 pieces. How much is that costing me with an extra 2 or 3 slices of pepperoni on every pizza times hundreds of pizzas a night times a couple thousand a week?

You get the idea. Portion control standards, checks and balances, okay? Put this in place. It’s really important. Okay. There’s a template for that as well. I call it the Menu Profit Accelerator. It’s got all the templates costing out your menu. We train you how to do that. You plug all this information in, you press the go button, and it’s going to show you where you’re making and losing money every day.

And then the third thing you can do besides training your staff to recommend your high profit items, besides having portion controls, Talk to your suppliers. They know what you’re buying now and they change products all the time, or they get new products in the door all the time. And you specify what your specs are, are there any alternative products to what I’m buying now that’ll have the same or similar flavor profile? The guest won’t know the difference. The quality is the same, but maybe you bought 10, 000 more cases of this versus what I’m buying now. You get a better price on it. You can pass the savings on to me.

You don’t ask, you don’t get. So that’s really important also. Okay. We talked about the profit, menu profits. So important. So do that. Let’s talk about the next thing you can do. Do you know your daily breakeven? A lot of people scratch their heads when I’m at food shows and I ask them, do you take this on a regular basis?

Do you know what your daily breakeven is? And they’re like, what’s that? So you don’t have to be an accountant or a CPA or an office manager to figure this out. Everybody has invoices that come in. Either on a weekly basis or on a monthly basis. Maybe they’re stored on your computer in the cloud. Maybe you get an old fashioned file cabin in the corner.

It doesn’t matter. I have a template that has a list of two different kinds of expenses, fixed and variable. Now, don’t worry. I’m not giving you an accounting lesson here, but let me explain the difference. A fixed cost is something that your restaurant has to pay, whether you’re open or closed. It doesn’t care if you’re open five days a week, seven days a week or one day a week and you’re closed the rest.

It’s a fixed expense. What’s an example of that? Your lease payment, your rent, okay, or a mortgage on the property. If you pay a monthly principal, obviously payment and that kind of thing, it’s interest and all those kinds of things, plus your property tax. These are fixed costs. How about the dumpster in the parking lot?

The dumpster might cost you three or five hundred bucks every single month to have two dumpsters. It might be the big cardboard dumpster for all the boxes and it might be the trash dumpster in your parking lot. You got to pay for that whether you’re open seven days a week or two days a week. That’s a fixed cost.

You get the idea. Phone lines, internet, equipment leases. One of my restaurants, we leased a dishwasher and we had to pay like 250 a month for the lease. That was a fixed cost. A variable cost is something that varies with the number of hours or days you’re open. Cost of goods, right? Payroll, these types of things.

Credit card fees. Obviously, if you’ve got lots and lots of business, seven days a week, your credit card fees are going to be higher than if you’re open five days a week. That’s a variable expense. Utilities and your operating supplies. Alright, so how does this work? The daily break even template lists first all of your fixed costs and then all of your recurring costs.

Variable costs. Go to the file cabin in the corner, ask your office manager, ask your accountant, or go to the cloud, wherever you got this stored, and you make a list of all these things. And how much does it cost you on a monthly basis? Now your lease might cost you 5, 000 a month. Just an example. It’s easy to plug that in.

Your cost of goods, you have to add up your purchases of your food and beverage for four weeks in a row and add all of that into the template so it can automatically calculate a month’s worth. So you literally put 30 days of expenses for every one of those fixed and variable costs. and list them there.

Then the template is automatically going to divide that number by 30, and that gives you a number. And it might be 1, 000, it might be 5, 000, doesn’t matter, it’s based on the size of your restaurant. But what does that mean? That means It’s what it costs you to put the key in the lock every single day, open the door, put the lights on, have food in the walk ins ready to serve the guests, have staff there to prepare the food and to serve the customers, and have the dumpster in the parking lot and the linen service and every other expense.

Whether you serve 500 customers that day or only 5 customers, it’s gonna cost you that much just to open the doors. So what’s the point of this exercise? The point is, unless With consistency, your restaurant, let’s just say your break even is 2, 000 bucks, unless you’re hitting on a slower day, Monday perhaps, maybe Monday’s your slowest day, unless you’re at least hitting 2, 000 every single Monday, you’re losing money.

You’re losing more money by being open for consistency than you would be if you closed and gave your staff the day off. Alright, that’s a very telling exercise, but first I recommend you figure out what your slowest day of the week is and you come up with a super promotion that drives business on that day.

If you absolutely can’t do that, then again, it makes more sense to close, unless you’re consistently hitting zero. that 2, 000. The last thing I want to talk about is a lot of restaurants are seasonal in this country. Like I had two seasonal restaurants. I was only open during the winter. We were at ski resorts and then in the summer the sidewalks rolled up and the customers were gone.

I had to close. I had to make enough money in four months to carry the eight months that I was closed and a lot of restaurants have the opposite season where they’re only open during the summer and they close for the winter seasonal resorts. So the calculation is a budget. I have a template also for a budget.

It starts with your ending cash. Let’s just say you’re a winter operation like me and your season ends April 15th, tax day. You write down how much cash you enter into the template. How much cash do you have either in the bank or in investments on the ending day of your close, your close season?

Um, you’re going to be closed for five or six or seven months. Let’s talk about the investment piece because you have a bank account or a couple of bank accounts or you keep all your cash but we used to park all of our extra cash as we made profit throughout that winter season. We had a money market fund that we would invest the money and it maintained its dollar value but it paid a little bit of interest.

But when we’re talking about hundreds of thousands of dollars that we were sitting on at the end of the operating season, even if it was a minimal amount of interest, The more money I had in there, it would pay us a nice return over the course of the closed months. Okay, so you got your cash on hand and you’ve got your investment cash in a money market fund, hopefully.

Then you list all of your fixed and variable expenses again in this template. What you know is going to happen when you’re closed. You still have electricity, perhaps. You still have utilities. , you may send the dumpster bye bye if you’re closed. That’s fine. You might still have heating oil.

Different things, right? Some things will go away because you absolutely don’t need them. Some things will stay, but you make a list of all the expenses that you still have to pay every single month until you reopen. And then you want to have a cash cushion, because you know that when you reopen, it takes a little while to generate positive cash flow again.

You’ve got labor right off the bat. The deliveries are coming in the door. You’ve got to pay COD for your alcohol. I always had a 20, 000 cash cushion that absolutely had to be there at the end of that eight month period when we reopened for business. So I put that in. Now the only missing thing was there’s a couple of blank lines in the template because unexpected things happen.

It might be the middle of summer and Something breaks that you absolutely need for, the winter that you’ve got to repair. So you plug things in as they happen, but you do this calculation every single month on the template and it reduces the amount of money because you’ve got your Cash and your investments, minus these expenses, month after month, minus your 20, 000 cushion, and then as you get close, the whole goal is to make sure you have at least that cash cushion of 20, 000, or hopefully even more, when you reopen That’s about it, guys.

Everything I talked about again is in the Restaurant Academy. Check that out at restaurantrockstars. com. Thanks so much for tuning in. Can’t wait to see you next week. And we’ll have a real live guest besides me. But every now and again, I’m going to be doing these because it’s based on my experience. I’m proud to say I had double the profit of the average restaurant in this country.

And with shrinking margins, you want to maintain those margins. It’s more and more challenging to do this all the time. So I hope today was helpful. Thanks so much for tuning in. Thanks to our sponsors this week. Can’t wait to see you next time. Stay well, stay tuned.

Thanks for listening to the Restaurant Rockstars podcast. For lots of great resources, head over to restaurantrockstars. com. See you next time.