RESTAURANT OPERATING COST CONTROL

Operating expenses are controlled by comparing actual expenses to budgets. Budgets should consider the variable and fixed component of each expense type.

We can show you how to use daily and weekly Break-even and week-to-date Profit Reports to manage operating expenses.

Breaking down operating expenses into fixed and variable components makes it possible to calculate daily break-even levels.

Don’t wait until the end of the month to calculate operating profit. Weekly and month-to-date operating reports with break-even help your managers understand the profit picture and the cash flow status of the restaurant.

Controllable OE:

Direct operating expenses are involved in the service of customers, and usually are controllable.

Direct expenses are usually not 100% variable with sales.

Purchases of china, small wares, and menus are often cash flow decisions more than budgeted expenses.

Utility and R&M expenses should vary with sales, but they are semi-variable, not 100% variable.

A marketing plan should include a detailed budget and an expected return to measure effectiveness.

G&A expenses should be defined and budgeted. Spell out the process if allocating overhead for several units.

Noncontrollable OE:
Occupancy costs may be fixed or semi-variable, and are usually noncontrollable (not influenced by management) Depreciation and interest are also noncontrollable.

• Direct Operating Expenses

Linen Rental
Uniforms
China and Glassware
Kitchen Utensils (small wares)
Menus
Contract Cleaning
Flowers and Decorations

• Utilities
• Repairs and Maintenance
• Music and Entertainment
• Marketing
• General and Administrative
• Occupancy Costs
• Depreciation