Have you ever heard the phrase “garbage in equals garbage out?” You know what that refers to, right? If you use the wrong numbers in any formula for software or a spreadsheet, you'll get bad results. And when it comes to running a profitable restaurant, it couldn't be more of an accurate statement or a problem. So, when it comes to restaurant management systems, how would you like to know a basic approach to assess your restaurant health and have the right numbers at your fingertips?
When it comes to tracking your numbers accurately so you can use them to steer your restaurant towards a strong financial position, toward a future that you really want to work toward, you have to record, track and verify seven very specific things. I call these seven things your daily admin.
Let's go over them.
1. Start with sales by category. That's food, bottle beer, draught beer, wine, liquor, merchandise and N/A bev. I don’t care what order they're in; you just need to look at them as separate categories. You can’t just break sales into food and beverage. When you do these separate categories, you can use the information to predict purchasing. It tells you how much you can purchase when it comes to food, bottle beer, draught beer, wine and liquor. It's extremely important. It helps us with accurate cost of goods sold by tracking gross sales by category, and you can have accurate pour cost.
2. Next, you need to track your comps and discounts daily. Doing this ensures you have cash controls because you expect certain gross sales but you also know you have discounts, which means you’ll have a different amount going to the bank.
3. You also need to track your account payable deposits. These can be classified as gift cards sold in most states. You’re not going to think of a gift card as a sale because most states have sales tax and gift card sales are not taxable. It's money we're holding until they swipe that card. When it's used, then it becomes a sale. One of those categories goes up, but we're not bringing in the cash. Well, we brought it in earlier. That's when we sold the gift card. Remember, you have your gross sales, you reduce the comps and then you add in the gift cards sold. Then there is any cash you take in a catering deposit for a catering in the future, or a wedding a year from now, you should expect that cash. Oh, don’t forget sales tax collected because that's not a part of sale. You expect that cash. So now by having gross sales, reducing your comps and discounts, and adding these accounts payable deposits, you know how much money you should be bringing in on a daily basis. That way you can ensure your cash is making it there.
4. To verify the cash part, you start with your actual cash deposit, but this is not, and I stress not, this is not the point of sale system, when it says your cash is due. You might put that into a spreadsheet right away, what I call the DSR tracker, to make sure you balance, but then you’re actually putting your actual cash deposit. Why? Servers, if you’re using server banking and you’re a full service restaurant, they’re even or over, they’re never under. Bartenders are over/under $5 per set of hands in a drawer. This means you almost never hit your ideal bank deposit, but based on your servers overages and your bartenders overs and unders, you should be balancing to whatever the math says that over short should be. This ensures my money, makes it to the bank.
I cannot tell you how many members that I've talked to that have been embezzled by a bookkeeper or a manager. You have to pay attention to this and tracking it.
5. Next is credit card totals by brand. That’s Visa, MasterCard, American Express, Discover Card, any other credit card services you take. You need to make sure that money came in so it matches what your cash due is, but also to ensure the credit card companies are getting me my money.
I can tell you a horror story. When I was a restaurant manager and operations manager of a place called Coyote Springs, I'm so old, there was a credit company called Diners Club. They had not given us $21,000, but we didn't discover it until I moved into that position and reconciled two years’ worth of books. That's frightening!
6. You also need to be tracking house accounts. A house account is any form of payment you're accepting that is not money. It could be a trade agreement where you trade your services for others’ services without money ever changing hands. It’s money but not in the true sense of money. You need to have a bucket to show what is used. You might have partners or yourself that instead of comping, part of the benefit is to ring food up to a certain amount of money. You need to track those accounts. House accounts have become something new these days and those are the third-party delivery services. You may be tracking all those because we don't get that money today, it comes later, but we want to show we tendered payment.
Another thing to track is your accounts payable used. You remember those gift cards sold and those catering deposits? Here you track their use. You need a great system to track a gift card that was sold through when it was redeemed to zero. At some point you will redeem catering deposits made as far as a year in advance of the event, using it as part of their tendered payment. You know it was money collected in the past, they should say, for future use.
7. Last but not least are your paid outs. This is money you use from the bar drawer or cashier drawer. It’s common for the chef to need more tomatoes or something easily purchased at a grocery story, and to grab $10 from the drawer to buy them. The bartender opens the drawer, tears a piece of receipt paper off – the most expensive paper in your restaurant – writes down $10/chef and chef signs for it. When chef comes back with a receipt and change, that goes in the drawer in place of the IOU. That receipt is as good as money in the drawer. And that's important because you’re trying to balance your gross sales, minus discounts, plus the accounts payable that were deposited. Then you have your cash as expected with all the MasterCard, Visa and so on, the house accounts and all the paid outs, as well as any accounts payable used, and they should equal, within the level of over short from our servers and bartenders.
This is incredibly important because, number one, it ensures all your money makes it to the bank. You can check your POS report against your DSR tracker against what actually hits the bank. You can see very easily within a moment, a day, that your money is safe.
To start this, you wanted good numbers. If garbage in is garbage out, how do you change that? Follow these seven simple daily systems as your daily admin, and you’ll have good numbers to get good results.
If you would like to learn how to own a restaurant that doesn't depend on you being in it to be successful, watch this free video that teaches you three key principles to running a successful restaurant. If you're ready right now to make some serious changes in your restaurant, you can also book a 60-minute call with me where we talk about your challenges and figure out exactly what is holding you back from having a restaurant that doesn’t depend on you being in it to be successful.
Be sure to visit my YouTube channel for more helpful restaurant management video tips.
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