Why take the time to create a budget for my restaurant?

restaurant-owner-data-metrics-finances-budgeting

These are the Big 3 Benchmarks of Performance in the Restaurant Industry:

  1. Same-Store Prior Year
  2. Location Side-by-Side
  3. Budget

 What are the merits of each and is doing a budget even worth it?

The most common financial and operational benchmark for a restaurant is comparing performance of the same store to the same time period of the previous year.

This is known as ‘Same-Store _______________” (you insert the metric you want – i.e. Sales, Guest Count, SPLH, Prime Profit, etc.)

Same-Store Prior Year is an important metric to be sure as it can alert an operator of things that have fallen out of the normal ratio for that same-store and thus where immediate action should/can be taken to rectify it.

Each location is unique to some degree and when all else is equal, the same-store performance the previous year is a great way to measure current year performance. However, it does have its limitations.

For example, one industry veteran told me his staff would commonly joke that if you wanted to make any poor performing period look good, just make the previous year look the same and no one would bat an eyelash. There is a need to look at your business through multiple lenses.

The second most common analysis in the restaurant world is comparing store performance to other restaurant locations within the same company for the same time period. This is referred to a Location Side-by-Side analysis.

This form of performance comparison is also helpful in identifying warning signs and opportunities across your multi-unit brand but the greatest benefit is an intangible one: it can drive manager motivation. People love to compete. They like seeing their store at the top.

Restaurant365 is one application that has taken this to the next level. They have an exciting feature that allows managers to see the P/L’s of other locations within the company without revealing which location they are looking at except their own. The manager can see where they ‘rank.’ This gamification of the data is helping promote excellence within the manager ranks and changing the tone of weekly manager meetings for the better.

The third benchmark restaurants use to measure performance is against a budget. There are many reasons people take the time to prepare a restaurant budget each year – and there are many people who purposefully don’t take the time. For those that do, it is often done out of compliance for an outside investor and completed by the CFO or accounting department. For those that don’t, a common excuse we hear is, “I don’t have the time to analyze any variances.

Besides, the minute I complete my budget it is obsolete and irrelevant because of the ever changing nature of my business.”  There is some truth in these comments and realities we cannot deny.

Why then, go to the trouble of preparing a restaurant budget and who should do it? The best answer is because of what it teaches the person who does it and secondly, everyone from the restaurant manager on up.

The exercise of preparing a budget teaches you the business. In other words, it reveals how the business makes money or loses it. There are ‘levers’ in the business that when pulled, drive profits or losses. Restaurant managers who understand these ‘levers’ are in the best position to make recommendations to the company on how to control them.

Managers who help create the company plan as to how to use the ‘levers’ have more buy-in and ownership to the results. Luck will always be on your side when managers are fully bought-in.

In the end, is budgeting worth it? It is not only worth it, but when combined with same-store prior year and location side-by-side analysis, it is critical for all restaurant business hoping to maximize their return on capital.

Morgan D. Harris CPA, Co-founder, Restaurant365

 

New Feature: Dynamics GP like SmartLists for Restaurants

Easily being able to find data you are looking for in your restaurant accounting software is one of the hallmarks of Restaurant365.  The new list features in Restaurant365 are very similar to that of the way Dynamics GP SmartLists work.  You can:

  • Multi-sort by column
  • Multi-select by value
  • Drag and Drop columns to new positions
  • Dynamically resize columns
  • Save favorite views
  • Export results directly to Excel
  • Add new columns from fields in the database
  • Drill down directly to source records from search results
  • . . . and much more – all in a browser interface!

Here is a quick screen shot of the new lists.  Contact Restaurant365 today (sales@restaurant365.net)  to learn more about your organization can use this powerful tool.

Vendor List Screen Shot

 

The 4 “Anchors” of Restaurant Reporting

There are so many moving parts to running a restaurant, managing by exception is really the only way to identify what part of the business needs the most attention.  So how do you know what is an exception?  In the restaurant business, there are 4 things you can compare your numbers to that will tell you what you can work on.  They are:

  1. Same Store Last Year 
  2. Budget / Theoretical
  3. Other Stores
  4. Industry Benchmarks

Which of these should you be looking at?  It totally depends on which aspect of your business you want to focus on.  There are also 4 key metrics in restaurant accounting you will be most interested in – Sales, Cash, Cost of Goods Sold, and Labor. 

Restaurant365 provides a simple and methodical way of looking at these metrics against these anchors to lead you to the biggest problems first.  If you can work your way down the list of issues, you will soon find that there is more money in your bank account.  Powerful restaurant accounting software such as Restaurant365 will help you run a more profitable business. 

Morgan Harris  |  Co-founder  |  Restaurant365

Tax season is over . . . time for restaurant accountants to look at new accounting software.

Taxes should be submitted by now and restaurant accountants nationwide need to go to Hawaii and get a breather.  Once you are fully rested and ready to get back in the saddle, the next task for most accounting teams is to find ways to be more efficient, more accurate, and more responsive to those making decisions on the data you provide.  All departments should always be striving to become better.  One of the best ways to do this in the accounting department is to leverage technology – and for restaurant accountants that means restaurant specific accounting software.

The right accounting software can automate (or all together eliminate) many of the tasks that are done manually today.  Here is a quick hit list of questions you might ask yourself to help quantify the value of having restaurant accounting software as opposed to generic accounting software:

  1. How many hours does it take to create a statement of cash flow?
  2. How many days after the last day of the week do I send out the weekly prime cost reports to managers?
  3. How many days/weeks after the end of the period do I close my books?
  4. How long does it take me to reconcile each of my bank accounts each period?
  5. How long does it take me to enter all stock count journal entry adjustments?

This list can go on and on.  All things that are automated these days with solutions like Restaurant365 (www.restaurant365.net).

Time to get home from Hawaii and get cracking on ways to free up your time today.

Morgan Harris  |  Co founder  |  Restaurant365

Restaurant365 Releases New Banking Integration Features (ACH, Positive Pay, Check Signatures)

Restaurant365 is pleased to announce 3 new features to it’s Banking module for multi-unit restaurant accountants.  They are ACH, Positive Pay, and automatic Check Signatures.

  1. ACH is powerful way of reducing the amount of time you spend printing and mailing checks.  Simply gather bank account info from your vendors and Restaurant365 will make paying your vendors as easy as making a pie.
  2. Positive Pay add a secondary control to check cashing as each check written and cashed at your bank is validated against a list you provide (and is auto-generated out of Restaurant365 for you) as part of your check run.
  3. Automatic Check Signatures is a major time saver for those who still want to print off physical checks but don’t want to sign each one.

The restaurant business is a high volume business.  ACH, Positive Pay, MICR, and Check Signatures are 4 ways Restaurant365 provides multi-unit restaurant accounting teams tight control over cash and administrative efficiency.

Morgan Harris  |  Co-founder  |  Restaurant365

Restaurant365 Releases Cash Flow Statement

We are pleased to announce the general release of a Statement of Cash Flow report.  If you spend 4-5 hours preparing a manual statement of cash flow for your executives in Excel each month, you will love being able to generate one with the simple click of a button.  The report utilizes the most commonly used format – the Indirect Method.  There is no other accounting system we know of that can generate an out-of-the-box statement of cash flow report the correct way.  

The feature is now currently available for all existing customers at no extra fee.  Here is a link for all existing customers on how to do the one-time setup for the report to be active:  http://restaurant365training.com/cash-flow-report/ 

Morgan Harris  |  Co-founder  |  Restaurant365

Do You Know the 3 A’s of Good Back Office Restaurant Reporting?

There are three important attributes of good reporting in any restaurant – and they can be categorized by three words all starting with the letter ‘A’.

  • Accurate
  • Actionable
  • Accessible

Let’s briefly touch on each one:

Accuracy – This might be the most obvious one but it isn’t always a given if you find yourself re-keying data from one system to another.  Also, if you are looking at the same data out of two systems, it always possible (and is frequently the case) that something is entered in the one that didn’t make it into the other thus causing the data to be off.  Restaurant365 helps eliminate this by reducing the number of systems needed to run a restaurant – it’s all in the same database.

Actionable – This has to do with when your people get the data.  Is it a day or two after the end of the period or is it a few weeks?  (heaven forbid it is a few months!)  Reporting becomes less and less useful as time passes.  And in a restaurant, there is a big difference between a day, week, or month.  Restaurant365 polls data from your POS nightly that creates your sales & labor accrual entries for you each day.  Managers enter or import vendor invoices and their stock counts in Restaurant365 at the store level each day.  So reports such as the Weekly Prime Cost report by Location can be generated on the morning after the end of your week!

Accessible – What good is a report or data if the people who need it, can’t get to it.  Restaurant365 puts this powerful back office information in the hands of the store managers.  They are the ones that can impact the restaurant the most.  They are the ones that can do the most with it – as long as they can easily get to it.  It’s about user adoption and ease of use as much as training.   Restaurant365 puts all this info in the hands of the store managers directly.

Morgan Harris  | Co-founder  |  Restaurant365

 

 

 

How Can Restaurant Accounting Software Help My Business?

I found myself in a conversation today with a restaurant professional discussing the merits and benefits of restaurant accounting software over generic accounting software.  The key difference is how it specifically helps restaurants achieve their objectives of:

1.  Protecting assets

2.  Identifying opportunities and trouble

3.  Increasing profitability without lowering customer service

What tool can help the restaurant business owner achieve these?  The answer is restaurant-specific ERP software such as Restaurant365. 

  • Precious assets such as time, inventory, & cash are monitored and controlled tightly
  • Trends, variances, and outliers are displayed clearly in easy to use reports
  • The system does the work of multiple people, thereby reducing administrative overhead 

Take you business to the next level with Restaurant365.

Morgan Harris  |  Co-founder  |  Restaurant365

3 Key Take Aways from the 2013 Restaurant Finance & Development Conference

We had a great time at the annual Restaurant Finance & Development Conference in Las Vegas this year.  3 key take-aways were:

  1. The attendees are the best part of the conference.  If you go to the show, make sure you say hello to the person sitting next to you.  They are full of knowledge and experiences that are often just as good or better than anyone on stage. 
  2. Restaurant executives care about their team members.   Despite any advance in technology or legislation that might encourage otherwise, executives don’t want to reduce headcount.  They love and depend on each team member and it shows.
  3. Restaurant Accounting Software is a hot-topic.  It was fun to sit in a few sessions and hear people talk about their desire to move to the cloud with their accounting software. 

It was great to connect with old friends and meet lots of new ones.  Restaurant365 is a great conversation starter.  There is nothing I love more than talking with folks about how Restaurant365 can save them administration time, see their business more clearly, and get greater control over their assets. 

Morgan Harris  |  Co-founder  |  Restaurant365

Restaurant Specific Accounting Software Alternatives

Whenever I speak to multi-unit CFOs who are looking for an alternative to QuickBooks and generic accounting software packages, I find myself explaining the following to them:

Basically, there are 3 options:

  1. Restaurant365 (www.restaurant365software.com)  – Accounting, POS Integration, Above Store Analytics (all in one, Cloud Based)
  2. Compeat (www.compeat.com)  – Accounting, POS Integration, Above Store Analytics (all in one, On-Premise)
  3. Outsource it to an outside firm – there are a number of these services out there that do it all on their own proprietary software (cost can be about $250/week/location)

You might find other bits and pieces of the solution (such as Above Store Only – i.e. CTUIT) but there is no other solution that does the full GL and allows you to replace QuickBooks entirely other than what is listed above.

Also, you might explore bundled packages but those are not built specifically for the restaurant industry and will be lacking in features and not really do anything for you more than what you have today (i.e. Great Plains, MAS90, Intacct, NetSuite).

Morgan Harris  |  Co-founder  |  Restaurant365