After a little more than 60 days of business, it’s time to start looking at tighter cost control. In the initial stages we focused on the food, customer service and marketing. We costed out our menu and knew that projected costs were in line at the time we opened. Since that time we haven’t done much to look at operating costs.
We will look at these areas:
- Scheduling and better management of time in the kitchen and front of the house.
- Food costs as the market continues to fluctuate (up and down) for commodities like meats, eggs, dairy, cheeses and wheat based products.
- Elimination of services, menu items, fixed costs, maintenance, and general administrative costs that may not be needed.
While sales are holding up well, we can focus on the cost to do business as a long term operational basis.
In the March 5th post, we wrote about the sales numbers being up and down. With overall revenue generally good, there were trends we didn’t like and decided to address those with some additional marketing programs that may fill in some of the valleys.
Some of the things we did were:
- Highlighted “Early Riser” specials to try to get more early morning traffic.
- Ran a new add in the two local neighborhood papers.
- Started to make calls on local businesses to increase take out sales.
- Used email to feature St. Patrick’s Day Specials (sent two days in advance).
The sales numbers are encouraging in the early stages. Our biggest Tuesday since opening was yesterday. Our second biggest Monday was the day before. Saturday and Sunday’s numbers were better than the previous week.
Are the restaurant’s new marketing programs working? Maybe!
Sometimes you don’t have conclusive answers to all the questions. We know some customers saw the ads. We sold out of our St. Patrick’s corned beef specials. Was that the emails? We have seen a couple of people from the personal visits.
Restaurant marketing programs generally take hold over a longer period of time that create measurable data trends. The results we are seeing seem a little quick, but we will be satisfied with the respectable sales numbers, even if it is an early coincidence or just the combination of things that are just starting to come together.
As the new restaurant enters its third month of operations we see that sales during the week are much different than anticipated. Carry out business is less than expected and highly unpredictable. We may do $25 dollars worth of take out sales one day and $200 the next day.
To promote carry out sales we created a program with the following:
- Set a goal to reach 100 business within our area and double our take out business.
- Create a fax order form that has our most popular breakfast and lunch items.
- Put together 100 file folders that have a label on the outside, fax forms and our complete menu inside.
- Assign staff (Manager, servers) to personally distribute the folders during the coming week.
The total cost to implement this program is under $75 (not including labor). The results??? We will report the numbers in a couple of weeks.
The first full month of operating the new restaurant was February, 2009. A reader of the blog has requested we post the first month’s statement. By following the link above you will see the Profit and Loss Statement generated before our accountant audits our entries. The only known missing item is an entry for depreciation, which is a non-cash item.
While the numbers are accurate, the early stages of any operation can be misleading on a long term basis. You have costs such as extra staff, training, items you purchase that were forgotten or changed since opening and similar adjustments that may not reflect long term results.
The Profit and Loss Statement may help someone who is trying to prepare a business plan for a new restaurant. As you can see, we tend to detail expenditures in our restaurants and have period to period ability to recall and compare the data. We use Quickbooks Online for our data entry. Our accountant has access to the accounting data through this service.
As any restaurateur knows, sales numbers, on a short term daily basis, never make a lot of sense if you only focus on a given day or week. Our new restaurant was chugging along with weekly (and daily) growth. Then, without a reason we can ascertain sales dropped last week. Weekday business was off about 25% for a couple of days and the weekend was off about 10%.
Why did these drastic changes occur? Why do they seem to have been temporary as sales rebounded in the last few days? Many possibilities have been explored, but no real answers have surfaced.
As we implement the plan described in the previous post on our restaurant marketing changes, we can only scratch our heads and start our tenth week of operations.
