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National Restaurant Association - Operations Report can help guide your bottom line

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Operations Report can help guide your bottom line

Assess and track your restaurant’s performance with the latest edition of the Restaurant Operations Report.

This National Restaurant Association publication is a study of restaurants’ operating results, based on financial data from 630 restaurant operators. The report helps restaurants gauge how their business measures up to the competition.

“This business-management tool helps operators determine how their costs and sales compare to those of a similar business profile to operate more efficiently,” says Hudson Riehle, senior vice president, research and knowledge, NRA.

The Restaurant Operations Report analyzes restaurant income and expense statements to present operations data for four restaurant profiles: three in fullservice (per-person checks of under $15, $15 to $24.99, and $25 and over), and one in limited service. In each profile, the data breaks down by sales volume, location type, menu theme and ownership. The cost categories match up with those presented in the NRA’s The Uniform System of Accounts for Restaurants.

In an industry that caters to constantly changing customer preferences, it’s important to maintain a competitive edge. Here are some ways the Operations Report can help you measure profitability to stay ahead:

  • Evaluate your operating results. The report presents operating results by the most common industry measures. It uses medians rather than averages to indicate the norm because of the broad array of surveyed restaurants. For example, the median total sales per full-time equivalent employee for fullservice establishments ranges from $53,448 (average check per person under $15) to $60,606 (average check $15 to $24.99) to $65,413 (average check $25 and over). For limited-service restaurants, median total sales per full-time equivalent employee was $68,571.
  • Review profitability targets. Understand how your pretax profit margins stack up against similar restaurant operations. For example, median income before taxes for fullservice restaurants was 4.1 percent of total sales in operations where the average check is under $15; 5 percent for restaurants with an average check of $15 to $24.99; and 4.5 percent for fullservice operations with average checks of $25 and over. For the limited-service restaurants surveyed, median income before taxes was 6.3 percent.
  • Get a leg up. If you’re opening a new restaurant, the report can guide you in developing a potential income statement and help you monitor your operation’s performance as your business grows.
  • Identify areas for improvement. For example, look at the food costs of similar profiles and determine whether and how you can decrease cost points to help your bottom line.
  • Analyze your operation. A periodic analysis of the financial performance of your food and beverage service operations could identify early warning signs of potential problems. For example, food and beverage costs or payroll could be inching up monthly. Regular examination of small day-to-day changes could uncover undesirable trends and help you avoid potential crises. Use this worksheet to get started.

“In this economic environment, competition abounds from all restaurants of all sizes, as well as convenience stores, supermarkets and other venues that offer prepared food,” Riehle says. “You need to monitor your costs and make sure you have enough cash for expenses and investments. A tool that helps guide your performance is invaluable and can help you succeed.”

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