Measuring profitability to stay ahead
Controlling costs in the restaurant business is critical. The National Restaurant Association's just-released 2013-2014 Restaurant Operations Report provides crucial data on cost of sales, gross profit, direct operating expenses and other performance measurements to help restaurateurs see how their business compares with those of a similar profile.
The report helps restaurant operators sharpen their financial performance and quickly identify cost categories where data could significantly vary from similar operations. By analyzing operating costs, restaurateurs can detect potential problems, determine how to cut costs, and become more efficient.
Based on financial and operating data from hundreds of restaurants, the Restaurant Operations Report analyzes restaurant income and expense statements to profile operations data for four restaurant profiles: three in fullservice, one in limited service. The categories match up with those presented in The Uniform System of Accounts for Restaurants. Special bundled pricing is available when buying the two publications together (the accounting basics kit).
It includes information on restaurant type, location, sales volume, and other measures. The report presents operating results as amounts per restaurant seat and as ratios to total sales, which are the most common bases in the industry.
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Data snapshot from 2013-2014 Edition
Food and labor are the two largest general cost categories for a typical restaurant. The cost of food and beverage is about one-third of the sales dollar, while salaries and wages account for another third.
The median total sales per full-time-equivalent employee ranged from $53,448 (in fullservice restaurants with an 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.
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.