Finding your way: adjusting budgets

These figures can vary tremendously as the sales drop as a % of budgeted sales increases. Some operators are experiencing drops of 20% in revenue. If you had a $5 million restaurant turn into a $4 million business, you’d be in the 20% club. Perhaps your average entree is in the $25 to $40 range. What do you need to do to survive?

You would be looking for a cost cut of 7.5%. WOW! That is huge. I’m expecting you have already cut costs to the bone and were projecting a break even year. In the short run, many operators in this position are selectively cutting management positions.

Trying to find the $300,000 bottom line short fall in food cost % is probably tantamount to slicing your own throat. If you had your food cost % in line and can’t increase menu prices (which may be out of the question for many of you) a 7.5% drop is tough. Cutting portions to achieve a 7.5% of sales drop would certainly be perceived by your patrons. Operators are cutting fat from their staffs to make up most of these shortfalls. A $300,000 cut means 5 key people making $50,000 plus benefits.

For the companies growing sales at this time, your hiring woes will come to a screeching halt. There are plenty of well qualified professionals looking for work this quarter. 

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(1) Comments • Permalink • 03 05 2009

• Joe Dunbar
• Reprinted with permission by Food Cost Solutions
• Photo by Crystal

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