Budget Planning for Restaurants

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Whether you are opening a brand new restaurant or taking over management of an already existing eatery, having a well researched and strategically outlined budget plan can make or break you. With so many responsibilities involved in running a restaurant, like greeting guests, preparing specialties and keeping up with employees and maintenance, it's sometimes easy to overlook the administrative tasks. But savvy restaurateurs know that budget planning for restaurants is the first step towards profit and success.

Why Is Restaurant Budget Planning Important?

Restaurant budget planning is crucial to the success of your restaurant.
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Trying to operate a restaurant without a solid budget plan is like trying to take an extended road trip without a map. Though your staff may be competent, products top-of-the-line and business booming, without a solid insight into the loss and gain aspect of your books your restaurant can run itself into the ground no matter how successful it appears. A solid restaurant budget plan can prevent chef's from over spending on foods, bar managers from overstocking liquor and supervisors from over-staffing and over-paying employees. Keeping track of your spending is crucial to successful ROIs in the restaurant industry.

Who Should Be Involved In Budget Planning?

Limit budget planning to managers, supervisors and business partners.
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Even though restaurant industry strategy planning typically involves all staff members of an establishment, budget planning is best left to the administrative management departments. You'll be best suited to limit budget planning meetings to managers, supervisors and any applicable partners or investors. Restaurants who employ executive chefs or entertainment managers often include such staff members in budget planning and allow them predetermined monthly, quarterly or annual budgets to operate their departments. It is also a good idea to include your attorney or banker to oversee any amendments to agreements, financial policies or spending reports.

What Are The Main Goals In Restaurant Budget Planning?

The ultimate goal in restaurant budget planning is to reach maximum potential for profit.
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The ultimate goal in restaurant budget planning is reach the maximum potential for profit and eliminate waste and over spending. A solid budget plan will help eliminate over-spending on materials like food, alcohol and janitorial supplies as well as administrative expenses such as advertising and payroll. Your budget plan can help identify which of your dishes or specialties are most cost effective and yielding the highest profits and enable you to create a more efficient and profitable price list for food and beverage items. In some cases a great budget plan is even used to establish the entire menu of a new or re-established restaurant.

Basic Formula "68"

Many restaurant professionals base their budget plans on a standard 68% formula.
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In the restaurant business many professionals base their budget plans on a standard "68 percent" formula. What this means is that with a modest amount of flexibility restaurant owners should try to base their budget on estimated overhead expenses of 68 percent or less of their finances. Broken down the formula is 30 percent spent on food and supplies, 25 percent on payroll, 3 percent to utilities expenses such as gas, electric and telephone service and 10 percent to rent or mortgage on the establishment. The remaining 32 percent -- minus any optional advertising and marketing costs --is considered profit.

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About the Author

Michelle Renee is a professional trainer and quality assurance consultant in the career, education and customer service industries, with two decades of experience in food/beverage and event coordinating management. Renee has been published by Lumino and Career Flight as well as various food, education and business publications.

Photo Credits

  • Esra Sultan Şahin/iStock/Getty Images