In this transcript from a video by Steven J Wick & Associates PC in Fort Collins, we explore essential strategies for restaurant owners to monitor daily profit losses, manage food and labor costs, and improve overall profitability. This video explains how to calculate restaurant gross profit, the importance of tracking expenses consistently, and practical insights into plate costing and inventory management.
To learn more about how to track costs and maximize profits, check out our detailed article on how to calculate restaurant gross profit in Fort Collins.
Please note, this video does not constitute legal or financial advice, and we recommend contacting a CPA about your specific case for personalized guidance.
Transcript
00:00:01 – Importance of Daily Profit Awareness
[Music] [Music] I think that restaurant accounting is you need to be hyp sensitive to almost daily profit losses and being aware of you know your food costs your labor costs and keeping track of all those things and you know daily to weekly all the way through and if you are off a little bit Believe It or Not restaurant profit margins are not real big and they can be lost really quickly you know typically we try and get maybe seven or 8% bottom line profit to a business but you know it’s pretty easy to see most if
00:00:51 – Labor Costs and Profit Challenges
not all of that going same thing with labor costs if you’re overstaffed you trying to be nice to keep people on well they’re really not doing things and sitting around that can eat into your profit real quickly too and then of course you got spoilage and several other issues that are there it’s definitely an important part of the business and kind of tracking where everybody is just being aware and the price creep because food costs in particular you know they can go up and down weekly and uh if you’re not aware
00:01:27 – Adjusting for Inflation and Cost Changes
of those things and making adjustments then you can go from a profitable to an unprofitable position very very quickly big ones supplies sometimes are in there are we accounting for those things and making the price adjustments necessary to just to keep up with inflation was inflation in the last you know year and a half it’s really really important to to try and do that so and keep on it all the time so when I get a new client in that’s a restaurant it’s one of the first things we look at is
00:02:09 – Assessing Gross Profitability
what is their gross profitability and after taking the sales of The Bu on the business less food labor and direct Supply costs that are going into that product so uh we look at that heavily and we talk about that and we start kind of working from there [Music] so that’s where a lot of the discussions are and most of the time unless they’re highly motivated they don’t like taking inventory and doing the plate costing and things like that measuring all the stuff they think that oh it’s just it’s
00:02:49 – Plate Costing and Ingredient Tracking
a scoop of this well is it a heaping scoop or a level scoop is it a whatever you know it’s only vegetables maybe that’s so but maybe you have a few more vegetables than you do the meat or something and so how much of each that you have and it it truly if you do it correctly you’re breaking it down to each individual ingredient maybe not the spices but I’ve had a several restaurants I can just tell you each one of them have had issues with food cost payroll costs things going out of line and not getting
00:03:28 – Achieving Target Gross Profit
the gross profit that they need and we this is kind of Beyond The Break Even analysis discussion but if you just think okay I need for example a 40% gross profit which probably should be uh 43% gross profit and it’s coming in at like 25% gross profit well they’re losing money at that point and and why is that sometimes people think that being the cheapest in p is is that’s the key maybe it is but you got to do a lot more volume make sure that whatever meets and whatnot you’ve got maybe some
00:04:10 – Balancing Quality and Profit
lower grade stuff the offset some those things to make sure it doesn’t go out crazy and we just got to look at it and see who you are and what you [Music] are [Music]
Conclusion: How to Calculate Restaurant Gross Profit
Understanding how to calculate restaurant gross profit is essential for any restaurant owner who wants to maintain profitability, manage costs, and make informed business decisions. By carefully tracking food, labor, and supply costs, performing regular plate costing, and monitoring gross profit margins, you can protect your restaurant’s bottom line and ensure long-term success.
