Find more profit in your bar, restaurant or nightlife venue with RMD Consulting
Finances, finances, finances. When you are running a bar, restaurant, or nightlife venue, you work hard to manage and maximize profit. Whether paying back investors or yourself, this is a critical focal point, daily, monthly, and annually. When evaluating profitability and making business decisions that impact it, several areas need to be evaluated: inventory, accounting, COGs, staff training, vendor agreements, labor, etc. The list goes on and on.
How do you as an operator, or owner, build a plan of action to tune expenses and increase profit? You have to start by identifying the areas that need the most support. This can be done by auditing your COGs and operating expenses, and comparing them to industry or geographical standards and averages. A simple way to test assumptions regarding a specific expense categories performance, is to calculate it as a percentage. As an example, a $40,000/month labor cost may seem normal because that’s what it’s always been, but if its 40% of revenue, this alerts us there is significant room for improvement.
Many times you’ll receive the best feedback by having someone outside your business evaluate it. Hiring a bar consultant or restaurant consultant is a great first step. At RMD Consulting, we have several evaluation points to test how successful a business is, or can be. We’ve helped many clients increase business performance, and developed a “best of breed” approach to managing profitability.
Start by asking yourself these questions:
- How often do I pour test and menu test all of my bartenders?
- When was the last time I audited my POS system, and then recipe tested my bartenders?
- Do I have a process in place to track food prices and associated costs?
- Am I reviewing a PMIX monthly and making changes to my menus based on that data?
- How often do I conduct a labor analysis? Am I in compliance?
- Have I shopped my vendors in the last quarter to structure better purchasing deals?
- Can I increase the accuracy of my inventory reports with applications like Bevinco or Accubar?
- Is there a better accounting system I can put in place that integrates with my inventory system?
Are you doing these regularly? Were your answers no or not recently? Reminding yourself to constantly evaluate these areas can have a significant impact on COGs and operating expenses, which can balloon quickly with limited management. As owner/operators of several hospitality concepts, RMD Group, a top nightlife and restaurant hospitality company based in San Diego, we know you invest lots of hours in your business, but identifying and correcting problem areas, establishing good systems, training your bar and restaurant managers and staff on these systems, and creating a threshold for these expenses, will help you drive more profit, more consistently.
RMD Consulting is a bar, restaurant, and nightlife consulting firm in San Diego, California. Receive your complimentary strategy session today.