Tips to Manage Your Cash Flow — Controlling Costs
In our previous blog article, you were about to start building a plan for profitable sales growth and improved communications and follow through with both your targets and results. We hope it’s been a rewarding investment of your time.
Next, let’s get after the two largest expense categories on your restaurant’s profit and loss statement (P&L).
Food and paper
Every organization needs a food cost leader and “ambassador.” If your organization is small, that might be you, the owner. Tasks for this role include:
- Set and communicate targets, regularly communicate results, and hold the team accountable for fixing any problems real-time rather than at month-end.
- Monitor base food and menu pricing.
- Utilize the new QsrSoft option to compare your restaurant’s results to other members of your co-op (if your co-op participates).
- Review and verify orders upon delivery from Martin Brower. Checking items as they come in can save you from costly ordering mistakes and delivery errors.
- Invest in a handheld leak detector to monitor carbon dioxide (CO2) leaks — this can save hundreds of dollars on wasted CO2.
- Help your local community by participating in food donation programs.
- Don’t forget about excess condiments and napkins going out the drive-thru window by the handfuls.
Labor — the most controllable P&L item
Errors on labor costs have the biggest impact on profitability, so if you’re going to get one line right, this is it.
- Set dollar targets for your managers, not percentage targets, and hold the management team accountable to building a schedule that serves guests well while maximizing flow through sales increases from guest counts and menu board adjustments.
- Monitor productivity, including transactions per crew hour, overtime and scheduling discipline, and illustrate for your management team with real numbers the financial cost of a good schedule versus a poorly executed one.
- Utilize pay guides and onboarding specialists for new hires with a clear roadmap to show team members how being reliable, productive, and engaging in training opportunities can lead to a successful and rewarding career.
- Re-evaluate bonus structures regularly so you are rewarding the right behavior. A plan that costs more than the profit driven to the bottom line likely isn’t the right one for your business.
If that feels like a lot of opportunity and a lot of work, just remember these wise words I heard recently: “An average plan vigorously executed is far better than a brilliant plan on which nothing gets done.”
And as always, you aren’t alone in this — your CLA McDonald’s team is here to help. We’ll get you there!
Angel is a principal with CLA with more than 25 years of accounting experience advising owners of McDonald’s franchises around the country in all phases of the business, from start-ups including registered applicants and next generation candidates through transitioning first generation operators into retirement or exiting the business.
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