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Control Prime Cost and Put More Money in the Bank

Knowing your restaurant’s prime costs each week is critical to your success. Cost of Goods Sold plus Labor Cost are the most controllable costs in your operation.

Monitor, track, and control these costs and you’ll put more money to your bottom line and in the bank! Plus, by doing inventory each week, you'll be able to discover Restaurant Profit Dingers quickly.

As we’ve said many times before on RestaurantMgmt101, weekly inventories are crucial and vital to maintaining operating profits. I know that it is a hassle sometimes, but if you organize your kitchen, and maintain it, your inventory process will flow much easier.

Every restaurant has a weekly “last day of sales”. That night after close, or early the next morning before open, you must do a complete inventory of all food products, all liquor on hand, and if you choose, all supply items.

After inventory is complete, you can complete the Prime Cost Worksheet and you’ll know precisely how well your restaurant performed for the prior week.

With a complete inventory, the form also calculates your “inventory days on hand”. Your money is either sitting on the shelf in inventory or its in your bank account. A high amount of inventory is wasting your money. The proper level of inventory is around six (6) days on hand. This will also depend on what day of the week you get deliveries.

To ensure you have the proper amount of inventory (enough to last until the next delivery but not be out of any item) you should consider getting the Food Order Guide. It’s a great tool!

The form is customizable. If you don’t sell alcohol, just leave those cells blank. However, if you’d prefer to utilize those areas, you can change the categories. Also, the days of the week can be adjusted if your week is different.

Other critical numbers the Prime Costs Worksheet calculates:

  • Prime Costs
  • Gross Margin
  • PPA (Check Average)
  • SSF (Sales per Square Feet)

Complete instructions are inside the form.

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