Despite being one of the most important aspects of running a restaurant, budgeting is sometimes ignored. Sure, creating a yearly budget can be a little stressful, but it can also relieve a lot of stress. Using the three A’s of restaurant budgeting, you can come up with an effective budget that works for your business.
Assessment of Restaurant Budgeting
The first of three A’s of restaurant budgeting is assessment. During assessment, you will take a look at those things that directly and indirectly affect your restaurant’s current and future viability. Factors over the coming year that you should take into consideration include:
- Sales generators
- The Economy
- Events That Might Drive or Diminish Sales
- Zoning Laws
- Profit and Loss
- Check Totals Average
- Guest Counts
- Employee Scheduling
Sizing up your restaurant’s competitors is pretty simple. Identify what businesses are competing with yours and then do a little research. How do your prices look by comparison? Are your portion sizes on par or better than your competition? Are they marketing aggressively? Do you need to do more marketing? What do customers like about these restaurants? Answering these questions will help you figure out how to get a competitive edge.
What local establishments are sales generators for your business? Local schools, businesses, industrial parks and apartment buildings are examples of places where there are a lot of people. This will help you identify where your sales are coming from and where strategic marketing can take place.
The local economy can make or break a business. That is why it is so important to know its state before you budget for the year. There is no sense in planning a big renovation or wide-scale marketing campaign if the local economy is in a downslide. You will want to budget in a way that takes the economy into account and keeps your restaurant in business. You will want to determine if your suppliers and utility companies are stable and will be consistently charging similar rates. Identify any increasing costs and determine how they will affect your budget.
Your profit and loss statements are going to give you the best idea of how your business is doing financially. Try to collect three or more from the year before. When determining projections for the next year, you will want to know how much sales have increased or decreased and how much costs have increased or decreased in percentages, dollar amounts or both.
You can average the monthly wages paid to get an idea of what you will be paying employees in the coming year. You will have to factor in raises and projected scheduling changes to get a realistic idea of what your employee budget should look like. Similarly, you should keep track of guest counts and check sizes all the time. This will let you spot any trends that could affect your budget, such as decrease in check size and guest count.
Action of Restaurant Budgeting
Now it is time to take everything you learned during your assessment and put it into action. The data you collected will allow you to come up with projected sales for every day of the year. For example, multiply the projected guest counts for Mondays by how many Mondays there will be in a given month. Do this for every day of the week and every month of the year. Total these projections to get your year’s projected sales.
Of course, how much you make is not the entire picture. You have to determine how much you will spend. If your assessment determined that food costs will remain relatively the same, you can use your data from the previous year to give you an idea of what the coming year will look like. However, you have to remember to account for rising prices and increased portion sizes, if applicable. You will determine payroll similarly, remembering to take into account changes in scheduling and employee raises.
Next, you will take a look at your rent, taxes, insurance and utilities. This is pretty straightforward. Using last year’s numbers and determining if there will be an increase in any of these costs will give you a solid estimate of what to expect in the coming year.
Finally, you can decide how much you want to incorporate in your restaurant budgeting for things like promotional events, music, entertainment, advertising, renovations and the like. You can determine this figure by using last year’s data and factoring any changes you deem necessary for the coming year, whether that is stricter budgeting or broader advertising.
All of this information will help you figure out profit before deprecation, which means simply subtracting deprecation from your profit total. That will give you the numbers you need to determine your income tax liability. Put all of your numbers into a budget worksheet and see how it matches up with your expectations for the year. This is where you can see any discrepancies and decide if you need to make changes in your controllable expenses.
Accountability of Restaurant Budgeting
Lastly, you are going to have to hold yourself accountable to your restaurant budgeting plan. Every month, compare your budget with the actual profits and costs. Come up with differences in dollar amounts and percentages. If the discrepancies are small, that is to be expected in the restaurant business. However, you will want to investigate bigger discrepancies and determine where the problem lies. For example, if appetizer sales are decreasing, you can run a special or a server incentive program. Your budget will guide you throughout the year.
How Ice & Refrigeration Systems Can Help With Your Restaurant Budgeting Plan
Our consulting team will review your needs and make recommendations for your restaurant kitchen. If you are looking to keep expenses down and get more restaurant equipment for at a cost-effective price, consider leasing. We offer some of the best leasing prices and the highest quality equipment.
Call us today for a free evaluation at 817-888-3057 or send us an email.
Your North Carolina Commercial Restaurant Equipment Resource
The competitive market for commercial restaurant equipment means that your North Carolina restaurant has many choices of types of equipment in all categories. The good news is that manufacturers are driven to develop more and more options for the kitchen as well as the front of the house. The bad news is â€“ the choices can be very confusing!
One of the ways your restaurant can be efficient is getting specific equipment that gets the job done. Coolers are a great example of the variety of choices available: beverage cooler, bottle cooler, glass door cooler, reach in cooler and walk-in cooler. And when you can use a piece of equipment to encourage impulse purchases, youâ€™ll see sales per head increase. Consider the possible effect on sales in addition to traffic flow when buying or leasing new equipment.
Itâ€™s beneficial to have a resource that asks the right questions to help you get everything you need. From the obvious commercial ice machines and ice bins to the less obvious differences between prep tables. Ice & Refrigeration Systems has a history and a track record of providing commercial restaurant equipment at the most competitive price.
Thatâ€™s where the solution to the bad news comes in â€“ Ice & Refrigeration Systems makes buying or leasing new restaurant equipment clear and easy. Ice & Refrigeration Systems offers unbiased, comprehensive, and budget-minded help in selecting restaurant equipment. Just a few of the manufacturers we represent are Kold Draft, Hoshizaki, ITV, Manitowoc, Scotsman, Accutemp, Atlas Metal, Hussman, Howard-McCray, Fogel, and Silver King. We carefully select our working relationships with manufacturers and guarantee the best price to customers. Free delivery is standard on all purchases or leases. Talk with us about your priorities and your North Carolina commercial restaurant equipment needs. Call Ice & Refrigeration Systems at 817-888-3056.
Restaurant auctions are often a first consideration when restaurants need additional equipment. Restaurant owners and managers who want to save money often think that buying used commercial kitchen equipment is similar to buying a used car â€“ there is a good deal of depreciation in value when the new car drives off the lot. However, that may not be the whole story.
The Pros And Cons Of Buying Commercial Kitchen Equipment At A Restaurant Auction
- If you know the restaurant selling the equipment, then you may know something about the condition of the equipment. Talk with the previous owners if possible before the restaurant auction.
- Pricing is favorable for owning equipment that you can use at a reduced cost.
- Better name brands may be more affordable for you than if you were buying new.
- An inspection of the equipment by a knowledgeable person can give you the confidence you need to buy.
- Short-term price breaks on used equipment may provide short-lived satisfaction if the used equipment you purchase needs chronic repair.
- If you donâ€™t know the restaurant or condition of the equipment, the reliability of the equipment is less certain.
- Used electrical equipment is considered especially risky because there are so many more parts than in gas equipment. More parts and wiring equal more things that can go wrong.
- Older equipment is typically less energy efficient. Manufacturers focus on the energy efficiency of new products as one of the reasons to purchase.
Options For Purchasing Commercial Kitchen Equipment
Since the biggest reason restauranteurs are attracted to used equipment is a favorable price, itâ€™s a good idea to compare used with the cost of leasing new commercial kitchen equipment. As an alternative to auctions with unknown product histories, leasing new equipment gives the restaurant owner or manager greater confidence of reliability. Products typically carry a warranty for any repair work needed, and you get the energy efficiency that comes with new products.
Your commercial ice maker should deliver quality ice for absolute customer satisfaction. Commercial ice machines are different than the appliances that you see in homes. The means of dispensing ice, available accessories, and opportunity for energy savings provide choices in commercial ice machines.
How Commercial Ice Makers Work
Commercial ice makers are either water-cooled or air-cooled.
A water-cooled ice maker is typically more energy efficient, while air-cooled is more water-efficient. And, there are varying degrees of efficiency within each type. Itâ€™s difficult to say how much water efficiency you can gain with a new machine due to the following factors:
- Type of water â€“ hard vs. soft
- Water filter â€“ how much sediment is reduced to keep the water as clean as possible.
- How much rinsing your machine needs â€“ the more rinsing, the more water used.
Selecting The Right Ice Maker
Here are a few tips about ice making that can help you decide what type of machine is best for you and your business:
Melt timesâ€“ the larger the cube, the slower the melt. So, if you offer drinks where you want to maintain the integrity of the drink for a long time, consider a large cube-making machine. Kold-Draft makes the largest cubes in the business. Theyâ€™re sized to over an inch diameter. The difference is in the aircooled cube and condensing.
Volume â€“ Estimating your current and future needs for amounts of ice production per day is important to getting the right machine that can grow with your business. The capacity you need, number of lbs per person, will determine which model you select. If your need for volume is not significant, you may want to consider an undercounter ice maker for saving space.
Customer preferences â€“ If you know that your customers like to chew ice and like a crushed texture, you have several choices. Scotsman pioneered nugget ice and has a variety of nugget ice making machines to choose from. Itâ€™s the filtered water that makes commercial ice makers ice the purest quality, resulting in better taste. Whether one lb or 200 pounds, a high quality filter adds to the taste regardless of the shape. The taste of ice adds to enjoyment of food at restaurants.
Maintenance â€“ All ice machines require maintenance, but the new Indigoâ„¢ line from Manitowoc takes communication to a new level. The machine lets you know when various tasks are required. The commercial ice machine functions are selfcontained and the information provided from the machine can reduce the number of repairs needed. If you read a review of Indigo ice maker commercial machines, youâ€™re likely to see a lot of stars from the people who write the rating. Another one of the items to consider regarding maintenance is the exterior of the maker commercial ice. For example, stainless steel is the most efficient material for keeping clean.
Location â€“ If you have space restraints, think creatively about moving food storage to the outdoor behind your restaurant. Many restaurants like the additional sq feet in a walkin refrigerator, and this allows more room in the kitchen for other items such as your commercial ice maker.
Types of Ice & Production
Flaker Ice – 73% Ice to Water Ratio. Typically shaved ice comes in the style of a snowflake and used for food displays. Daily production: 150 lbs and goes up to 2,600 lbs.
Nugget Ice – 90% Ice to Water Ratio. Softer, chewable ice that is compacted flaker ice. Daily production: Starts at 150 lbs daily.
Half-Diced Ice – 100% Ice to Water Ratio. Most popular ice and is used primarily for sodas. Size is generally 3/8â€ x 1 1/8â€ x 7/8â€. Daily production: Ranges from 130 lbs to 3,300 lbs.
Diced Ice – 100% Ice to Water Ratio. Rhomboid-shaped. Size is generally 7/8â€ x 7/8â€ x 7/8â€. Daily production: Ranges from 60 lbs
to 2,000 lbs.
Crushed Ice – 100% Ice to Water Ratio. These ice pieces are diced or half-diced crushed into smaller pieces and crushed into pellets. Daily production: Manually produced and can make up to 2,000 lbs.
Tubular Ice – 100% Ice to Water Ratio. Ammoiated freezing systems are used. Long, round with a hole in the center. Texture is softer and chewable texture. Daily production: 30 lbs to 184 lbs.
Gourmet Ice – 100% Ice to Water Ratio. Larger cubes that are hard and clear and can be octagon, round or square shaped and used with craft cocktails. Size is usually 1 1/4â€ x 1 1/4â€ x 1 1/4â€. Daily machine:60 lbs to 1,000 lbs.
Ice Required Per Person
||Type of ice
||Amount of ice per day
|Banquet service (church events)
||cube or crushed
||cube or crushed
||3 lbs./seat6 lbs./seat
To figure the ice another way, hereâ€™s how much ice it takes to fill a glass to three-fourths full with ice (the perfect amount to keep a drink cold):
||Amount of cube
||4 1/2 oz.
||7 1/2 oz.
Getting a new ice making machine doesnâ€™t have to be complicated or costly. Youâ€™ll want guidance from experts who make it a policy to save you money and help you make the best choices before you buy a commercial ice machine. Our history and relationships with manufacturers give you the best opportunity to get a machine thatâ€™s just right for your needs and budget. You can lease a new machine starting at $59/month that includes a water filtration system. And, Ice and Refrigeration Systems delivers for FREE! You can email us or call for more information â€“ 817-888-3056. Be sure to visit our online commercial ice maker store!