A budget is a look into the future at accounts that make up your restaurants revenues and expenses. Sales,Cost of goods sold, expenses add up to the bottom line or your net income or loss. The budget should be an educated guess using all available information. Last years income and expenses, industry forecast of cost of product increases or decreases and trends in the industry all play a role in creating a best guess forecast. The key to a forecast is the use of it as a guide to react when thing are not as forecasted. Sales drop so you react by reducing labor. Cost of food goes up so you tighten control or shop for better deals with your venders. The budget is the starting point of your yearly business. All accounts should be targeted to the budget you create at the beginning of the year. Your hope as a manager is that the sales are higher and the costs are lower. This will produce a larger net income and profit.
To see an example of a restaurant budget press Budget master
In this next link you can see that we have started to insert last years #s and this years forecast #s in a side by side comparison. Notice as you put in your #’s the % of each expense changes and the bottom line net income changes. From here you tweak the #s with the end result of achieving the goal you set. Pay all your bills, Mortgage, notes, expenses and have a healthy “location operating profit” at the end of this new year. Budget 2
This picture above shows you the end result of the budget. The location operating profit is forecast at $4462.00 compared to last years actual number for location operating profit of $384.00 You will also notice the percentages. Looks good! Now all you have to do is keep to the forcast, make adjustment as needed and your profit will be much larger than last year.
If you would like Social Media Connected to help set up your budget Email: Social Media Connected
Next we will look at tracking our profit and loss compared to the budget and give you some tools to monitor your restaurants progress daily, weekly, monthly and yearly.