Join James Kahler, COO of Full Course, in this new session all about where to spend and where to save when operating and expanding your restaurant for maximum profitability!

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©2024 FULL COURSE
Navigating Your
Path to Profitability
A Guide for New and Seasoned Restaurant Owners…

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Laying the groundwork:
Defining Success and Benchmarking: Understanding what success
looks like in your specific segment of the restaurant industry. (Fast Food,
Quick Service, Fast Casual, Casual, Fine Dining, Food Truck, Catering,
etc.)
• Essential Metrics and Goals: An in-depth look at KPIs critical to your
business's financial health. (Controllable and Non-Controllable expenses)
Tracking for Success: Exploring tools and strategies for effective
performance tracking (POS, Back Office, 3rd-Party Integrations) and
deploying the KISS method.
Adapting Strategies: The importance of flexibility, supported by case
studies of successful business pivots and failures.

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WHY FOCUS ON BENCHMARKING?
“You can’t improve
what you don’t
measure.”
– Peter Drucker

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Defining Success and Benchmarking:
Getting back to the basics (P and L statement):
(Benchmarking Costs as a % of Revenue: Historical, Budgeted, Actual)
1. What is your annual revenue goal? Do you have a Budget? Is it
realistic?
2. What are your Food Costs?
3. What are your Labor Costs (Salaried and Hourly)?
 What are your Prime Costs (COGS + Labor Costs)?
4. What are your “Controllable Expenses”?
5. What are your “Disposable Costs”?
6. What are your “Tech Costs”?
7. What are your discount totals as a % of Revenue?
Be mindful that growing sales does not guarantee profitable success…

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Restaurant
P&L
Largest
Line Items
Labor
Cost
Food
Cost
EXAMPLE WITH
FOOD COST?
Food Costs can
account for
roughly 25% -
35% of the total
net revenue.

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THEORETICAL VS. ACTUAL FOOD COST
Theoretical Food Costs
Costs are calculated based on POS data of
menu items sold and the raw costs of the
recipes that correlate to that item. The
“ideal” food cost in “Theory” if it was
prepared, cooked, portioned, and
produced the same way every time.
Actual Food Costs
The real tangible cost that a restaurant
incurs to produce and sell their menu items.
This is calculated based on an inventory
being performed to include expenses
associated with purchasing ingredients,
waste, spoilage, and any variations from the
original recipe.
In Theory, your Food Cost should have been
27% of Net Revenue:
Net Revenue = $1,000,000.00
Food Cost (COGs) = $270,000.00
or 27% of Net Revenue
Net Revenue = $1,000,000.00
Food Cost (COGs) = $290,000.00
or 29% of Net Revenue
COGs = Beginning Inventory + Purchases - Ending Inventory
$20K Difference
Why?

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CAUSES OF HIGH FOOD COST
Raw Product Costs
Inventory Purchases
(PPI vs. CPI)
Raw Product
vs. Finished
Product = Yield
Portion Controls
Standardized
measurements where
possible
Over or
Undercooking
Recipe
Deviation
Under Charging
for item
Notwithstanding Shrink (AKA: Theft)

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Defining Essential Metrics and Goals:
Essential Metrics and Goals: An in-depth look at KPIs critical to your
business's financial health.
Looking at food cost as an example: (what % of Revenue is beef an
expense)
Understanding the PPI (Producer Price Index) as a lead indicator to
the CPI (Consumer Price Index) and how it may affect your cost and
Menu Pricing.
If you are a heavy user of Beef on your menu…tracking the prices of
your beef as it relates to the beef commodities market can help you get
ahead of the curve on implementing a menu pricing strategy.

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Tracking for Success:
Tracking for Success: Exploring tools and strategies for effective
performance tracking (Excel Spreadsheets, POS systems, Back Office
Solutions, 3rd-Party Integrations).
Implement a system for regular monitoring.
Daily: Inventory tracking (where applicable), labor hours, sales, and
discounts data.
Weekly: Comprehensive review of food and labor cost percentages,
utility costs (mini close on weekly controllable expenses – w/inventory)
Monthly: Detailed financial reports and analysis of trends.

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Adapting Strategies:
Adapting Strategies: The importance of flexibility, ability to analyze and
implement new processes, equipment, sales channels, software, tools, etc.
Validate and adjust for successful business pivots.
Regularly review the metrics to identify areas of concern or opportunity.
Share necessary data metrics with your management team(s) and crew where
applicable. Typically: Controllable expenses-COGs, Labor, Linen, Smallware,
etc. Have them be a part of the process (buy-in / adoption rate becomes
higher)
Compare actual vs. ideal percentages.
Assess the effectiveness of direct marketing and LTO/special discounts.
Monitor the impact of any changes made in response to metrics

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Tips and Tricks to Food Cost improvements
1. Tracking (Breaking down COGs)
2. Menu Item Costing
3. Raw Product Costs (Inventory)
4. Categorize Areas of Loss Revenue
5. Portioning

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5 AREAS (Profitability)
16
1. Tracking (Breaking down COGs)
2. Menu Item Costing
3. Raw Product Costs (Inventory)
4. Categorize Areas of Loss Revenue
5. Portioning

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BREAKING DOWN COGS
1. TRACKING
17
o
o
o
o
o

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BREAKING DOWN COGS
1. TRACKING
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o
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o

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BREAKING DOWN COGS
1. TRACKING
Common Example
o
o

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BREAKING DOWN COGS
1. TRACKING
Example
o
o
o

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BREAKING DOWN COGS
1. TRACKING
Example
o
o

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Improving Visibility by Analyzing COG’s

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5 WAYS
1. Tracking (Breaking down COGs)
2. Menu Item Costing
3. Raw Product Costs (Inventory)
4. Categorize Areas of Loss Revenue
5. Portioning

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Example:
The Daily Duel $19.99
Options
Proteins::Chicken and Steak (1/4
Chicken and Steak Tips)
Sides: Fries, Broc, Mash, Squash, Side
Salad, Mac & Cheese (Pick 2 items)
BREAKING DOWN FOOD COSTS
2. MENU ITEM
COSTING
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When costing your menu
look for the following:
o
o
o
o

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BREAKING DOWN FOOD COSTS
2. MENU ITEM
COSTING
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Example:
The Daily Duel $19.99
Options
Proteins: Chicken and Steak (1/4
Chicken and Steak Tips)
Sides: Fries, Broc, Mash, Squash, Side
Salad, Mac & Cheese (Pick 2 items)
Potato Cost
$1.00
Steak Cost
$2.50
Chicken Cost
$1.50
Broccoli Cost
$1.00
Food Cost Percentage:
The Daily Duel $19.99
Food Cost (plated) $6.00
($6.00/$19.99) x 100 = 30%

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BREAKING DOWN FOOD COSTS
2. MENU ITEM
COSTING
Food Margin 1 (Standard Costs):
•Cost of Goods Sold (COGS): $6
•Food Cost Percentage: (30%)
•Standard Combination is
Chicken+Steak+Mash.+ Broc.
Food Margin 2 (Increased Ingredient Costs):
•Cost of Goods Sold (COGS): $8
•Food Cost Percentage: (40%)
•Highest combination is
Chicken+Steak+Side Salad+Mac&Cheese
Food Margin 3 (Lowest Ingredient Costs):
•Cost of Goods Sold (COGS): $5
•Food Cost Percentage: (25%)
•Lowest combination is Chicken+Steak+Double
Fries
Example:
The Daily Duel $19.99
Options
Proteins: Chicken and Steak (1/4
Chicken and Steak Tips)
Sides: Fries, Broc, Mash, Squash, Side
Salad, Mac & Cheese (Pick 2 items)

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OTHER CONSIDERATIONS
2. MENU ITEM
COSTING (Paper)
o
o
o
o
o

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5 WAYS
1. Tracking (Breaking down COGs)
2. Menu Item Costing
3. Raw Product Costs (Inventory)
4. Categorize Areas of Loss Revenue
5. Portioning

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INVENTORIES
3. RAW PRODUCT
COSTS
o
o
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o
o
o

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INVENTORIES
3. RAW PRODUCT
COSTS
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Supply Chain (Auto-substitutions)
Changes in Pack Size
Split Case Cost vs Case Cost
UOM (Unit of Measure) Conversion Errors
Not consistently FIFO product
Not receiving credit on damaged products
Human Input Errors: Input case vs sleeve count
Causes of
Inventory
Errors /
Variances

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5 AREAS
1. Tracking (Breaking down COGs)
2. Menu Item Costing
3. Raw Product Costs (Inventory)
4. Categorize Areas of Loss Revenue
5. Portioning

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BREAKING DOWN COGS
4. Categorize Loss
Revenue
o
o
o
o

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BREAKING DOWN COGS
4. Categorize Loss
Revenue
o Discount Subcategories:
o
o
o
o
o
o

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AS THEY RELATE TO REVENUE
DISCOUNTS VS REFUNDS
Discounts
o
o
o
o
Refunds
o
o
4. Categorize Loss
Revenue

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REVENUE ASSOCIATED WITH
o
o
o
Examples
o
o
o
o
4. Categorize Loss
Revenue
WASTE

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TRACKING WASTE
4. Categorize Loss Revenue

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5 WAYS
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1. Tracking (Breaking down COGs)
2. Menu Item Costing
3. Raw Product Costs (Inventory)
4. Categorize Areas of Loss Revenue
5. Portioning

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5. Portioning
Proper portion controls:
o
o
o
o
o

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©2024 FULL COURSE
Areas to Invest
Team Development and Training
Process Improvements
Preventative Maintenance
Automation
Brand Marketing and Local Marketing
Loyalty Programs
POS Data analytics

40. Education
(fullcourse.com)

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Great Resource: Oano
Labes
www.oanalabes.com

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