4 Things That All Restaurants Should Consider: Part Two



The hospitality industry leader at bgr CPAs explains the four practices that all restaurant managers should consider implementing to help combat financial challenges that are common within the hospitality industry.

In Part One, the hospitality industry leader at bgr CPAs explained how implementing 13 four-week periods can provide substantial benefit to restaurateurs. In Part Two of our series, bgr CPAs discuss how regular menu costing can provide a more accurate depiction of cost of sales, and can allow managers to consistently anticipate profits.

Menu costing is the detailed process in which a restaurant manager breaks down their menu by the cost of each ingredient involved. In doing so, the manager gains a better understanding of how much each item truly costs, and thus how to set prices to achieve the margin goals for the business. However, accurate pricing is not the only advantage that menu costing provides. Managers who conduct regular menu costing analysis have a better ability to consistently anticipate profits because they are fully aware of how the sale of each item on their menu impacts their sales mix. As a result, restaurants are able to recognize how performance compares to expectations.

Costing each item on a menu requires that restauranteurs become intricately familiar with their invoices. At times, invoices can offer a large amount of data that managers may not otherwise consider.  This data is important in assessing the true menu costs, but can often be time consuming to analyze and properly break down.  Thankfully, management can leverage software tools available in the industry to help.

Primarily, evaluating an invoice will allow a manager the ability to compare vendor pricing and make changes when necessary. But an invoice can also indicate when internal changes need to be made. Specifically, when managers have an in-depth understanding of what their menu costs, and overall food costs begin to rise, they are able to quickly identify what items are causing the increases. This enables managers to be proactive in changing their offerings if needed to prevent losses, or to assess other areas that need improvement, such as preparation or waste.

Menu costing and four-week periods are just two of the ways that restaurants can improve reporting and performance. Next month, the hospitality industry leader at bgr CPAs will discuss how weekly profit and loss meetings can improve overall restaurant performance.

bgr CPAs professionals have helped clients within the hospitality industry throughout the Mid-Atlantic region. We have assisted restaurants with their tax, accounting, and business needs. To learn more, please contact Stephen Wolf, CPA at or (410) 418-4400.