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Saturday, July 28, 2007

Month End Surprises

When food cost percentages are in flux, its common to experience numerous month end surprises. Most of the good surprises will spark a round of high fives and optimistic conversations about bonus time. On the other hand, a bad surprise marks the start of a cost reduction campaign and lots of meetings to find out the cause of the problem.

Most surprises occur because communication is inadequate.

To prevent the majority of month end surprises, implement a simple weekly flash report. The flash report should be prepared at the operations level and communicated to general management via the accounting staff. At a minimum, the report should contain weekly statistics on sales, food and beverage purchases, other purchases, payroll recap, gross profit and management comments.

Once these reports become a reliable tool, the number of month end surprises will decline. As managers become aware of a bad week and take prompt action, profitability will become stable and fluctuations will be minor.

The key to implementing a flash report system is simplicity. Don't turn this into a production on the level of the month end close. The purpose of the flash report is to point out major issues in a timely fashion. Some reports will appear too good to be true. A lost invoice will stick out like a sore thumb in a weekly recap but go unnoticed in a monthly statement.


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2 comments:

John said...

HI Joe. do you have a sample layout of a simple flash report?

Joe Dunbar said...

John,
I like the essential info:

Week Ended:
Sales:
Purchases-Food:
Purchases-Beverages:
Purchases-Other:
Kitchen Labor:
Service Labor:
Management Labor:
Burden:
Gross Profit:

You could add line items for cash deposits (by day).

Joe

Restaurant Data Pros

 
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