Slammed! 2nd Oven Installed

This is the final post regarding a new rotisserie chicken specialist in my neighborhood. They purchased a slightly smaller second oven. In order to allow room for the oven, they traded their large flat top grill for a smaller unit. Everything fits under the original hood.

The purchase of the new oven has solved their peak period production problem. Recent lines measured at the peak dinner period on a Friday were moving steadily. It seems more people are ordering their meals to go now. The reconfigured dining room has fewer seats.

When the restaurant first opened the menu had many Peruvian specialties. The new kitchen is very focused on the chicken options. I have never seen anyone order any meals which did not include the chicken.

With a few months of operations experience, the owners have adjusted the hours to meet the needs of the community (and to allow themselves a few shorter days each week). I have no knowledge of the terms of their lease. As long as their rent is reasonable, they have a high probability of success.

Food Cost Calculation Question - Sales Tax

Good Morning Joe,

I had a quick question for you. When calculating FOOD COST %, do you want to use gross food sales or Net food sales? Obviously Gross will give you a better percentage but I am just curious as to what is the norm.

Thank you,

Amanda

Full Charge Bookkeeper

Thanks for the question Amanda!

When a restaurant's POS system records a transaction, the amount needed to pay the local tax authorities is calculated and automatically added to the check total. When you look at the recap, the total tax liability is summarized daily. This tax collected increases cash and receivables from credit card processing but does not increase sales. It is a liability.

In fact, an increase in any liability is favorable to cash flow in the short run.

You should eliminate the tax in your food cost calculations.

More importantly, restaurants would be wise to set aside the cash collected for sales tax so they can meet their quarterly obligation. Often, the amount collected is not available when it is time to file the quarterly return.